As Google Search Test Ends, DOJ Seeks Sanctions for Missed Messages

The fate of Google’s search business is now in the hands of Judge Amit Mehta, as closing arguments concluded in the landmark trial on Friday.

The Justice Department and the plaintiff states made their latest arguments Thursday about Google’s alleged anticompetitive conduct in the search market generally, and on Friday focused on its allegedly illegal conduct in search advertising. Google has also been criticized (separately) for not retaining chat messages that the DOJ believes could have been relevant to the case.

The government is trying to show that Google has blocked distribution channels important to the overall search engine market so that potential rivals cannot develop into significant threats. It claims it did this through contracts with phone manufacturers and browser companies to be their exclusive default search engine. If the judge agrees that Google successfully excluded competition in that market, he could consider the government’s arguments about the search advertising market as evidence of anticompetitive conduct.

In his summary, DOJ attorney Kenneth Dintzer said the latest major technology monopoly ruling, USA x Microsoft, “fits like a glove” on Google. Google’s lead litigator in the case, John Schmidtlein, disagreed. In Microsoft, he said, manufacturers were coerced into doing business and customers were fed an inferior product they didn’t want. “Google won with a superior product,” he said.

“The importance and significance of this case is not lost on me,” Mehta said at the conclusion of Friday’s court proceedings. “Not just for Google, but for the public.”

If Google charges higher prices for advertising, are there suitable substitutes that advertisers would shy away from? The answer to that question could say a lot about whether or not Google has the monopoly power that the DOJ claims it has created through contracts to be the default search engine across multiple browsers and devices. Google says there are many alternatives for advertisers; the government disagrees.

Mehta appeared sympathetic to the government’s arguments, while acknowledging that alternatives to Google are robust advertising companies in their own right. Amazon, for example, isn’t exactly an inferior replacement for Google in terms of ads, Mehta said. Unlike wrapping a sandwich in newspaper instead of cellophaneMehta said, “If you move your advertising dollars from Google to Amazon, you’re not wrapping your ad in newspaper.”

But Mehta later differentiated ad platforms like Facebook and TikTok from Google. Users searching on Google have a clear idea of ​​what they are looking for, practically explaining it in the query. Social media platforms often have to infer this intent from indirect signals.

In 2017, Google ran an experiment over several weeks and discovered could increase prices by 5% to 15% and at the same time increase revenue. “Google can decide what margin it will acquire. And that’s why they’re running experiments to say, ‘Well, if we increase this by 15%, how much are we going to lose in revenue?’” Mehta told Schmidtlein. “That’s something only a monopolist could do, right?” Schmidtlein disagreed, saying it’s fair to conduct pricing experiments to find out if they’re charging the right price.

Mehta highlighted that “there is no evidence that Google ever analyzes competitor prices” for this purpose. Schmidtlein replied that it was not that simple. Because ads are sold through a complicated auction, not even Google has full insight into the pricing mechanism behind it. It’s simply not the same as a Coca-Cola representative walking by a supermarket to see Pepsi prices.

The plaintiff states — the attorneys general of 38 states led by Colorado and Nebraska who filed the lawsuit along with the DOJ — are also arguing that Google intentionally dragged its feet when creating certain features for SA360, its search marketing tool. SA360 helps advertisers manage ads across different platforms – not just Google, but competitors like Microsoft’s Bing.

The states say Google fell behind in building an SA360 feature for Bing ads when it had already implemented it for Google search ads.

“The evidence here is a little complicated for Google,” Mehta said, noting the importance of Google saying publicly at the outset that it would “play no favorites” when it came to SA360. While Google could have chosen to exclude Microsoft from the tool from the beginning, “that wasn’t the choice they made,” Mehta said.

The tool took nearly five years to ship after Microsoft requested it. “How can this not at least be inferred as anti-competitive?” Mehta asked.

Looming over the entire case is the question of whether Google intentionally deleted or failed to retain documents that could have been used as evidence in this trial.

Google had a policy of having “history turned off” in its chats by default, leaving it up to employees to determine when to turn it on for relevant conversations. The DOJ’s Dintzer called the alleged destruction of documents “unequivocally and honestly breathtaking.” He added that there is “no doubt that” the executives “intentionally turned the story off.”

“Google’s retention policy leaves a lot to be desired,” the judge said, adding disapprovingly that it was “surprising to me that a company would leave it up to its employees to decide when to preserve documents.”

Soon after, Dintzer’s slideshow paused on a slide that simply said “This is wrong,” as the DOJ lawyer pointed out that Google never apologized for the unretained documents nor promised not to do so again in the future. He said it is imperative that the court impose sanctions that demonstrate that the risk of destroying documents is not worth it. The DOJ is asking Mehta to draw an adverse inference about Google for any element of the case where he does not believe the plaintiffs have sufficient evidence. This would mean that the judge would assume that any deleted chat would have been bad for Google and would show its anti-competitive intent behind its contracts with manufacturers and browsers. The DOJ also wants Mehta to consider the destroyed chats as a sign of his anti-competitive intent.

Google lawyer Colette Connor said the company’s lawyers informed the state of Texas (one of the plaintiffs) in advance about its retention policies. Dintzer said that even this disclosure came months after the litigation was suspended and that the DOJ “clearly” would have acted if it had known.

Mehta didn’t seem to believe Google’s defense. “It’s interesting to me that Google has been very deliberate — and perhaps after seeing what happened with Microsoft — very deliberate in advising employees on what not to say,” he said. In training for employees, the company advised avoiding terms such as “market share”. (Bloomberg Law noticed this is a common practice in large companies.)

It is now up to Mehta to decide how these missing conversations should be accounted for. He didn’t provide a timeline for his decision, but in the meantime, Google and the DOJ will be preparing for their second antitrust showdown over ad tech in the fall.