Why Google Didn’t Challenge the DOJ’s Antitrust Charges
Like the biggest of bruising fullbacks, Google seemed to decide last week that it can take the tackler head-on, because it can overpower any defender. The impact could be something to watch.
In October, the Department of Justice and 11 state attorneys general filed a civil antitrust lawsuit against Google, charging the search engine and data giant with “unlawfully maintain[ing] monopolies through anticompetitive and exclusionary practices in the search and search advertising markets and to remedy the competitive harms.”
The Department of Justice referenced the breakups of AT&T in 1974 and Microsoft in 1998 – actions that fractured those companies into smaller competing parts. It said Google, which accounts for almost 90 percent all search queries in the U.S., has used anticompetitive tactics to maintain and extend its monopolies.
It said Google uses exclusionary agreements that, in essence, prevent or heavily curb access to all other search engines by requiring that Google be the preset default search engine on billions of mobile devices and computers worldwide. In many cases, Google has agreements that prevent computer makers from preinstalling any competing search engine.
For instance, it pays Apple $9 billion per year to make it the exclusive default search engine for Safari – the tool most of us use to search on our phones. The deal – unavailable to any company that doesn’t have $9 billion a year available to pay Apple – nets Google $25 billion per year.
The Department of Justice suggested in its press release that Google’s practices mirrored those of Microsoft in that “antitrust laws forbid anticompetitive agreements by high-technology monopolists to require preinstalled default status, to shut off distribution channels to rivals and to make software undeletable.”
At the beginning of this type of litigation, most firms in Google’s position will file a motion to dismiss the case. They typically say that the court lacks jurisdiction, there was an error in the pleading, there is no viable claim stated for which courts can provide relief, or that the suit is not yet “ripe.” It is typically a first salvo in the fight, and allows courts to dismiss obviously frivolous suits.
But last Friday, Google chose not to take this step, instead telling the court it intends to answer the complaint by Dec. 21.
It could be that Google did not want to start out this battle by taking a loss. Headlines would say “Judge denies Google motion to dismiss,” which would give credence to the case.
But a more likely explanation is that it sees itself as that bruising fullback, ready to bulldoze through the legal process and emerge victoriously.
Google has appeared to deploy this strategy for years on the theory, as expressed by its executives, that government is not good at enforcing its orders, in part due to confusion since the lanes Google operates in are relatively new, emerging, and poorly understood.
It deployed this strategy in defense of the lawsuit filed against it by Oracle. In a case that finally made it to the Supreme Court last month after over 10 years in the courts, Google admitted it took 11,500 lines of proprietary code to make Android, its mobile operating system, but unconvincingly argued that the coding shouldn’t be copyrightable. Taking the code Oracle had spent millions to develop enabled Google to develop a mobile platform that enabled it to stay atop the online search and search advertising market.
It’s unclear how the Supreme Court will rule, of course, but Justice Samuel Alito said during oral arguments that if Google’s argument that the code it took from Oracle was not proprietary is allowed to stand, virtually no code will be subject to intellectual property protections. Google, in other words, single-handedly would have wiped out copywriting of computer code – providing a powerful disincentive to innovation for everyone outside of the company.
No one knows if Google has a play up its sleeve featuring its bruising fullback or perhaps plans for a trick play, or whether it simply has made peace with being broken up by court order.
And no one can say that its strategy, whatever it is, won’t work – it has made billions of dollars off the technology at dispute in the Oracle case with no indication of slowing down.
What we do know, however, is that the courts are about to take two serious looks at Google’s business models and practices. And if they find what the Department of Justice says it has found, that bruising fullback will have met a line he can’t bulldoze over, and his team will find itself in an entirely new situation.
Matt Mackowiak is president of Potomac Strategy Group, LLC. He’s a Republican consultant, a Bush administration and Bush-Cheney re-election campaign veteran and former press secretary to two U.S. senators.