The US government wrapped up its main arguments against Alphabet on Thursday, as part of a trial in which the Justice Department is seeking to prove Google’s monopoly and abuse of power. Similar cases have taken place in Europe, where the tech giant’s practices are under scrutiny.
Since September, the US government has been presenting its arguments in the evidentiary phase of the trial, trying to prove that the online search leader is breaking antitrust law to stay on top.
This case, filed by the Trump administration, was the first of four aimed at reining in tech giants. The second, against Meta, was also filed during the Trump administration while President Biden’s antitrust enforcers have followed with a second case against Google, as well as one against Amazon.
On Thursday, Michael Whinston, economics professor at US university MIT and the government’s final witness, hit the high points of the government’s case.
He disagreed with Google that it had to compete with Microsoft to be exclusively pre-installed on smartphones. Google’s payments to Apple and others, totalling $26.3 billion (€24.2 billion) in 2021, were essentially monopoly profits paid to distributors, he said.
Alphabet – Google’s parent company – reported a net profit of $19.69 billion for 2023’s third quarter, up from $13.91 billion over the same period last year.
Whinston said Google had the market power to raise ad rates without losing advertisers, citing company experiments. He argued that Google’s US market share of nearly 90% meant it had little incentive to improve quality.
“When there’s not a competitive threat, they’re not making that investment. And quality is lower,” Whinston said.
John Schmidtlein, one of Google’s lawyers, reiterated that the payments were legal revenue-sharing deals that resulted from competition and were aimed at ensuring proper updates and keeping users’ data secure – one of Google’s main defences through the trial.
He also stressed that Google is popular because of its quality, pointing to reviews of other brands’ smartphones that show consumers were unhappy when Microsoft’s Bing was the phone’s default search engine.
Google also in trouble in Europe
Google’s US trial follows a great deal of legal wrangling in Europe over the past few years.
In 2017, the EU Commision fined the US multinational tech company a record €2.42 billion penalty for illegally favouring its own comparison shopping service, abusing its search engine leading position.
In September this year, Google made a last-ditch effort to try to overturn the fine issued 6 years ago by turning to the Court of Justice of the European Union (CJEU) after the General Court in 2021 already confirmed the fine.
It was the first of three penalties for anti-competitive practices that have cost Google €8.25 billion in total in the past decade.
The three cases however pale in comparison with the ongoing EU antitrust case into Google’s lucrative digital advertising business, where regulators in June threatened to break up the company.
The stakes are higher for Google in the current procedure as it concerns the company’s biggest money maker, with the advertising business accounting for 79% of total revenue last year.
The European Commission had previously launched an investigation into behaviours such as favouring its own advertising services, which could lead to a fine of as much as 10% of Google’s annual global turnover.
Google may have to sell part of its lucrative adtech business to address concerns about anti-competitive practices, EU regulators said on Wednesday, threatening the company with its harshest regulatory penalty to date.
Source: Euro News