Public Knowledge Policy Counsel Elise Phillips watched the closing arguments of the Department of Justice’s landmark U.S. v. Google case live from the E. Barrett Prettyman United States Courthouse. View the week one and week four recap of the opening arguments, as well as what’s next.
Last week, I revisited the E. Barrett Prettyman United States Courthouse to watch the closing arguments of U.S. v. Google (2020), the Department of Justice antitrust case against Google in the search and search advertising market. Due to very strict confidentiality rules from the court, you couldn’t watch the trial unless you were there in the building and following the court’s rules prohibiting using electronic devices. However, unlike during the opening arguments, the court did permit a conference line to listen in on the trial. This was likely due to the uproar from media outlets and civil society groups that the proceedings were not accessible enough to the public. Despite this change, I found that the display of heavily redacted exhibits, placed on large televisions screens for the audience to view, still left much to be desired.
The closing arguments took place over two days, with Judge Amit Mehta grilling both parties on the merits of their claims. Here’s a brief recap:
Day One: Search
The Department of Justice highlighted Google’s decision to erode privacy and produce more targeted ads as evidence of the company flexing its monopoly power. The DOJ argued that Google’s avoidance in rolling out an incognito mode shows that the company has the freedom to innovate without competitive pressure. Judge Mehta really pushed on this argument – it seemed like the Department’s argument implied that Google has not been innovative enough, which is tricky to prove. There wasn’t much dispute on Google’s dominance in general search, but Judge Mehta pressed for further explanation as to how Google concludes that there are no barriers to entry in the market. Google argued that specialized search engines, like travel or social media sites, are suitable competitors, and that with the massive investments in artificial intelligence and machine learning the barrier to entry into search is lower than ever before. However, Google’s dominance in the already highly concentrated artificial intelligence market disproves this latter point. Moreover, this argument underscored the government’s: that scale remains the key barrier to entry not just in general search, but broadly new innovations in tech.
A common phrase I heard throughout Google’s argument here was, “We’re winning.” Google contends that it has lawfully earned a dominant position in search due to the superiority of its product. Moreover, Google stated it is lawful for a company that has acquired monopoly power to exercise it (given its duty to its shareholders). However, the government had a great response to this – if Google is truly the superior product, then why craft restrictive agreements with Android to ensure Google Search remains the default on Android? Likewise, why pay Apple, Android’s main competitor, billions of dollars to make Google Search the default search engine on iPhones?
Day Two: Search Advertising
The government discussed Google’s monopoly power in search and text ads, stating that the pricing mechanisms harm advertisers. Specifically, the Department focused on Google’s pricing mechanisms and the lack of transparency in the search advertising auction process. The government’s delineation of Google’s intentional pricing methods was particularly damning – Google employs a process called “squashing,” which switches the winner and runner-up in an auction and, in turn, boosts prices. Likewise, Google’s “Polyjuice” program makes lower bidders look like higher bidders, inflating prices and, in turn, artificially boosting Google’s profits. In response, Google stated its pricing mechanisms support product quality and create fairness in the bidding process – if the same bidder keeps winning, the quality of products/ads may diminish and there may be less innovation.
Judge Mehta had an interesting question on transparency: Does it matter that auction participants don’t know how the pricing mechanism works, when they also don’t know how the pricing mechanisms work on competing advertising platforms? In a perfect world, we would have a more competitive marketplace that would allow us to observe whether more transparency in ad pricing is a critical benefit for auction participants. But Google’s dominance and subsequent control of this market is ironclad; we simply can’t observe whether or not transparency is a by-product of competitive pressure.
Next Steps
The quest for remedies is challenging when dealing with massive companies that establish great control over our daily lives – Google’s control over access to information is a prime example. Now that the closing arguments are over, the baton has been handed to Judge Mehta to make the final determinations on each claim. But even then, we can’t predict the impact of his decision until the court establishes what remedies are required (likely months from now).
We shouldn’t wait for the outcome of the case to make necessary updates to antitrust law. Congress can pass strong legislative proposals now that strengthen antitrust enforcement and grant agencies the resources they need to confront modern anticompetitive harms. Likewise, given that tech innovation like AI so often outpaces legislation, we need a dedicated digital regulator with technical expertise to research new innovative technologies and prevent further market consolidation.