In October 2020 the DOJ filed against Google along with a number of other Attorney Generals from 10 plus states. Here is the general gist of the suit:

The Complaint alleges that Google’s anticompetitive practices have had harmful effects on competition and consumers. Google has foreclosed any meaningful search competitor from gaining vital distribution and scale, eliminating competition for a majority of search queries in the United States. By restricting competition in search, Google’s conduct has harmed consumers by reducing the quality of search (including on dimensions such as privacy, data protection, and use of consumer data), lessening choice in search, and impeding innovation. By suppressing competition in advertising, Google has the power to charge advertisers more than it could in a competitive market and to reduce the quality of the services it provides them. Through filing the lawsuit, the Department seeks to stop Google’s anticompetitive conduct and restore competition for American consumers, advertisers, and all companies now reliant on the internet economy.

In particular, the Complaint alleges that Google has unlawfully maintained monopolies in search and search advertising by:

  • Entering into exclusivity agreements that forbid preinstallation of any competing search service.
  • Entering into tying and other arrangements that force preinstallation of its search applications in prime locations on mobile devices and make them undeletable, regardless of consumer preference.
  • Entering into long-term agreements with Apple that require Google to be the default – and de facto exclusive – general search engine on Apple’s popular Safari browser and other Apple search tools.
  • Generally using monopoly profits to buy preferential treatment for its search engine on devices, web browsers, and other search access points, creating a continuous and self-reinforcing cycle of monopolization.

So at a high level that is what this episode talks about – those 3 main points and what is going to happen next (possibly and most likely).

Disclaimer – since this again is an episode about law we want to remind you that this write up is not quotes but a general summary. This also goes for the transcription since it is done by AI and thus not 100% accurate.

Google and Google Properties

We talk about a number of Google owned properties including how YouTube is one of the largest sites in terms of traffic and searches.

A recent study by Moz of 2.1M searches and 766K videos, YouTube accounted for 94% of all video carousel results on page one of Google, leaving little room for competition. Thanks to Dr. Pete for help as we (Dave) missed this study.

Google Antitrust Documents and Resources

Microsoft Antitrust Compared to Google Antitrust

We do talk about this a bit later on as Dave references a few articles, including some of the following points from a 2019 NY Times article:

5 Lessons From Microsoft’s Antitrust Woes, by People Who Lived It

  1. Antitrust law may be old, but it can apply to the modern tech industry.
  2. Consumer harm extends well beyond the price of products.
  3. Fight, but be flexible.
  4. Politics and public opinion matter a lot.
  5. The Microsoft case changed the industry … or so it seems.

Interesting point from the article:

Mr. Yoffie said, as he has studied the early years of Google’s rise. Without the restrictions on its behavior that were in the settlement in 2001, Microsoft could have unleashed the tactics it used against Netscape, like pressuring personal computer makers to agree to exclusive deals that would feature Microsoft’s Bing search service and exclude Google search.

“Google may have never emerged in its current form if Microsoft had not been restrained,” Mr. Yoffie said.

Baby Googles

While just a theory from 2011, again this is PURE fiction from Danny Sullivan long before he worked at Google, the Baby Google idea has been mentioned by others. We asked Steve about it a bit and here is the breakup as Danny did in his SEL article What Would A Google Antitrust Breakup Look Like?.

  • Gmetrics (Analytics & Shopping Services)
  • Gommunication (Communications)
  • Cloud (Apps & Content)
  • AdSense (Ad Products)
  • Google (Search Products)

Full Transcript

] Matt Siltala: [00:00:00] Welcome to another exciting episode of the business of digital podcast, featuring your host, Matt  and Dave roar. Hey guys, excited to have everybody join us on another one of these business of digital podcast episodes. And today we

Steve Cernak: [00:00:17] kind of have a round

Matt Siltala: [00:00:18] two, Dave, if you’re. Over there listening. How’s it going, bud?

Dave Rohrer: [00:00:22] It is round two. And there’s big updates though. So, yeah.

Matt Siltala: [00:00:25] And so what we’re talking about is, uh, we did, uh, an episode a while back on the Google. anti-trust

Dave Rohrer: [00:00:30] almost two years, by the way. Oh,

Matt Siltala: [00:00:31] hasn’t been that long,

Dave Rohrer: [00:00:32] but literally almost two years to the day from recording to recording.

Matt Siltala: [00:00:36] Well, this year has been an anomaly, so.

It’s hard to believe that it’s been two years, but this year is kind of like a blur anyway, 20, 20. But anyway, um, if any of those that have listened to the Google anti-trust one before, uh, we are going to be, um, pleasure to be joined with, uh, Stephen Cernik he’s partner of bono law in Detroit, Michigan. And we also have Elmer Boutine [00:01:00] who’s the SEO director at GTB, a Detroit area agency.

And so Steve Elmer grateful you guys are joining us again and welcome.

Steve Cernak: [00:01:10] Happy to be back.

Elmer Boutin: [00:01:11] Yeah, absolutely. Thank you for having us.

