Court document reveals Google’s strategy to dodge Department of Justice

The United States District Court for the District of Columbia has ruled against Google in the anti-trust lawsuit filed by the US Department of Justice (DOJ) and a number of US states.

The court concluded that Google had violated Section 2 of the Sherman Act by maintaining its monopoly in general search services and general text advertising through the use of exclusive distribution agreements. 

According to the 286-page Memorandum Opinion court ruling, uploaded onto Politico, Google recognised the risk it would face if Apple Safari browser users were to use an alternative search engine and had calculated that it would cost Apple billions of dollars to develop and operate a global web search engine.

The court paper shows that in 2022, Google’s revenue share payment to Apple was an estimated $20bn, which is nearly double the payment made in 2020, equivalent to 17.5% of Apple’s 2020 operating profit. It also reveals that Google recognised that its search revenue would be severely impacted if Apple were to develop and deploy its own search engine as the default in Safari.

Although the court chose not to sanction Google for its failure to preserve chat evidence, the court document shows that, for years, the search engine giant had directed its employees to avoid using certain antitrust buzzwords in their communications.

Citing a March 2011 Google presentation titled “Antitrust Basics for Search Team”, the court documents show that Google directed employees to “[a]void references to ‘markets’ or ‘market share’ or ‘dominance’”, “[a]void discussions of ‘scale’ and ‘network effects’” and “[a]void metaphors involving wars or sports, winning or losing”. The Memorandum Opinion document also shows that Google urged employees to “[a]ssume every document you generate ... will be seen by regulators”.

The court document presented examples of how Google trained its employees to add its in-house lawyers on any written communication regarding revenue sharing and the MADA device-by-device licence that allows mobile device manufacturers to use Google’s proprietary mobile applications developed for the Android ecosystem. It also instructed that, when “dealing with a sensitive issue” via email, to “ensure the email communication is privileged”, which means employees could add a lawyer as an additional recipient on any email correspondence to claim the communications were legal advice. This meant that, initially, Google’s lawyers withheld tens of thousands of records on the grounds of privilege.

The plaintiffs contended that the creation of faux privileged materials “demonstrates that Google intended to harm competition through its contracting practices and its supposed procompetitive justifications were simply pretext”.

In his conclusion, judge Amit P Mehta said: “Any company that puts the onus on its employees to identify and preserve relevant evidence does so at its own peril. Google avoided sanctions in this case. It may not be so lucky in the next one.”

No company – no matter how large or influential – is above the law. The Justice Department will continue to vigorously enforce our antitrust laws

Attorney general Merrick Garland called the victory against Google “an historic win for the American people”, adding: “No company – no matter how large or influential – is above the law. The Justice Department will continue to vigorously enforce our antitrust laws.”

Assistant attorney general Jonathan Kanter said the landmark decision held Google accountable. “It paves the path for innovation for generations to come and protects access to information for all Americans,” he said. “This victory is a reflection on the tireless efforts of the dedicated public servants at the Antitrust Division and our state law enforcement partners whose work made today’s decision possible.”

While Alphabet, the parent company of Google, may have lost this case, it is likely to appeal, and any fines or changes to its business practices may take year to be enforced, as Emile El Nems, vice-president for Moody’s Ratings notes. “While today’s ruling will likely be appealed and may take years to materialise, we believe that Alphabet’s scale, continued strong execution and financial strength mitigate this legal risk and the possible ensuing financial and business model ramifications,” he said.

Google also faces continued scrutiny over its business practices from anticompetitive regulators in other regions.

In 2017, the European Commission fined Google €2.42bn for abusing its dominance as a search engine by giving illegal advantages to its own comparison shopping service. At the time, commissioner Margrethe Vestager said: “Google’s strategy for its comparison shopping service wasn’t just about attracting customers by making its product better than those of its rivals. Instead, Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results and demoting those of competitors. In 2018, it was fined €4.34bn for imposing illegal restrictions on Android device manufacturers and mobile network operators to cement its dominant position in general internet search.”

In 2023, the European Commission also informed Google of its preliminary view that the company breached European Union antitrust rules by distorting competition in the advertising technology industry (adtech). 

In the UK, the Competition and Markets Authority (CMA) has been looking at the planned roll-out of Google’s Privacy Sandbox, which would be detrimental to organisations that use third-party cookies in Chrome for tracking web usage. Following a consultation process, Google has revised its plans and will continue to support third-party cookies.

“Throughout this process, we’ve received feedback from a wide variety of stakeholders, including regulators like the UK’s CMA and Information Commissioner’s Office, publishers, web developers and standards groups, civil society, and participants in the advertising industry,” said Anthony Chavez, Google vice-president of Privacy Sandbox.

“This feedback has helped us craft solutions that aim to support a competitive and thriving marketplace that works for publishers and advertisers, and encourage the adoption of privacy-enhancing technologies.”