How big is too big? And when does a company become so big that the government is forced to step in and make it smaller? Politicians have been struggling with those questions for at least a hundred years. But as the latest generation of tech companies has taken shape, the questions are becoming more and more relevant to internet giants like Google and Facebook. There’s a new movement in Washington to break up those companies, whether through a Justice Department lawsuit or an old-school appeal to the Sherman Antitrust Act. It’s a struggle Microsoft fended off in the ‘90s, and it has only grown more urgent in the years since. As Amazon has taken a stranglehold of online retail, Jeff Bezos’ company has started to attract antitrust attention as well, with figures like Sen. Elizabeth Warren and Lina Khan taking aim at Amazon’s cutthroat competitive strategies. If it succeeds, it would be one of the most ambitious government projects in a generation — but success is still a long way off.
James Avery, who runs an ad server company for retailers called Kevel, testified he’d like to buy Google’s ad server and exchange, ideally together. Index Exchange CEO Andrew Casale is also interested. Google’s cross examination has tried to cast this interest as a way that the industry could reconsolidate under new ownership.
The government will continue its case-in-chief today, where it’s arguing for a break up of Google to restore competition to the markets for publisher ad tools. Yesterday, we heard from a publisher witness and a rival ad exchange CEO. Catch up on our coverage here.
Without a break up of its ad tech monopoly, the DOJ argues, Google will find another way to cheat.
Andrew Casale, CEO of ad exchange company Index Exchange, testifies that Google’s proposed solutions leave too much room for it to maintain dominance. Casale also says Index would consider buying AdX if Google were forced to sell it.
The government’s first publisher witness, Advance Local VP of advertising technology Grant Whitmore, wants Google to sell both AdX and its publisher ad server, DFP. The DOJ is currently asking for a DFP sale only if other remedies don’t do enough. Whitmore says Google has demonstrated it can adapt to changes and maintain its dominance.
Google attorney Karen Dunn argues that the government is seeking to go well beyond what’s needed to restore competition to the ad tech markets, and might even hurt the customers it’s seeking to help.
In the government’s opening statement, Julia Tarver Wood warns Judge Leonie Brinkema against leaving open new paths for Google to distort competition in its favor. That’s why the DOJ is asking the judge to force Google to sell its AdX exchange entirely.
In a statement outside the courthouse, Antitrust Division chief Gail Slater notes how the court known as the “rocket docket” has a statute of the tortoise and the hare outside. Speed is important in tech antitrust cases because of how quickly the markets change.
Google and the Justice Department have returned to a federal courthouse in Virginia for a two-week trial to determine how to restore competition to the advertising technology market that Google monopolized. I’ll share updates to our trial coverage stream during breaks.
A federal appeals court granted the Trump administration an emergency stay blocking Federal Trade Commissioner Rebecca Kelly Slaughter from returning to work. The lower court had called President Donald Trump’s decision to fire her “unlawful,” and reinstated her. Slaughter says the public will remain in the dark on FTC decisions in her absence. “Right now, the FTC isn’t doing the job it should be to protect consumers and competition, and Americans deserve to know why.”
The Justice Department released an unsealed indictment against Oak View Group CEO Timothy Leiweke, alleging he conspired with competitor Legends Hospitality to rig the bids for an arena project. Leiweke allegedly convinced Legends not to bid on the project in exchange for subcontracts he later reneged on. The DOJ says Oak View and Legends cooperated and entered non-prosecution agreements, including penalties of $15 million and $1.5 million, respectively.
Oak View Group said in a statement it “cooperated fully” and “is pleased to have resolved this matter with no charges filed against OVG and no admission of fault or wrongdoing.” Leiweke spokesperson Ellen Davis, however, said he “has done nothing wrong and will vigorously defend himself and his well-deserved reputation for fairness and integrity.”
Update: Added comment from Oak View and Leiweke.
[documentcloud.org]
The US District Court in Washington, DC, was the home of two of the most important tech trials in decades — plus so much more.
Democrat Alvaro Bedoya will formally step down, while continuing the legal battle against President Donald Trump’s attempted firings of him and fellow Democratic Commissioner Rebecca Kelly Slaughter. Trump’s dismissals broke with Supreme Court precedent saying presidents can’t fire independent agency members without cause. Bedoya says while serving as a commissioner has been his “dream job,” he has to take care of his family by seeking a source of income, without breaking federal ethics rules.
We’re at the end of a day-long set of closing arguments, concluding with one final request to the judge from DOJ attorney David Dahlquist to “please seize this moment in time” and order Google to change how it runs search. Judge Mehta thanks everyone for dealing with a “challenging schedule” for the trial and says, “we’ll get back to you as soon as we can,” and with that, the remedies trial portion of US v. Google is officially done.
Thank you for staying, someone whispers right next to the conference line just before things go silent — pretty sure it’s not directed at those of us listening in, but I can always dream. For now, we’ll be awaiting a ruling later this year.