Matt Siltala: [00:01:14] Oh, this is, this is excellent. And so I’m going

Steve Cernak: [00:01:16] to kind of just

Matt Siltala: [00:01:16] turn the reigns over to Dave a little bit. He’s, uh, put this together with you guys and, and, uh, Uh, he’s got all the fun questions to ask.

So we’ll just go from there. So, uh, take it over, Dave.

Dave Rohrer: [00:01:26] Yeah. Just in case Elmer, do you want to do a quick intro? And then, uh, Steve, I imagine you have to give your lawyer spiel as well at the start. Um, so I’ll let you do your quick intro just for those that haven’t listened to the first one. Um, and then we’ll go from there.

All right.

Elmer Boutin: [00:01:43] Well, I’ll, I’ll, I’ll go first. So I’m Elmer Booton, um, I’m, uh, SEO director at GTB, which is a Detroit area based agency. I’ve been doing digital marketing for over 20 years. Um, have I hate to say that to G hate to admit that I’m getting old? Uh, but I [00:02:00] specialize in SEO, but I’ve done,

Steve Cernak: [00:02:01] um,

Elmer Boutin: [00:02:02] development, a lot of other things along the way.

And obviously, uh, because of what I do for a living, I am a big Google watcher and this case is very, very interesting. So I’m very glad we were able to have Steve come in here and help us out because he certainly has expertise in this area.

Matt Siltala: [00:02:18] Well, Elmer, you said something that, that made me, this’ll make you laugh.

When you talk about, um, how long you’ve been in the industry and how it ages you. When I tell my kids that I have read it, accounts that are older than them, they’re just blown away.

Elmer Boutin: [00:02:33] That’s good.

Steve Cernak: [00:02:36] All right. So this is Steve Saranac. And, uh, since Elmer and I went to school together, way back when I, he and I are the same age.

Um, I’m, I am an attorney at bono law. We’re a small antitrust boutique. So we only do antitrust law, uh, based out in LA Jolla, California, but I I’m in the Detroit office. Uh, and I’ve been doing this kind of work for about 30 years. Started off at general [00:03:00] motors, uh, and have, uh, done antitrust. And you’ve taught antitrust at a couple of different law schools.

Yeah. In the Michigan area as well. Uh, and, and yes, my disclaimer is that, uh, all the views that I’m expressing here today or will, are, are my own, uh, at least as of today, I get to change my mind. Um, but there’s certainly not the necessarily the views of any, uh, past present or current employer or client of mine.

Dave Rohrer: [00:03:28] Thank you. Yeah. After we had Ruth on as the first lawyer and she was like, she went into the launch, I was like, Oh, wow. That makes sense. Yeah. Anytime you guys are talking in gals. Um, I think the very first question would probably make sense is to go into the formal complaint from the DOJ. And I believe there’s technically three claims that they make, um, And that would make sense to get into.

And for those that have not listened to the first one, if you’re curious about EU and Google antitrust and a lot of [00:04:00] stuff, there’s about 40 minutes of us talking about a number of cases that have already happened. Um, feel free to go through it’s in YouTube and it’s on the site. Um, it’s number episode 78.

Go listen to it before you continue listening now. But Steve, does that make sense to get started with that? Just that the actual complaint.

Steve Cernak: [00:04:20] Yeah, let me, uh, yeah, so I’ll, I’ll do a little bit of antitrust one-on-one, but I’m really going to be focusing on. Does that make sense? Um, so, so, uh, the, the department of justice, the antitrust division.

So, you know, the federal government as well as many, but not all state attorneys general, um, have, uh, sued Google, uh, accusing them of monopolization under Sherman act, section two. So there, the, uh, the idea is the, here is that, um, uh, Google ha is a monopoly. That’s the first part and that they are doing something too.

Uh, to maintain that monopoly. So there’s needs to be [00:05:00] both a noun and a verb here. Uh, and the idea is that they are, um, uh, acting badly, uh, monopolizing, um, the market for general search services, search advertising, and general search text ads advertising in the United States through various anti-competitive and exclusionary practices.

Um, to, to, to me, I think this boils down to a couple of things that the justice department is going to have to prove it at a really high level. Uh, and that is first. That Google is a monopolist, and we can talk about that, but then second that, yeah, they are monopolizing that the, these actions that they are taking, uh, you know, vis-a-vis, uh, Apple and the, uh, in the default search engine and, uh, you know, anti forking.

Um, uh, uh, agreements on the, on the Android device that all of those add up to something that is not just harmful to other search engines, but [00:06:00] actually hurtful to competition. Um, and so, uh, you know, those, those are the two big questions that we’ll have to talk about.

Dave Rohrer: [00:06:09] I’m just writing notes. Yeah. I forgot about the, an, the Android, anti forking part of it. Um, and it’s interesting. Sorry.

Steve Cernak: [00:06:18] It’s, it’s not quite an, an after thought, but it is certainly comes second in, in the complaint. And so, and I think in a sense it is, it is second, but it’s, it’s interesting because, um, it’s, you know, it’s something that obviously they’ve got some connection to it because of their ownership of the Android

Dave Rohrer: [00:06:34] software.

