Washington, D.C. — It was an ambitious goal from the get-go, taking on the staggering monopoly over internet search engines and search-related advertising of Google, a company that started in a garage less than 25 years ago, but now has an empire worth $1.7 trillion. The final witness for the Department of Justice, MIT economist Michael Whinston, closed the case on Nov 16 by reiterating the core tenets of the government’s challenge to Google’s monopoly power: Google’s default agreements with other Big Tech companies such as Apple exclude rivals from competition, unfairly hike prices on advertisers, and decrease innovation that could benefit consumers and other market participants.

“Google’s search monopoly creates a strong disincentive to innovation in the search market,” said Lee Hepner, Legal Counsel at the American Economic Liberties Project. “Why would rivals invest in new search features or other innovation if Google’s default agreements prevent them from obtaining any market share? Meanwhile, Google’s unrivaled access to user interaction data gives it the incredible advantage of reducing innovation risk. Google tracks what users click on, how they scroll, where their mouse hovers, and how long they stay on a given search page, information that rivals can’t access, and which Google relies on to reinforce its dominant market position. It’s an incredible monopoly feedback loop.”

Over the course of the 10-week trial, the Department of Justice and States plaintiffs argued that Google deprives rivals of access to scale and data, and that rivals are consequently unable and unwilling to compete. For its part, Google sought to hide key evidence while arguing that Google’s superior search engine is owed to innovation and engineering. Some of the most compelling evidence of Google’s illegal monopoly came in the form of Google’s own statements. Google Chief Economist Hal Varian championed the “power of defaults,” which Google then exploited to exclude rivals from becoming real competitors. Google CEO Sundar Pichai, in a 2007 email, warned of the bad “optics” of Google’s pending default search agreement with Apple. In 2012, when Apple sought the option to set alternative defaults, Google leveraged its monopoly power to maintain those exclusive defaults, which Pichai acknowledged was the result of there not being meaningful rivals to Google’s search engine.

While Google and third parties went to extraordinary lengths to hide key figures from public scrutiny, we learned that as of 2021, Google paid $26.3 billion to maintain default status across distribution channels, including Android and iPhone devices, wireless carriers, and internet browsers from Apple Safari to Mozilla Firefox. In the waning days of the trial, an expert witness for Google, Kevin Murphy, a professor of economics at the University of Chicago, accidentally let slip that Google shares 36% of its ad revenue derived from Apple devices to Apple. Outside estimates have suggested that revenue share could be $20 billion per year to maintain the Google-Apple contract, one of the most important contracts governing online information flows. Douglas Oard, a Computer Science professor at the University of Maryland, got to the heart of why Google was willing to pay so much money to maintain defaults: user data. On Wednesday, Oard testified, “The cost of storing data is expensive, and when the value of data goes down, Google would stop storing it. Google has not stopped [storing] it yet.”

The final days of the trial also included testimony about the economic incentives of alternatives to Google’s default search agreements. Experts disputed the extent to which search engines are incentivized to innovate under current conditions, and the DOJ’s expert witness spoke to the greater incentives to innovate based on “unconditional” default agreements, which allow distributors and end-users to choose their own search engines. In effect, the DOJ wrapped its case against Google by hinting at potential remedies it might seek if it prevails in the liability phase of the trial.

It’s a long road ahead. Google and the DOJ will file proposed statements of fact, conclusions of law, and post-trial briefs with the court by February 9. They then have until March 22 to reply to each others’ briefs. Judge Amit Mehta has scheduled closing arguments May 1-3, 2024. There is no deadline for a ruling, but the expectation is that the court will rule sometime in Summer 2024.

Learn more at USvGoogle.org.

Learn more about Economic Liberties here.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.