The Department of Justice’s antitrust case against Google is ambitious but fraught

Alphabet and Google CEO Sundar Pichai in Warsaw, Poland on March 29, 2022.

Mateusz Wlodarczek | Norphoto | Getty Images

Ministry of Justice latest challenge to The Google The tech empire is an ambitious turnaround for the company with the potential to reshape the digital advertising market. But along with the potential for big reward come big risks in seeking to stretch the boundaries of antitrust law.

said Daniel Francis, who studies antitrust at New York University School of Law and previously served as deputy director of the Federal Trade Commission’s Office of Competition, where he worked at Monopoly case against Facebook.

Justice Department antitrust chief Jonathan Kanter has indicated he’s comfortable with the risk, and often says in public statements that it’s important to file cases that seek to challenge existing agreements in antitrust law. He said he prefers permanent treatments like separation over promises of behavior change. This sentiment comes through in the Department of Justice’s request in the recent lawsuit it took to court to force it The Google To disperse parts of its advertising activity.

Antitrust experts say the DOJ is crafting a compelling story about the ways Google allegedly uses acquisitions and exclusionary strategies to fend off competitors and maintain monopoly power in digital advertising. It’s something that, if the government can get its way, can cannibalize the business that generated more than $50 billion in revenue for Google last quarter, which could open up an entire market where Google is currently one of the most important players.

But they warn that the government will face significant challenges making its case in a court system that many lawmakers believe has taken a shortsighted view of the scope of antitrust law, especially when it comes to digital markets.

said Doug Melamed, a resident scholar at Stanford Law School who served in the antitrust department, including acting as assistant attorney general, from 1996-2001 during the landmark case against Microsoft. “But it is not clear that they will win this case.”

challenges and strengths

The experts interviewed for this article said the DOJ would take on the challenge of painting relatively unexplored areas of antitrust law in proving to the court that Google’s behavior violated the law and hurt competition without benefiting consumers. While this is challenging, it could come with a significant upside if the agency is successful, potentially broadening the scope of antitrust law for upcoming digital monopoly cases.

“All antitrust cases are an uphill battle for plaintiffs, thanks to 40 years of case law,” said Rebecca Howe Allensworth, a professor of antitrust at Vanderbilt Law School. “This is no exception.”

But Allensworth added that the government’s challenges may be different than those found in many other antitrust cases.

“Usually the difficulty, especially in platform-related issues, is defining the market,” she said. In this case, the government has argued, the relevant market is publishers’ ad servers, ad exchanges and advertisers’ ad networks — and all three sides of Google’s ad stack have a hand, which the DOJ said has benefited from its competitors. “And here, I think, this is relatively straightforward for the Department of Justice.”

William Kovacic, who served on the Federal Trade Commission from 2006 to 2011 and is now a professor at George Washington University of Law, said in an email.

Google, for its part, has it He said The latest Justice Department lawsuit “attempts to rewrite history at the expense of publishers, advertisers and Internet users.” It claims that the government is trying to “pick winners and losers” and that its products have expanded choices for publishers and advertisers.

compared to the Ministry of Justice Previous lawsuit, which has argued that Google maintained its monopoly on search services through exclusionary contracts with phone manufacturers, this theory offers more unconventional harm theories, according to Francis, a New York University law professor and former official with the Federal Trade Commission. He added that it raises the possibility that Google will move to dismiss the case to at least narrow the range of claims it may have to fight later — a step it did not take in the previous lawsuit.

“This case breaks much more new ground and illustrates theories, or appears to express theories, that lie directly on the border of what current antitrust prohibitions,” Francis said. “And we will discover, when all is said and done, where the limits of the digital monopoly really lie.”

High stakes, high reward?

Alphabet and Google CEO Sundar Pichai in Warsaw, Poland on March 29, 2022.

Mateusz Wlodarczek | Norphoto | Getty Images

The Department of Justice took a gamble on this issue. But if it wins, the rewards may match the risks.

“In terms of the potential impact of treatment, this could be a bigger issue than Microsoft,” Melamed said.

However, Francis cautioned that a court could order a less troublesome remedy, such as paying damages if it finds the government was harmed as an ad buyer, or simply requiring Google to stop the alleged illegal behavior, even if it rules in favor of the DOJ.

Like all antitrust cases, this one is unlikely to be concluded anytime soon. However, a major decision by the Department of Justice could make it happen sooner than expected. The agency brought the case in the Eastern District of Virginia, which has earned a reputation as a “rocket file” for its relatively efficient pace of moving cases.

“What it suggests to me is that, because the time frame for antitrust litigation is so slow, the DOJ is doing everything it can in choosing the venue to ensure that this litigation moves forward before technological and business changes make it obsolete,” Francis said. .

He added that the judge assigned to the trial, Leonie Brinkema, who was appointed by Clinton, is considered smart and fair and has handled antitrust cases before, including one brought by Francis years ago.

“I can imagine that both sides will be satisfied with the appointment of Judge Brinkema to be a fair, efficient and sophisticated judge who will advance the case expeditiously,” Francis said.

However, there are hardly any judges who have experience with a case like this, simply because many digital monopoly cases are not decided in court.

“So any judge who is going to try this case is going to have boundary issues in terms of antitrust theory and principle,” Francis said.

Immediate effect

Outside the courts, a case can have a more immediate impact in other ways.

“From a strategy standpoint, the case adds significant complexity to Google’s defense by increasing the multiplicity and severity of the public agency’s antitrust enforcement challenges,” said Kovacic, a former FTC commissioner. “Massaging enforcement at home and abroad forces the company to defend itself in multiple forums in the US and in jurisdictions such as the EU and India.”

Whatever the outcome, Kovacic said the sheer volume of lawsuits and regulations could be distracting to senior management and likely lead Google to look more carefully at its actions.

“It can be a serious drag on the company’s performance,” Kovacic wrote.

The lawsuit could also lend credence to lawmakers’ efforts to legislate around digital advertising markets. one suggestion, Competition and transparency in digital advertising lawwill prevent large companies such as Google from owning more than one part of the digital advertising system, so they cannot have tools on the buying and selling side as is the case currently.

Most importantly, the bill is sponsored by Sen. Mike Lee, R-Utah, the ranking member of the Senate Judiciary Subcommittee on Antitrust. Lee remained skeptical of some Other antitrust reforms in the digital marketBut his leadership on this bill suggests there may be a broader group of Republicans willing to support this kind of measure.

“An antitrust lawsuit is fine, but it would take a long time and only apply to one company,” he told me. chirp After the Ministry of Justice announced, saying it would reintroduce the measure soon. “We need to make sure the competition works for everyone, and soon.”

Representative Ken Buck, R-Col, who endorsed the House version of the bill, called the digital advertising legislation “the most important bill we can move forward with” in a recent interview. Washington Post.

“This is clearly the hottest case to date from the Department of Justice’s antitrust division,” Francis said. “And I think it’s a groundbreaking effort to create a new law around the limits of the monopoly doctrine. And at the end of the day — win, lose or tie — it will really contribute to our understanding of what the Sherman Act actually forbids in technology markets.”

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