Yeah. And then noun in the verb is an interesting way to think about it because we talked about it before and you just mentioned it now. You can’t just be. You just, can’t just have a lot of market share. You can’t just be the largest. You actually have to have the largest and do something. And did the DOJ kind of talk in the, in the claims, in what they said under Sherman act to [00:07:00] what Google’s done.

Steve Cernak: [00:07:02] Yeah. Um, yeah, so, uh, on the verb parts, so let’s, let’s talk about the verb, but let’s, let’s remember put a pin in it. Let’s make sure we go back and talk about the, the noun at some point as well, but the verb is, um, exclusive dealing. Um, that is, um, and this is a fairly standard antitrust claim that is that you’ve got.

You know, somebody who’s got a large market share and they, you know, tie up the key suppliers or they tie up the, the key distribution points. Um, and, and they foreclose a large share of either the supply or the, or the distribution. And so there’s remaining smaller. Uh, competitors can’t reach the market or don’t have an access to an input that they really need.

Um, and so, you know, that’s, that’s a fairly standard argument here. The, the exclusive dealing arrangement, um, that the, the justice department is focusing on [00:08:00] is, uh, Google’s. Um, uh, exclusive or that I’m sorry, default, um, uh, search engine arrangement with, with Apple, um, that is that Google spends a lot of money, pays a lot of money to Apple, to be the default search engine, um, on the, uh, you know, on the iPhone.

And that, that is preventing. Dang duck, duck go others, any other general search engines from, um, you know, reaching the market from, from being able to, you know, get the, the searches that they need in order to both build, uh, the, the scale, uh, and be successful, but also to, you know, get all of these searches so that they can, you know, their algorithm gets better and smarter.

And so people will say, yeah, you know, I, I get just as good as. A search result on, on being productive go, um, you know, as I did on, on Google. Um, so that’s, that’s the verb, that’s the, the allegedly bad thing that’s stopping those other competitors [00:09:00] from, uh, from being as good as they, as they would otherwise be.

Uh, and you know, that’s the alleged term. That’s interesting though,

Elmer Boutin: [00:09:08] Steve,

Steve Cernak: [00:09:09] because

Elmer Boutin: [00:09:09] Matt, Dave correct me if I’m wrong, but did not Apple have an agreement with Microsoft before they had the agreement with Google, for Microsoft to provide their search results. So, you know, that being the case, you know, is, is the fact that Microsoft

Steve Cernak: [00:09:27] could

Elmer Boutin: [00:09:27] outbid Google and, uh, and theoretically when their contracts ended become the default search for Apple.

Does that necessarily negate that argument?

Steve Cernak: [00:09:39] I don’t think it necessarily negates it, but yeah, that is I’m sure going to be one of Google’s defenses that is, Hey, you know, we’re, we’re not stopping, um, you know, our competitors from, from outbidding us and it’s not like at least one of our competitors, right.

Um, you know, is, is, is, is, is a huge, um, uh, you know, [00:10:00] competitor and, you know, they’ve got money to spend. Um, so I, yes, I think that that’s one of Google’s strong defenses. Um, I think the other one is, is the one, you know, you and I were committing about before we turned on the recording, uh, and that is okay, but does this, does this default, um, really stop.

Others stop users from using other search engines. Um, you know, can’t, I, you know, make being my default search engine, or even if, if, uh, Google is my default search engine, can’t I use Bing or duck, duck go, you know, anyway in, and at least in some certain, certain searches. Um, and I think that, you know, that’s going to be a key.

Uh, factual question, um, that, uh, well, you know, that you guys might have a better sense of that than I do. Um, but I think that’s one that, you know, we’re really going to be interested to see how it gets argued out in the court.

[00:11:00] Dave Rohrer: [00:10:59] The interesting thing of be about the, I think you were right, Elmer. I think it was being, but I think the reason why Google can.

Outbid being is one they’re more invested because all their money comes from Google or from search. But I think because they have a larger base of advertisers per search, they make more money. So per search coming from Apple being doesn’t make as much money. So, you know, if they’re making 5 cents per search in theory through ads, but Google is making 15, Google can really double the bid and Steve through their scale.

Or, you know, then they’re monopolistic, you know, when I’m sorry, let me rephrase that. Through their large scale of advertisers and users, they have an advantage. Um, and just to talk about it, cause the last time we talked about these numbers, it was two years ago as of most recently, and I’ll drop in it.

Stat counter droid. Android is 73% of the market. For F F [00:12:00] O S for phones and Apple is 26.5. So when you combine that by Google being in the default for both of those 99.5% or so of phones that are shipped, go with Google as the

Steve Cernak: [00:12:14] default. Yeah. Yeah, exactly. So, so that’s, so the question is, um, you know, how, how difficult is it for being or duck duck go to, to reach the customer?

If, um, Google is the default search engine for nearly 100% of the, of the mobile phones. Um, and, and, and the, the, the point here though is, and, and we get this from the old Microsoft case, um, that the justice department does not need to prove that it’s, you know, actually, you know, impossible. Uh, it’s just that it’s going to be so difficult for, for customers to, to, you know, use being or to default to being.

