By Brent Kendall
Former Google Chief Executive Eric Schmidt criticized the
government's antitrust lawsuit against the search giant as
misguided and unduly influenced by politics, as antitrust experts
said the Justice Department and the company each face pitfalls as
they head toward litigation.
The fierceness of the battle ahead came into focus Wednesday
when Mr. Schmidt offered a full-throated defense of Google.
"There's a difference between dominance and excellence," Mr.
Antitrust observers said the Justice Department could face
several challenges as it heads into a court fight, including
building a landmark case around an intangible product like internet
search and explaining why Google's alleged conduct is harmful when
it gives away its services for free. The department, they said,
also faces hard-to-answer questions about what a court could do to
remedy an anticompetitive marketplace if the government proves one
"All antitrust cases are difficult to win," said Gene Kimmelman,
a former Justice Department antitrust official and now senior
adviser to Public Knowledge, a public-interest group that has
advocated for strong antitrust enforcement in the tech sector.
"Here it's particularly tricky because you don't have a classic
price fight or market control of physical assets that people can
see and touch."
But he and other observers said Google has challenges of its
own. Those include explaining why, even though it already has a
dominant market position, Google has paid large sums of money to
business partners, including Apple Inc., so its search engine will
be the default option on mobile phones and internet browsers. Those
business deals are the central focus of the government's case.
Google has long argued that consumers can readily choose other
services, but "the first thing Google has to deal with is, if it's
so easy to switch, why is it paying billions of dollars to Apple?"
said University of Pennsylvania law professor Herbert
The Justice Department's lawsuit alleged Google, a unit of
Alphabet Inc., has long used an interlocking web of exclusionary
arrangements and business deals to lock in its status as the
preferred search provider and shut out any potential competitor.
The department said this lack of competition means there is little
room for other companies to become the Google of tomorrow, which
means consumers have few choices and are forced to accept Google's
policies, privacy practices and use of their personal data.
"If we let Google continue its anticompetitive ways, we will
lose the next wave of innovators," Attorney General William Barr
said in a statement after the lawsuit was filed.
Google said that it achieved its position by skill and ingenuity
and that it remains the market leader because it offers quality
products and services that people want to use -- which often cost
nothing. The company likened some of its agreements to a soda or
cereal brand that pays for product placement in a supermarket.
Mr. Schmidt on Wednesday described Google as having "ruthless"
competition, particularly from Microsoft Corp., whose Bing search
engine runs a distant second to Google in search volume. He
observed that while he was CEO, until 2011, he studied closely the
government's prior antitrust case against Microsoft and was careful
to avoid tripping any wires.
Speaking at The Wall Street Journal's Tech Live conference, Mr.
Schmidt described the suit as "largely driven by Republicans, at
the end of a term of a president whose polling indicates that he is
unlikely to be re-elected."
The Justice Department has denied that politics played any role
in its Google investigation. A spokeswoman declined to comment on
Mr. Schmidt's remarks.
The new lawsuit is the most aggressive against a tech sector
giant since the Justice Department sued Microsoft in 1998 on
allegations the software giant engaged in unlawful
In many ways, the new lawsuit "is almost a carbon copy of the
Microsoft case," Mr. Kimmelman said, adding that neither case was
focused on price, but on alleged harms to innovation and product
quality. The government, he said, has presented a legitimate legal
theory and can attack years of conduct by Google as it has enjoyed
overwhelming dominance in search -- and the advertising it sells
with its search results.
"What we don't know yet is how strong the facts are in the
case," he said.
Chris Sagers, a law professor at Cleveland State University,
said the government in the typical case has to show that a company
is causing anticompetitive harm in a well-defined market. "The
government's challenge could be market definition," Mr. Sagers
said. "Is search an actual market? Can a free product be a relevant
The government, he said, is going to need a crisp accessible
narrative that counters Google's longtime argument that
"competition is just one click away."
Philip Giordano, a former Justice Department antitrust lawyer
now at law firm Hughes Hubbard, said the government needs to show
Google has inflicted significant harm that affects consumers.
"People really can switch easily and would if there was a good
reason to," Mr. Giordano said. "Google works hard to make sure it
has the best search engine, so how do you make an innovation case
For Google, the company will have to grapple with the fact that
other companies don't have the copious amounts of data it
possesses, the central backbone behind a successful search engine.
"There's a barrier to entry there that Google is going to need to
address," he said.
Mr. Hovenkamp, the University of Pennsylvania professor, said
the department has a good shot of winning if it stays focused on
narrow and specific legal claims, such as its arguments against
Google's business deal with Apple to secure its place as the
default search provider for iPhone users.
The department, he said, could have brought claims under a part
of the law that prohibits contracts that restrain trade and
For now at least, the government has focused on another part of
the law that bars the unlawful maintenance of a monopoly, which Mr.
Hovenkamp said presents higher legal hurdles but could give the
department more room to seek broad business changes at Google, such
as breaking up parts of the business, if it wins.
"I believe they're going for something bigger," he said.
Rob Copeland contributed to this article.
Write to Brent Kendall at email@example.com
(END) Dow Jones Newswires
October 21, 2020 20:12 ET (00:12 GMT)
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