Its attorney notes that an appeal in the liability case is ongoing, and Google wants that to be able to proceed. The DOJ, in a response, asks Judge Mehta to disregard the request, saying the appeal and remedies can proceed in parallel.
Mehta briefly asks how Google would recommend forming a committee that could handle all the specifics of whatever remedy is proposed, as suggested by the DOJ. Google’s attorney complains any committee could end up simply letting the DOJ — and the executive branch in general — control how the deal gets interpreted. “That delegation of authority, I submit, is a violation of due process.” Schmidtlein also brings up how broad the remit of the committee would be, covering everything from privacy to identifying competitors.
Unspoken here: the Trump administration is no fan of Google, and this deal — in Google’s interpretation — would give it a huge amount of power over the company.
We’re wrapping up final discussions about some of the more obscure remedies, and Google briefly references the issue of advertisers gaming the system if they’re provided search data. “There’s lots of problems with this,” Google’s attorney says, including significant privacy problems.
Judge Mehta has been triaging some non-Google cases to continue past 5, and we’re now back, with Mehta questioning Google’s attorney.
Mehta’s going through a final round of remedies and asking for explanations. First up: a proposed ban on self-preferencing. Government attorney explains it’s focused on search in relation to the Play Store, on-device AI, and a few other products. “Does this mean that, say, let’s say tomorrow Google launches a new product that is... Gemini... Super-Gemini. Do you mean to say if Google launched Super-Gemini, they couldn’t use Google Search to ground it?” Attorney seems to suggest banning something like that might be reasonable, though he equivocates. He says if there’s “a better way to draft” the statute, “we’re all ears.”
Mehta is, again, asking for specifics about a plan to offer incentives to try alternatives to Google. “How does Google deliver that option?” he asks. The attorney’s answer, again: a committee will decide.
Moving on from Chrome acquisitions, we’re in the final section, starting with the state attorney. Michael Schwartz is arguing for an education campaign fund that would address “habit, inertia, and brand recognition” barriers that prevent rivals from attracting users and competing with Google. Mehta asks some practical questions: how much money should be put into the fund, and who decides what the campaign to make people aware of alternatives looks like? The attorney says at a high level, it would be Mehta — who doesn’t seem thrilled about that. “I assure you, I am not qualified to tell you what is a good marketing campaign and what is not,” he says.
Schwartz says a committee could handle the details; for now, he offers a somewhat muddled explanation of how much money Google might need to contribute, reaching up to nine figures. Mehta asks if the whole idea is legal, and Schwartz tries to cite an AT&T antitrust decision — Mehta doesn’t bite. “Can you point to any case where there is a directive to a monopolist to out of pocket make an expenditure?” he asks. “We’re talking about nine figures at least.” Schwartz says all he’s got is AT&T. “The power of defaults is real,” Mehta says, but “that’s a different question than whether I can legally grant the remedy you’re asking.”
We’re back to the DOJ, whose attorney is saying Google’s claim only it can steward Chrome is wrong — and that separating Google from Chrome will, conversely, let it evolve. He struggles to cite a specific legal case that would explicitly justify an order like a Chrome divestiture, but he says looking to the body of law on mergers could be useful, and while the judge can’t require Chromium employees to stick around, he could order financial incentives or other measures that would make Google fill any empty roles.
Google’s lawyer is making a long case against the Chrome sale — essentially arguing that nobody else has the pragmatic incentives to keep developing Chromium or the ability to maintain Chrome as competently. Any divested version of Chrome will be “a shadow of the current Chrome,” he says. “I don’t see how anybody would be better off.” Also, he says, 80 percent of Chrome users are outside the US, and they’d be affected by the divestiture as well.
Schmidtlein says not only is it not justified by the law, the tangible harms outweigh “speculative benefits” to the competitive landscape. There’s “voluminous evidence” Chrome succeeded through innovation.
Mehta says the outcome of this plan is “less speculative” than many of the other proposals, and “in some sense, it’s from a judicial standpoint, a little cleaner and a little more elegant and a little less speculative than some of the other remedies.”
We’re currently hearing from a lawyer for the state lawsuit against Google, and Mehta is drilling down on a fairly salient issue: will Chromium employees actually move from Google to whoever buys it? The attorney says it’s common industry practice for workers to come with a company. That might be a reasonable claim, but it’s not a hard rule — and if it turns out not to apply here, that’s a potentially big temporary hit to Chromium’s maintenance and all the browser makers that rely on it.
Mehta asks whether a Chrome buyer would need to demonstrate it was capable of maintaining the open source Chromium project that powers numerous other browsers. “There are very few that could actually demonstrate it today,” he says. The DOJ’s attorney says there could be a negotiation with the future buyer to ensure a commitment, and people who are currently working on Chromium at Google would come over to the new owner.