Um, or, or duct a go, um, that [00:13:00] they will never get that, you know, that scale that they need. Uh, and because they don’t have the scale, their algorithm will never learn as much or as well, or as quickly as Google’s does. And so their search results will never be quite as good. And so they’ll never be able to catch up all because, um, you know, they make it, the Google makes it so difficult to, you know, for customers to, um, use these other search engines.

Dave Rohrer: [00:13:28] I know you can’t speculate. So I’m just trying to think how to phrase things that doesn’t require speculation in any way. Um, or did you have another question?

Steve Cernak: [00:13:37] Well,

Elmer Boutin: [00:13:38] it’s interesting that we’re looking at this and,

Steve Cernak: [00:13:40] and we talk a lot about

Elmer Boutin: [00:13:41] the Microsoft, uh, antitrust case from so many years ago, but you know, it seems that back then, you know, Microsoft was and still is, uh, for the S for most computers, I think most desktop computers.

They were forced to make it easier to let you [00:14:00] install other browsers, which, you know, back in the day, you know, floppy desks was pretty much the only way to do it. Now it’s so easy. You could just download it and install them. Another browser is pretty easy, but I’m kind of wondering if the tables haven’t turned a bit.

Cause I imagined that Google probably

Steve Cernak: [00:14:15] argued

Elmer Boutin: [00:14:17] on the side of the justice department at that point to say, Oh yeah, Microsoft’s monopolizing the browser. Look at this. And we’re not able to get Chrome in there. Right. Now Chrome is the dominant browser and Google is the dome, but it’s search. And now, you know, I could, I could just see kind of Microsoft.

Poke it in just a little bit. And, um, and, and jumping in on that side, uh, you know, it’s, it’s, it’s kind of interesting to see how this has come full circle in that respect.

Steve Cernak: [00:14:41] Yeah, no, it definitely has an at least according to press reports. So you’re that given, given away the story here, um, it sounds like Microsoft is, is, you know, one of the people who’ve who have been running into the justice department and saying, you know, this, this is a problem.

And here’s, you know, here’s why. Uh, and, and [00:15:00] certainly before the justice department brought this case, um, um, I’m sure I know that they talked with all the other competitors as well as others in the industry, and I’m sure Microsoft is one of them. And yes, I, I suspect that was part of the story that Microsoft gave them.

Um, but, but it is interesting going back. Um, to the old Microsoft case and, yeah, you’re right. And when, uh, once again, uh, we’re, we’re showing our age, um, when I teach the Microsoft case to two students these days, um, they think of it as ancient history. Um, and, and, uh, I tell them, you know, what the issue was that, you know, Microsoft was.

Um, you know, the VX, uh, forcing all the internet service providers, you know, like AOL, um, you know, to have, uh, the, uh, internet Explorer as the default browser, uh, and, uh, and having exclusive arrangements with computer manufacturers. So Dell and Compaq and all those other [00:16:00] places, all those other manufacturers, uh, and that made it so difficult for Netscape to get its browser out there because you.

You didn’t download, um, browsers or any other software. Um, then what you did is, you know, you got these floppy disks or the CDs, and I’m sure we all remember getting those free things in the mail and throwing them away, or really to date ourselves, um, to, to see the, the free ones there at the cash register.

When you walked, you know, bought something at comp USA. Um, and yeah, you can get a free Netscape, um, a browser and load it, but that was so much more difficult for Netscape to, to do, to, you know, to reach the customer. And that the, the courts then said, yeah, you’ve the Microsoft has actually made it so difficult.

They’ve monopolized continue to monopolize that, that market. Um, and so now, yes, you’re right. They’ve made it easier for, uh, computer manufacturers and others to, to put different browsers [00:17:00] on, but you know, it’s also, yeah, the technology has changed. It’s a lot easier now, um, to. Uh, T to download a browser or download other software, we all do it all the time.

Um, that’s going to be one of the factual questions, you know, is it that it’s so difficult to change your default search engine or to use another search engine? Even if it’s not your default, that these other search engines cannot reach the customers in the same way that Netscape could not reach the customers 25 years ago.

Dave Rohrer: [00:17:36] I just read today that someone was talking about the fact that the Google antitrust happened and the w or no, I’m sorry. The Microsoft case happened. It actually opened up the door for a search engine named Google to get access. And here we are almost 20, 25 years later. And that, that company and tool and search engine [00:18:00] that came out of that is now in the same position.

It’s kind of weird. You’re talking about really going full circle.

Steve Cernak: [00:18:05] Yeah. Yeah, no, it really has. And the justice department started off their complaint with that, you know, Google was a scrappy little company, not anymore. They’re a monopolist.

Dave Rohrer: [00:18:15] Yeah. Do you want to go back to the, the noun we’ve been talking about the verb.

You wanted to talk about the nouns.

Steve Cernak: [00:18:22] Yeah. So the, you know, um, The justice department will have to show that, uh, that, uh, Google is a monopolist in end in a way, you know, you’ve mentioned some of the numbers, Dave, but in a way there’s the themes kind of easy. Uh, and yet I, I don’t think it necessarily is, uh, in certainly it’s maybe something that, that Google is going to, uh, contend with.

