Google, Justice Department set for antitrust showdown on Tuesday

By Jon Swartz

The case is the culmination of antitrust probes launched against Google and other Big Tech companies over the last several years

After years of investigations, lawsuits, the threat of legislation and plenty of congressional hearings, the federal government's case against Big Tech is ready to have its big moment in court.

An antitrust clash of the titans is scheduled to start Tuesday in a federal court in the District of Columbia, where the Justice Department will square off against Alphabet Inc.'s (GOOGL)(GOOGL) Google. A federal judge will consider arguments over whether Google illegally abused its influence over online search to smother competition.

The federal government's first monopoly trial of the modern internet era comes against a backdrop of efforts to expand artificial intelligence by some of the world's most valuable companies, which already wield extend considerable power over commerce, information, entertainment and labor.

"This will draw comparisons as the biggest antitrust case since the Justice Department took on Microsoft Corp. (MSFT) a quarter-century ago," Rick Rule, an antitrust lawyer and former assistant attorney general at the Justice Department, said in an interview.

"I don't think the current [Google search] case will get quite the attention," Rule acknowledged. "As one judge told me, 'My, there are a lot of monopolists these days.' There is a lot of competing noise [among Big Tech regulation], not a singular focus. ... It is boom times for antitrust lawyers."

Still, antitrust experts are framing the trial -- which marks the culmination of anticompetitive probes launched against Google and other Big Tech companies over the last several years -- as a major test for Google's multibillion-dollar business empire, whose tentacles extend throughout the internet. The case is also a crucial barometer of the U.S. government's current aggressive posture on antitrust.

Justice Department officials argue that Google illegallyleveraged agreements with phone makers such as Apple Inc. (AAPL) and Samsung Electronics Co. and with internet browsers like Mozilla to be the default search engine for their customers, thus preventing smaller rivals from gaining access to that business.

A whopping 90% of the U.S. search-engine market goes to Google, which commands 91% of the market worldwide, according to market researcher Similarweb.

"Google is a $1.7 trillion company because they have illegal monopolies, and there is no denying that when it comes to search, Google's default search agreements block out competitors, pay companies not to compete against them and prevent better products and results from getting in front of consumers," says Sacha Haworth, executive director of the Tech Oversight Project, a technology-policy advocacy organization.

Google, which was successful in having some of the government's claims thrown out in August, contends its deals with Apple and others were not exclusive and that consumers could change the default settings on their devices to choose other search engines.

A slate of Big Tech cases to come

Next week's search case is one of several highlighting the federal government's two-year-old antitrust crusade against Big Tech.

The prolonged conflict began with regulators at the Federal Trade Commission challenging mergers and acquisitions, an effort that largely fizzled, as well as futile efforts by federal lawmakers to pass legislation to rein in tech.

The focus is now increasingly in the courtroom.

Last week, Alphabet reached a settlement in a long-running antitrust case with a coalition of 36 states and Washington, D.C., led by Utah, which claimed the company ran its app store as an illegal monopoly. Another antitrust trial case brought by the Justice Department and states over Google's advertising business is expected to start in the spring.

Read more: Google reaches settlement with 36 states over antitrust litigation

Separately, the FTC is expected to file an antitrust complaint against Amazon.com Inc. (AMZN) in September, after last-ditch talks between the two sides failed to reach a settlement. A long-rumored Justice Department case targeting Apple over its app store policies is another possibility, according to Rule.

Read more: FTC antitrust suit against Amazon coming in September: report

"DoJ should be successful, as with the ad case" in the spring, Rule said. "But Google spent a lot of time studying and learning from Microsoft's mistakes. It is a formidable foe."

Regardless of the case's outcome, it's a wake-up call for tech's largest companies -- especially as they pursue generative AI to extend their formidable reach and economic influence.

"Social media needs to be regulated, but not in the ham-handed way the government has attempted," Tom Siebel, chief executive of C3.ai Inc. (AI), said in an interview. "FTC actions used to almost guarantee you had to fold your tent. Now, everyone is taking them on."

Even if the suit is successful, critics of Big Tech believe new laws are essential.

"We need to strengthen our antitrust broadly," says Charlotte Slaiman, vice president of Public Knowledge, a nonprofit public-interest group. "We need to address self-preferencing concerns, not just in search but in other digital platforms. We need to address app store concerns. We need to break up the ad tech stack. And we need to create a new digital regulator. These are all additional legislative solutions that are still going to be needed, even if the case is highly successful."

-Jon Swartz

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09-07-23 1419ET

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