The Justice Department is suing Google — but it’s the government’s power to police big tech that’s on trial

Google has long contested those claims, arguing it should not be penalized for becoming one of the most popular, lucrative companies in the world. But it now faces the grueling prospect that it may have to rebut those allegations in a federal court, a battle that encumbered one of its competitors — Microsoft — for years in the government’s last major antitrust challenge against a tech company seen as too big and powerful.

The case carries vast, urgent weight for both Google and the government: It could reshape broad swaths of the Mountain View, Calif.-based company’s business if the Justice Department prevails, or it could embolden tech giants in the event that federal lawyers lose. At stake is no less than Washington’s power and political willingness to watch over Silicon Valley, so the government’s gambit against Google stands to test whether roughly century-old antitrust rules are sufficiently powerful to keep the country’s technology giants in check.

On Capitol Hill, some lawmakers quickly seized on the government’s antitrust action to call again for Congress to rein in big tech companies.

“There’s no question that antitrust enforcement agencies have a responsibility to do robust enforcement, and I do not think they have done enough of it in the last couple decades,” said Rep. David N. Cicilline (D-R.I.), who recently led a House investigation into big tech.

But Cicilline stressed: “It’s one enforcement action against one company. There’s a much broader problem in the digital marketplace.”

U.S. investigators opened their probe into Google in summer 2019, building off a broader inquiry into big tech and the extent to which companies, including Apple, Amazon and Facebook, have grown into corporate behemoths to the detriment of the millions of Americans who use their services. The lawsuit filed Tuesday focuses on a slew of special deals — and in some cases, revenue-sharing partnerships and direct payments — that Google has brokered with rivals including Apple and Mozilla to ensure its search engine is the default option available to Americans seeking to query the Web.

The Justice Department views those practices as “pernicious” and anticompetitive, stressing that Google has enriched itself, foreclosed competition and violated federal antitrust laws in the process. Google, however, contends that consumers easily have the ability to switch to other rival search engines — and it that argued its successes despite that are not a sign of illegal activity. Kent Walker, the company’s chief legal officer, added Tuesday that Google remains “confident that a court will conclude that this suit doesn’t square with either the facts or the law.”

Absent a settlement, the outcome could rest in the hands of a federal judge in a Washington, D.C., district court, the same legal setting as the federal government’s challenge against Microsoft decades earlier. That historic clash appears to have greatly informed the Justice Department’s new complaint against Google, a search giant that federal lawyers described in their lawsuit as having tapped “the same playbook” as Microsoft “to sustain its own monopolies” roughly 20 years later.

The Justice Department’s strategy to link the two tech giants appears explicitly designed to “increase their prospects of success,” said William Kovacic, who formerly served on the Federal Trade Commission. Now a law professor at George Washington University, Kovacic pointed out that the government similarly argued that Microsoft essentially had forced its technology onto competitors to entrench its dominance, violating federal competition laws. In that case, the U.S. government initially prevailed in trying to break up the company, lost on appeal, then ultimately settled with Microsoft in 2001, ending years of legal wrangling that forced changes in the way it offered its Windows operating system.

“That’s a way of laying the groundwork for telling the district court you’ve seen a version of this movie before,” Kovacic said of the Google case.

The U.S. government faces a formidable foe in Google, a tech behemoth that has battled back antitrust probes globally, including in the United States, which scrutinized Google seven years ago and ultimately opted against breaking it up. The company has at its disposal a seemingly unlimited political and legal war chest that it has long put to use to quash regulation — and now is likely to bring to bear against the Justice Department if such a case comes to trial.

“In one sense, I feel sorry for the DOJ lawyers who have to try this case. It’s going to be a long battle, which in terms of resources, [means] they are going to be completely outgunned,” said George Hay, an economics expert and professor at Cornell Law School who served in the Justice Department’s antitrust division in 1970s. “They think they have the law on their side, but it remains to be seen.”

The Justice Department has struggled mightily in recent years in battling corporate conglomerates, its detractors say. It failed in its bid to quash AT&T’s purchase of Time Warner Cable, for example, and it opted against challenging the since-successful mergers of Sprint and T-Mobile, two telecom giants, as well as CVS and Aetna, a pharmacy and health insurer. The agency’s track record has frustrated some competition experts, who long have felt that the government should have a greater appetite to bring more audacious cases.

With Google, some of the company’s foremost corporate critics again had hoped the Justice Department might have put forward a more robust lawsuit: News publishers, for example, fretted that the federal government failed to focus on Google’s advertising empire. The review site Yelp, meanwhile, pointed to the tech giant’s manipulation of search results as it heralded the promise of ongoing probes by Democratic and Republican state attorneys general, who said Tuesday that they plan to forge ahead even after the federal government filed its lawsuit.

Instead, the Justice Department “brought the strongest, easiest case against Google, and it is only getting at a part of Google’s anticompetitive conduct,” said Sally Hubbard, the director of enforcement strategy at Open Markets Institute, which advocates for the breakup of tech giants. “I do think the standard for antitrust enforcers, particularly for DOJ, is [if it can] 100 percent win this case … which is too high a bar for enforcement.”

Hubbard added that she thought the Justice Department’s approach — and the government’s recent losses and missteps — as a result have “increased the pressure on Congress to reform the antitrust laws.”

Before state and federal enforcers filed their case, lawmakers embarked on their own parallel probe targeting Google and its Silicon Valley peers last year, aiming in large part to explore whether the government’s competition watchdogs had failed in meeting their mandate. Cicilline, the Democratic lawmaker who led the inquiry, ultimately concluded his roughly 16-month investigation with a sweeping report calling for stronger federal powers to probe and punish antitrust violations — in big tech and across the economy.

Such reforms require acts of Congress, where Democrats and Republicans found rare accord Tuesday in calling for an aggressive response to Google and its peers even before litigation begins. Republican Sen. Josh Hawley (Mo.), for example, stressed in a statement that “legislative solutions [are] needed to end the tyranny of Big Tech.” Rep. Jerrold Nadler (N.Y.), the Democratic leader of the House Judiciary Committee, similarly pledged “robust oversight of the antitrust laws” in response to Silicon Valley.

“The more people learn about the behavior of these large digital platforms, the more they will recognize they are gatekeepers engaged in anticompetitive conduct that allows them to maintain their enormous market power,” Cicilline said. “I think an enforcement action is one vehicle to educate my colleagues and the general public about these practices.”

View original article here Source