Yeah. So the, the market that the justice, this department is defined is a market for general search. Well, the general search services. So they’ve excluded, you know, for instance, Amazon excluded Expedia, um, [00:19:00] from, from searches and, you know, so because of that, then, you know, Um, you know, Google has, uh, an awful lot, has a very high market share.

Um, and of course they, the justice department, you know, points out the, you know, to Google has become a verb because it’s, it’s such a, um, uh, a commonplace occurrence. Um, but I, I I’m sure Google is going to do make two arguments on this side, you know, first that, okay. You know, We, we do compete in search with Amazon Expedia or, you know, others, uh, out there, these other specific, uh, special search engines.

Um, but then I’m sure because they’ve, you know, they’ve saved this practically every time they issue a press release, I’m sure they’re going to say, and by the way, yet, even if we do have a high market share competition is only a click away. Um, and you know, anybody can go ahead and very easily, um, uh, you know, use another search engine.

And [00:20:00] because of that, you know, we, while we might have a high market share, That usually means that we’ve got monopoly power. That usually means we’re a monopolist, but you know, here, even though, even if we have a high market share, we really don’t have that power. You know, we don’t have that power to raise price.

We don’t have the power to raise price. You know, on free searches. Um, so I, I think that, um, you know, Google will, will not give up on that, uh, will not stipulate that, that yes, they’re a monopolist and just worry about whether they’re monopolizing things. Uh, instead I think they will, um, you know, uh, try to push back on whether they’re actually a monopolist or not.

Elmer Boutin: [00:20:42] So, I wonder if we look at this from another angle too. So I have an iPhone, I just pulled up. I use Chrome. I prefer that as my browser, but I looked in the settings for Chrome. It is two clicks to change my default search engine in Chrome, which is Google’s product. So [00:21:00] I kind of wonder Steve, if you think that might play into it, as well as like, look, you know,

Steve Cernak: [00:21:04] you are saying

Elmer Boutin: [00:21:05] that we are a monopolist, but yet in our own products, We make it fairly easy for people to change if they want to.

Steve Cernak: [00:21:13] Yeah, no, I think that’s absolutely going to be key. I think that’s probably going to be key in the verb part that the monopolizing part, but I do think, um, you know, even in the, in the noun part, um, you know, just the idea that, you know, gosh, even. Yeah. Yeah. Even if we’ve got, you know, yeah. 94% or whatever of all of the, uh, search engine results, um, you know, we, we have to keep doing well.

Um, because others, uh, other competitors are really, you know, one click or as you pointed out, maybe just two clicks away. Uh, and you know, if we don’t do really well and continue to better serve our customers, uh, those who are doing searches. Um, you know, we’re, we’re going [00:22:00] to, uh, we’re going to lose out.

Dave Rohrer: [00:22:03] I think that is a good segue Elmer.

Um, the, so the 94% number you just mentioned is MAs thank you, dr. Pete for sending that over to me. Um, I totally missed that. They did a study of 2 million search results. There was almost 800,000 videos. They looked at the three positions. So if you do a search for like, I don’t know how to tie your shoe or something, um, anytime you most likely ask how or something, you’ll see a video of those times that a video popped up in the one, two or third slot, basically 94% of the time.

It was YouTube. YouTube is a company. The sub-company of alpha, but who Googled it? You know, alphabet owns, it’s a sister company now to Google, I wonder, will these types of properties and how they leverage their own properties. So they own, um, Elmer, Matt, someone, they [00:23:00] bought the, the booking engine that basically Expedia and all of those other companies use for 750 million at one point.

I think it was, um, if you would talk to Angie’s list, uh, Thumbtack, Yelp, you know, the review sites or any of those other service sites, there’s a number of other services that Google keeps rolling out and copycatting or verticals that they just keep taking and more and more of it is on their site or they take content.

Will any of that Steve be brought in, do you think. Um,

Steve Cernak: [00:23:33] I think, I think in, into this case that, that we’re talking about now that was brought by the, the justice department, I think. Yes. Some of that, um, we’ll, we’ll, we’ll come in. Um, but I think a lot of those questions were ones that the justice department did not bring in, at least at this point.

But remember I told you that justice department and several attorneys general brought this case. There are many other attorneys general. Um, that are [00:24:00] still, uh, looking at, at, at Google and looking at bringing cases and the theories that you are talking about are ones that we, we know that they are looking at that is, um, that either they are, are self preferencing, um, or they are, are tying, Oh, you know, one of their products due to the sale of, of, of one of their other products.

Yes. You know, some other product in the, in the alphabet, um, um, uh, universe. Uh, and I think that, uh, if those kinds of claims do not come up in this particular case, it would not be a surprised to see him in another case, um, that, uh, you know, that other AGS are, or other attorneys general are looking at bringing, uh, you know, it’s sometime probably in the next few months.

Dave Rohrer: [00:24:49] I think we’ve covered what the noun and the verb completely. What does, I don’t know if you can speak to what is a winter loss look like [00:25:00] for either the DOJ or Google? Can we talk about that?

