Google defends ‘better’ search product as US antitrust trial wraps up

Google is making its last attempt to fight back against a historic effort by the US Department of Justice to break the tech giant’s grip on online search, as the most significant antitrust trial in 25 years comes to a close in Washington.

A federal court in Washington began hearing closing arguments on Thursday after a 10-week trial in which the DoJ accused Alphabet, the parent company of Google, of suppressing search rivals by paying tens of billions annually for anti-competitive agreements with wireless carriers, browser developers and device manufacturers.

During the hearing on Thursday, John Schmidtlein, a lawyer from Williams & Connolly representing Google, sought to push back on claims that it had hindered rivals’ efforts to gain a foothold in online search, and argued that users had plenty of alternatives.

Unsealed court documents revealed this week that Alphabet paid Apple $20bn in 2022 alone to be the default search engine for its iPhone and Safari browser on its other devices.

“Google winning agreements because it has a better product is not a harm to the competitive process, even if it gives it scale to improve its product,” Schmidtlein told the court.

A lawyer for the government, Kenneth Dintzer, told the court that Google’s “anti-competitive conduct harms competition and is self-perpetuating”. Defaults “are a powerful way to drive searches, otherwise Google wouldn’t pay billions of dollars for them”, he added.

Amit Mehta, the judge hearing the case, noted that search “today looks a lot different than it did” 10 to 15 years ago. He pushed back on the DoJ’s contention that the quality of search had suffered due to the lack of competition, although he also noted that only two “substantial competitors” had entered the search market in the past decade.

“Doesn’t that tell us all we need to know in terms of barriers of entry?” he asked.

Mehta pressed Google’s lawyer over a question advanced by the DoJ: “If it’s all about quality, then why pay billions in revenue share?”

There was no evidence businesses had “seriously considered” alternatives to Google in the past 10 to 15 years, he added: “How is that a competitive marketplace?”

Prosecutors have also accused Google of monopolising advertising, then abusing its dominance by raising prices and “manipulating” auctions.

Google has argued that competition in search had “never been more varied or significant” and that the quality of its products drives demand. The contracts in question were shaped by counterparts such as Samsung and Apple and were open to other bidders, it added.

It is the most high-profile monopoly trial since the DoJ accused Microsoft in the 1990s of using Windows’s dominance to sideline then-pioneering web browser Netscape.

It is also one of the most significant tests for the tougher antitrust stance adopted by President Joe Biden’s administration, with a particular focus on curbing the power of Big Tech. The Federal Trade Commission, another competition regulator, has litigation pending against Meta and Amazon, while the DoJ recently unveiled a case against Apple.

Jonathan Kanter, head of the DoJ’s antitrust unit who was in the courtroom on Thursday, inherited the current case against Alphabet from the administration of Donald Trump. He has filed a separate case accusing the company of exercising monopolistic control of the digital advertising market, with a trial date set for September.

Among the witnesses at the search trial was Satya Nadella, chief executive at Microsoft, whose rival Bing search engine has failed to make significant headway, getting only 2 per cent of mobile search traffic versus Google’s 93 per cent.

Nadella had called the idea that users have a choice in internet search “bogus” due to Google’s contracts. Google countered that Microsoft had failed to sufficiently invest and offered an inferior product.

Mehta on Thursday said the government would need to prove that the default agreements had worked to prevent “competitors from competing”. The DoJ’s arguments seemed more persuasive when it came to allegedly stifling “nascent competition”, he said.

“But then how do you square that with Microsoft,” the judge asked, whose chief executive “admitted fully . . . they didn’t invest enough?”

Closing arguments are expected to wrap up on Friday, after which Mehta will rule on Google’s liability, likely before the end of the year. If Google loses, there will be proceedings to determine the appropriate punishment.

In addition to the government cases, Google has also faced civil challenges. Late last year, it lost an antitrust case brought by Epic Games against its Android app store. A federal jury found that it was suppressing competition by cutting deals with smartphone makers, networks and game developers to shut down alternatives to its Play Store, then using its position to charge a 30 per cent commission on sales. A remedy has yet to be determined.