Technology Artificial Intelligence Digital Transformation

What we’ve learned so far in Google’s landmark antitrust trial


By Kendra Barnett | Senior Reporter

October 3, 2023 | 17 min read

Here’s what marketers need to know about the ongoing hearings concerning the tech giant’s dominance in the search space.

Google Search on phone

Google is embroiled in the US' largest antitrust case in decades / Arkan Perdana

A historic antitrust case brought by the US Department of Justice (DOJ) against Google alleges that the tech titan uses deceitful, anti-competitive approaches to secure an outsized position in the search market. As the 10-week trial enters its fourth week in court, the temperature is rising.

Much of the landmark trial – which could have lasting impacts on search and the shape of the internet – has unfolded behind closed doors, as the judge overseeing the case, Amit P. Mehta of US District Court for the District of Columbia, agreed to petitions by Google, Microsoft, Apple and others to keep much of the proceedings private over competition concerns. Apple went so far as to attempt to squelch subpoenas issued in the case, arguing that they were “unduly burdensome.”

The unprecedented level of secrecy has left consumers, legal experts and advocacy groups frustrated, as only bits and pieces of the case have been accessible to the public. A particularly prominent witness, John Giannandrea, an Apple executive who previously helmed Google’s search business, testified for only 10 minutes publicly; the remainder of his hours-long testimony occurred in a closed-door session.

However, as backlash surrounding the case’s secrecy grows, the courtroom is becoming increasingly transparent. On September 28, the court established a process allowing the Justice Department to publish trial exhibits and demonstratives used during open court testimonies. And on Monday, Microsoft’s chief executive officer Satya Nadella was allowed to testify publicly for more than three hours.

“Information is slowly getting out to the public,” says Jeffrey May, manager of content management at the US legal and regulatory branch of information services firm Wolters Kluwer.

Many of the revelations made during witness testimony over the last couple weeks could have significant implications for the digital ecosystem – and the advertising industry that serves as its backbone.

Here are the key developments in the case thus far.

1. Google accused of hiding and destroying evidence

On September 12, Justice Department attorney Kenneth Dintzer presented evidence that Google has been “hiding and destroying documents because they knew they were violating antitrust laws,” per reporting by Bloomberg. In particular, he presented messages from Google’s chief executive Sundar Pichai and other employees that frequently requested that chat settings be changed so as to auto-delete messages.

Under the law, organizations that are the subject of litigation must save all relevant communications and produce them if required. At the time, Google was already being investigated by various state attorneys general for possible violations of antitrust and competition laws.

However, evidence suggests that auto-deletion remained a common practice in executive chats at Google – even though the company continuously “reaffirmed that it was preserving and searching all potentially relevant written communications,” DOJ attorneys wrote in their motion.

“By intentionally destroying employee chats and making repeated misleading disclosures to the United States, Google violated” federal litigation laws, the lawyers went on to say.

2. Google alleged to buy out Apple and others

The Justice Department’s Dintzer said on September 12 that high-dollar contracts help Google secure an outsized share of the market.

“Google’s contracts ensure that rivals cannot match the search quality ad monetization, especially on phones,” he said. “Through this feedback loop, this wheel has been turning for more than 12 years. It always turns to Google’s advantage.”

He alleged that “Google pays more than $10 billion per year” to organizations like Apple “for these privileged positions.”

The DOJ presented evidence that Apple originally wanted to give its users a choice to elect Yahoo or Google as their preferred search engine but that Google fought to thwart this proposal, saying, “No default placement, no revenue share” in an email.

Internally, Google employees referred to the potential loss of their default position on mobile systems as a “code red situation.”

For its part, Google insisted that while it commands some 90% of the search market, it faces plenty of competition from the likes of Microsoft’s Bing, Yelp and even platforms like Amazon. “There are lots of ways users access the web other than default search engines, and people use them all the time,’’ said John Schmidtlein, a partner at Williams & Connolly, the firm representing Google.

However, Microsoft’s chief executive Satya Nadella took the stand on Monday, saying that Google has used unfair tactics – including its agreements with Apple to make Google the default search engine on Apple’s Safari browser – to hamstring Microsoft’s Bing. The executive called the deal between the two tech companies a “fantastic, simple oligopolistic arrangement” that renders user choice in the search engine market “bogus.”

3. Google admits to increasing ad prices without telling advertisers

Google admitted on September 18 that it “frequently” inflates ad auction prices quietly in order to meet revenue targets.