Steve Cernak: [00:25:03] Sure. You know, for, from the justice department standpoint, uh, you know, they’ve, they’ve talked about, um, you know, looking at some sort of, uh, you know, not just behavioral remedy, I mean, so you can, you can see something like a behavioral remedy that is okay.

Google stop doing what you’re doing. Um, or, or your, you know, so stop being the exclusive, um, uh, search engine on Apple or, or, you know, something along those lines that would seem to be, um, you know, remedy that they would look at. Um, um, but, uh, the justice department is looking more at some kind of structural remedy.

So, you know, w I’m not exactly sure what that’s going to look like. Um, you know, how you would split up Google in some way. Um, but certainly the. Uh, the justice department, um, the, the head of the anti-trust division, who, who [00:26:00] is, who is not involved in this particular case, um, and is probably going to be leading, leaving the antitrust division anyway, but he’s not, has not been involved in this case because he did some work for Google before he went into the government.

Um, but the justice department more generally has, has expressed some skepticism about, uh, behavioral remedies, um, and, and, you know, wanting instead to. Um, prove their case and then have a remedy that’s just one time and done, you know, we, we, you know, solve the problem by, um, you know, changing the structure of the company in some way.

Um, so I think that’s where the justice department would like to head, uh, if, if they can, but I think that’s going to end up being difficult. Um, you know, for, for Google, um, it, to me, this is, this is just one front on a multi-front battle or war that they’re fighting, uh, and, and will continue to fight. Um, you know, with private plaintiffs, with other attorneys general that I’ve talked [00:27:00] about.

And as we talked about in the last time yeah. Uh, with investigations or lawsuits in Europe and elsewhere around the globe, um, so, you know, for them, if they can, you know, fight this off in, in, in some form or fashion in the next several months or more likely few years, um, you know, that’ll be great for them, but it won’t be the last time that they’ll have to do it.

Okay,

Dave Rohrer: [00:27:26] mr. Mr. Danny, Sullivan’s going to come throw stuff at me. There’s an article that he wrote AMR 2011 and it’s a fictional, it’s a fictional book and I, I kept double checking. I’m pretty sure that he quote unquote fictionally wrote it, but it talks about the baby. Google’s like baby bell, breaking it up.

Do you think Steve, they could go that far.

Steve Cernak: [00:27:51] Um, I guess is the answer. Yes, I

Dave Rohrer: [00:27:55] could. I could

Steve Cernak: [00:27:56] click. Could they go there? Yes. But you know what that looks like, what a [00:28:00] baby Google looks like, you know, are we going to get, you know, Ameritech and Southwest bell? Uh, and like we did out of at and T what does that look like?

I’m not, I’m not sure. Um, but you know, again, you guys might have a better sense of that or a sense of what that could look like, uh, than I do.

Elmer Boutin: [00:28:18] The thing that strikes me about that while I think it’s great

Steve Cernak: [00:28:22] to talk about when

Elmer Boutin: [00:28:25] we’re looking at organic search, natural search. I mean, that’s a free service that Google provides in order to have a platform to serve

Steve Cernak: [00:28:34] ads on

Elmer Boutin: [00:28:36] dividing that up.

May create a way that they would not be able to conduct business. And I’m kind of curious about that. Um, so maybe from your perspective, Steve, you could, you could comment on that. You know, if the government comes through and says, well, Hey, this is the way we need, you

Steve Cernak: [00:28:53] all need to break

Elmer Boutin: [00:28:53] up. Um, the baby bells was pretty easy, you know, cause they all provided the same service.

[00:29:00] Basically. They just took and divided up geographically. You

Steve Cernak: [00:29:04] can’t

Elmer Boutin: [00:29:04] really do that with Google.

Steve Cernak: [00:29:06] So how would that work?

Elmer Boutin: [00:29:08] How would they be able to even stay in

Steve Cernak: [00:29:09] business? I wonder, yeah, no, I, I think you, you would not obviously divide them up geographically, but, you know, could you create, you know, two or three different, uh, you know, general search engines and then let them go fight it out?

Um, I think at that point, Google is going to say, Hey, you know, the, the end result is likely to be that, you know, one of them is going to be the, that become the dominant. Oh, search engine and we’re, we’ll be back to where we were. Uh, and, and so, you know, that remedy, uh, it, you know, doesn’t, doesn’t get you what you really want.

You know, if at that point, if Google has, has sort of lost the case, and now we’re arguing about what the remedy is, you know, I think there. Their argument is going to be, you know, it should be behavioral in some way, you know? Okay. Yeah. We won’t be, uh, the default search engine on, on an iPhone, um, because [00:30:00] anything else is going to be a huge, uh, change to Google and it might not actually end up in the long run, um, you know, providing the relief that the justice department has asked for it.

Dave Rohrer: [00:30:17] I think the, uh, the next question would be, um, since we’ve, we’re starting to go down a bit of a theoretical what the EU has brought more cases. I think now I know there’s we talked about some cases in the past, um, about shopping and Android and, and, uh, last time there was Google was appealing. Something last time we talked in the EU, is there anything in the EU that they’ve done against Google?

That would likely or could be used here, any steps or any of the, the things that they’ve talked about?

Steve Cernak: [00:30:52] Yeah, I don’t think it would be, uh, you know, w what they’ve done in, in, in Europe. All right, is what I was calling sort of [00:31:00] behavioral remedy. And that is, but that’s really more focused on, on self preferencing that is, um, that, you know, Google needs to display the results in a certain way that does not, um, necessarily favor some other Google product.

Um, but it allows other. Um, you know, other results to, to come through in a, in a, in a better way. Um, and so those claims, I’m sorry, that that kind of remedy is what you could see here for these different claims that the justice department has brought. Um, but I think the same kind of claims, um, of, you know, self preferencing or, or tying their products together are the, probably the, the claims that the other attorneys general are.

Uh, are looking at, and so I wouldn’t be surprised if you see, you know, sort of a us version of that EU case, you know, coming down the pike.

Dave Rohrer: [00:31:54] Interesting. Um, and then as we all know, and then, you know, better than [00:32:00] us. What are the next steps? Like, you know, is this going to happen in our lifetime is going to happen before 2030? Um, like how long is this going to take?

Steve Cernak: [00:32:10] Yeah, they’re good. They’re going to try to move it along. Um, you know, expeditiously.

Um, yeah, so they they’ve. Google and the justice department and the AGS, um, have already met, uh, you know, virtually or remotely over zoom, uh, with, with the judge, um, there in DC. It’s, it’s it, it’s a judge. Who’s, who’s been involved in antitrust cases in the past. He’s also been involved in one with me in the ABA antitrust law section.

So he, he knows antitrust. Um, and he’s promised to, to move this along fairly quickly. Um, he, uh, Google told. Well Google’s next step is either to answer the complaint. Um, w you know, says here, here’s why the, the complaint is wrong, or, um, to, uh, file a motion to dismiss, which is basically if we don’t need to get to the factual, factual [00:33:00] situation, you know, just on the face of this complaint, you know, the justice department didn’t state it the right way.

They didn’t even stay at a code. Um, uh, you know, a legitimate claim, uh, and Google has said that they will decide, you know, fairly soon probably mid-November, um, whether they are going to. You know, do an answer or a file, a motion to dismiss. Uh, and then their answer is, uh, is do early to mid December. And so, you know, if they file a motion to dismiss that will get briefed and argued and decided, uh, oops, next year, um, I would say, uh, the, the, uh, opinion on something like that would be mid to late, uh, 21.

Um, or if they just decide to file an answer, you know, then you start going into. Um, uh, discovery and that will be months worth of discovery. And then I’m sure a summary judgment motion, um, you know, which would be, you know, probably the end of next year. Um, and [00:34:00] then the, then the judge makes the decision, uh, probably months after that and I’m sure it’ll get appealed.

Um, you know, so yeah, that, that’s when you’re starting to talk about 20, 22, um, before we’re getting something that, that is final or at least close to final. I, I don’t see, at least as of, at least on these claims, I don’t see something going to the U S Supreme court. Um, at least as the claims have been laid out, there’s not a lot of, of, you know, new law or new theory or anything.

I don’t think the justice department’s breaking a lot of new ground. Um, and that’s what the Supreme court’s supposed to be looking at. Um, I think if it plays out that this is just so factually intensive, it’s just an argument about, you know, what the facts are. Um, I, you know, I can see this, uh, getting sorted out by 2020, you know, sometime in 2022.

Um, I think that’s, you know, fairly aggressive, but you know, the justice department and, and Google will want to move this along as expeditiously as possible. Um, but you know, even if, even if that [00:35:00] happens, so I said there will be other suits from other attorneys general and private plaintiffs. So I don’t think, you know, we’re, we’re, we’re ever, we’re not going to be hearing the end of Google and antitrust for quite some time.

Dave Rohrer: [00:35:13] It’s interesting. They spent 11 state AGS, the federal spent 16 months building this. Is it really possible that Google could, you know, just say there’s nothing here and it could be, or do you think they’re going to probably have to answer it to some extent just to try?

Steve Cernak: [00:35:32] Yeah, I think many, I go so far as to say most.

Defendants ended up filing a motion to dismiss, as long as they’ve got something to say, to try to

Dave Rohrer: [00:35:43] do

Steve Cernak: [00:35:43] it. It’s, it’s a swing for the fences. If you, if you win great, you know, you win right away. You don’t have to spend a lot of money on discovery and the like. Um, but

Dave Rohrer: [00:35:53] also buy yourself some time

Steve Cernak: [00:35:55] yourself sometimes, but you also get a sense of, you know, you, you make the other [00:36:00] side, you make the plaintiff respond to your complaint.

I’m sorry to your arguments. And you know, maybe you narrow things. Maybe the judge says, okay, I’m going to let it, I’m going to get most of these Queens go forward, but not all of them or here’s, here’s why I’m letting it go forward. And so at least you get a sense of what the judge is thinking about, you know, so that, that can be worthwhile.