The search giant said it adjusts the cost of search ads by as much as 5% for the average advertiser and up to 10% for certain queries.

The company tends “not to tell advertisers about pricing changes,” said Jerry Dischler, a Google advertising executive.

Experts say that while this tactic may not be illegal, it could undermine trust among advertisers.

“Anyone who has been in sales knows that there can be intense pressure to ‘make your numbers.’ Sometimes that means making short-term decisions that generate quick revenue but are bad for the business longer term,” says Gus Hurwitz, senior fellow and academic director at University of Pennsylvania’s Center for Technology, Innovation, and Competition.

“As with having market power, this isn’t necessarily illegal,” Hurwitz says. “But it is dangerous: raising your prices is one of the fastest ways to lose customers. And, unlike in the search market, it is far less clear whether Google has market power in ads – Meta and Amazon have been growing and newer entrants like TikTok have been gaining a substantial foothold.”

4. Public access to evidence is revoked, then reestablished

Google complained to Judge Mehta on September 20 that the Justice Department was sharing an abundance of court evidence on its website and cited concerns over employee privacy. Mehta said he had not been made aware that the DOJ was doing so.

The Justice Department’s Dintzer apologized and the documents were quickly pulled from the agency’s website.

Antitrust law expert Hurwitz suggests that “there’s always a tradeoff in trials over how much should be open to the public.” As he put it to The Drum: “These are important public events, but they also significantly intrude upon private rights. The Department of Justice pushed the envelope a bit early in the trial with how aggressively they were sharing information.”

Then, on September 26, Mehta changed his tune, ruling that court documents can be published online at the end of each day. The judge agreed, however, that Google and others are allowed to object to exhibits being shown publicly before the Justice Department presents them in court.

Even so, complaints about the relative secrecy of the trial remain widespread.

5. Google’s use of machine learning and AI comes under scrutiny

Core to the DOJ’s concerns is Google’s development of machine learning algorithms and AI tools that could be used to unfairly advantage the tech giant in the search market.

Google Search leverages user data to surface personalized search results; then, as a user continues to search via Google, the tech giant collects and processes even more personal data about that user, which is used to inform its search algorithms further. In essence, it’s a self-reinforcing cycle. When self-learning AI is introduced into the picture, something like a network effect is created.

An antitrust report published by Congress in 2020 just before the DOJ filed its complaint against Google says that this network effect is a barrier to entry for smaller competitors in the space. Incumbents in the market with access to huge datasets are at an advantage, “especially combined with machine learning and AI,” the complaint reads. “Companies with superior access to data can use that data to better target users or improve product quality, drawing more users and, in turn, generating more data – an advantageous feedback loop.”

And machine learning and AI have remained at the heart of the trial. Former Google engineer Eric Lehman said in his September 20 testimony that the company’s machine learning systems BERT and MUM are becoming more valuable than user data in ensuring Google’s search dominance.

“The trial is further proof that the AI future is already likely to be organized and dominated by the existing giants as opposed to entrepreneurs seeking to move technology’s power centers to new ground under new terms,” says Greg Kahn, chief executive officer at GK Digital Ventures and an expert in emergent technology and media. Kahn says that this momentum “should be of particular concern to advertisers and brands worried about the next chapter of the media landscape.”

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6. Apple’s Eddy Cue defends the company’s deal with Google

Apple’s senior vice-president of services Eddy Cue testified in a highly-anticipated session on September 26, where he was grilled about Apple’s deal with Google.

The executive, who led negotiations on the most recent agreement to keep Google as the default search engine on Apple operating systems, explained that while Apple wanted a higher percentage of the revenue Google made from Apple, Google’s Pichai did not want to adjust the terms of the agreement.

Cue said he never truly considered abandoning the deal if the two tech companies couldn’t come to an agreement. “I always felt like it was in Google’s best interest, and our best interest, to get a deal done,” he said. “Certainly there wasn’t a valid alternative to Google at the time.” Eventually, the two sides reached an agreement.

A central question that the DOJ pressed Cue on is whether Apple elected to make Google its default search engine because it’s a superior product or because Google ponied up the most money. The Department presented evidence in court – including emails from Cue and others at Apple – that Apple had concerns about Google’s data privacy practices, believing them not to be stringent enough. The Justice Department implied that Apple only agreed to make Google the preferred choice on its devices because of the revenue-generating potential of doing so.

To add more fuel to the fire, Microsoft’s chief executive of advertising and web services, Mikhail Parakhin, claimed in a September 28 session that Apple executive John Giannandrea has agreed that Microsoft’s Bing is superior to Google on desktop. Nonetheless, Google is still the default search engine on the Mac.

7. Microsoft airs out details of its negotiations with Apple and Samsung

A handful of testimonies have spelled out details of Microsoft’s efforts to secure a deal with Apple to offer Bing on Apple devices.

Microsoft, according to the company’s corporate vice-president for business development, Jon Tinter, made Apple an offer that would entail sharing more than 100% of its revenue. However, Apple ultimately opted to stick with its existing partnership with Google, which Big Tech On Trial reports was offering only 60% of its revenues.

“We were just big enough to play but probably not big enough to win,” Tinter said.

The allegations would suggest that Apple’s decision to prefer Google was not motivated by money alone but that product quality and market share were likely key considerations.

Parakhin said in his September 28 testimony that he felt Apple never truly gave Microsoft a fair shot. “My impression is that Apple doesn’t really consider switching … they use us as a bargaining chip against Google.”

In his testimony, Tinter also claimed that Microsoft pitched Samsung but that discussions did not go far, as Samsung said its ongoing deal with Google rendered the conversations relatively pointless.

Like Microsoft, privacy-centric search engine DuckDuckGo claimed in testimony to have attempted to secure deals with device manufacturers. And like Microsoft, the company’s chief executive officer Gabriel Weinberg said, DuckDuckGo was turned down because Google had already secured contracts with many device makers.

Both Microsoft and the Justice Department have suggested that Apple’s decision to make Google its default search engine deters challengers from investing in making their products more formidable competitors.

Some competition experts, however, say that Google’s dominance over Microsoft in the search market isn’t necessarily unfair if Google’s product is simply superior. “Google definitely has a competitive advantage. That is why they are so popular. But they also have a competitive advantage because they are so popular,” says As Brian Albrecht, chief economist at the International Center for Law & Economics, a nonprofit research organization. “The question is why. Competitors like Microsoft have access to tons of data and high quality talent, as well as the money to spend, but they struggle to replicate Google's quality. That's not necessarily unfair, and is more often than not is the natural outcome of the competitive process.”

8. Microsoft CEO says Google’s dominance is inarguable, opines on the future of AI

The highest-profile witness to testify thus far, Microsoft’s chief executive Satya Nadella took the stand Monday, October 2, where he said the internet as we know it is essentially the “Google web.”

In a testimony that lasted over three and a half hours, the executive claimed that Microsoft, valued at $2.4tn, could not compete with Google on search.

The executive also expressed deep concern for his company’s ability to compete with Google in the AI market – a rapidly growing space expected by many experts to reshape the internet in the coming years. “Despite my enthusiasm that there is a new angle with AI, I worry a lot that this vicious cycle that I’m trapped in could get even more vicious,” he said.

Though Microsoft’s Bing Chat – an AI chatbot that made waves earlier this year with a disturbing New York Times account of the tool’s abilities and dark, human-like conversations – has proven Microsoft a formidable player in the AI space, Nadella said in his testimony that he fears Google will use its existing scale to shoulder out competition in the burgeoning market.

Microsoft itself is a backer of OpenAI, the company behind the wildly popular generative AI tool ChatGPT – a partnership that some experts say could also attract regulatory scrutiny. “Microsoft is likely to find its alliance with OpenAI challenged by regulators at some point,” says GK Digital Ventures’ Kahn. “So it had to sharpen and narrow its critique and prepare its own best defense while Google is in the hot seat.”

Microsoft has also been the subject of antitrust investigation as recently as this summer, when the Federal Trade Commission attempted to block its acquisition of gaming giant Activision Blizzard.

For advertisers watching the DOJ’s battle with Google unfold this month, the University of Pennsylvania’s Hurwitz suggests, the pressure to increase marketplace competition in search is sure to be compelling. “Google has been facing growing competition in the ad market for years, and this pressure is only continuing to grow. That’s great for advertisers. It means they have more options, and the competition pushes prices lower.”

He suggests that “advertisers should probably be doing the same thing that they’ve always been doing: thinking about their audience and the best ways to reach them.”

This is a developing story. The Drum will provide updates as it learns more.

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