Um, you know, even, even if he ended up losing a motion to dismiss can be worthwhile to file. So

Dave Rohrer: [00:36:26] it’s like me finding 20 bucks in Vegas and just going, you know, 20 on black. And if I win great. And if I don’t, well, then, you know, I didn’t really lose

Matt Siltala: [00:36:33] much. We all know that you wouldn’t spend it on that. You’d spend it on beer day.

Dave Rohrer: [00:36:37] I have no luck. I have no luck on the rollout tables the last couple of years. So no, I would not,

Steve Cernak: [00:36:44] no. Go to Vegas and start betting and they’ll bring you the free beer.

Dave Rohrer: [00:36:47] There you go. That’s not good beer though. Um, Elmer, do you have anything else? I think those were the main, big things I wanted to talk about.

Um, I think we’ve covered most of [00:37:00] it or Steve, is there anything else we missed or we didn’t throw at you? Well,

Elmer Boutin: [00:37:03] there’s one thing that I would like to, to have Steve address if he can. And that is,

Steve Cernak: [00:37:08] you know, what is the burden of proof that

Elmer Boutin: [00:37:11] the justice department and the state AGS have to come up with? I mean, as I understand it, this is a civil case.

And how does that play into the proceedings? I mean, You mentioned the motion to dismiss could be a swing for the fences, but how does that fit into the whole thing? The

Steve Cernak: [00:37:28] burden of proof. Yeah. I’m on the motion to dismiss. Um, all the justice department has to prove is that their theory is plausible. Um, not, not probable, not likely, but, but plausible.

Uh, and so the, you know, that that’s a pretty easy hurdle to, to, to get over. Um, and so that’s why I think that so long as you’re the plaintiff for the justice department here is, is, is not breaking any new ground. That that’s probably something they get by. Um, but then they, they’ve got to show. Um, that, uh, you know, all of these actions [00:38:00] have harmed competition that it’s, you know, there’s, uh, it’s more likely than not that competition has been harmed by the actions of this monopolist.

So, you know, actions, M Annapolis, verb and noun. Um, and, uh, yes, that’s a lower standard than a criminal standard, right. Um, uh, but it’s still going to be difficult for, for them to, to prove that. And certainly the last, Oh, I don’t know, 15, 20 years it’s been difficult for any monopolization plaintiff that to, to win.

Um, and you know, that helps to explain why you don’t see too many monopolization claims, um, by the justice department, uh, you know, uh, against big companies. Um, the. Uh, you know, first I think the justice department usually thinks that, you know, their actions really are not monopolizing, but second, even if they thought that the, that it was, um, that, uh, you know, it’s, it’s, it’s, it’s a difficult standard.

Uh, it’s [00:39:00] difficult to prove monopolizing, you know, generally. Um, antitrust law as it’s interpreted today. Um, you know, there’s not want to step in into the marketplace unless it’s got a pretty good idea that, you know, the government in the form of the court stepping in is going to improve competition and not just mess it up in some way, including through unintended consequences.

So, you know, the err on the side of. Of making sure that, um, you know, letting the market take care of itself. So, you know, that will be what the justice department is going to have to overcome, um, in giving the judge, or then later on the appellate court, uh, confidence that, yes, this is one of those rare circumstances when, uh, it’s worthwhile, um, stepping in having antitrust laws step in and, and change the way the market is, is acting.

Dave Rohrer: [00:39:54] Yeah, I just don’t know what that’s going to look like. Yeah. We talked about breaking up in different things. I think it’s going to be, yeah. I [00:40:00] don’t even know. It doesn’t make sense to break it up, but we’ll see, at least not from this.

Steve Cernak: [00:40:07] Well, I think that means I wouldn’t be surprised. Uh, David, if, uh, you know, we’ll, we would still have.

Plenty to talk about not just six months, but even two years from now, uh, on this particular case.

Dave Rohrer: [00:40:20] Yeah. And you said it, and I read about it earlier. That just, there’s a, by what I say, 11 or 12 AGS. And there was one or two other groups just in the U S and there’s more probably in the EU that are saying that the last time they did something, Google basically didn’t change anything.

And now the EU, I guess, is looking at more. Yup for Google because they’re like, yeah, they paid this $4 billion fee and it didn’t change any behavior. Really, nothing has changed because of, because of all that stuff. So,

Steve Cernak: [00:40:53] and, and, you know, um, you know, the, the way this has played out, um, most, either [00:41:00] most or all of the attorneys general, um, that you joined this particular lawsuit.

We’re Republican. There are other attorneys general that are, that are Democrats that are looking at bringing their own suit. That suits would probably get combined. But, you know, maybe, maybe not depending on exactly what, what the claims are. Um, and if we do get a Biden administration, you know, it’s certainly possible that they change, um, this lawsuit in some way amended or, you know, Um, you know, uh, withdraw it and then refile it.

But I think more likely they continue to pursue it. And the other, uh, democratic state attorneys general jump in and we get an even bigger, broader, um, case against Google with more claims and you know, more plaintiffs. Um, so yeah, I, I suspect this is only going to grow, uh, for the foreseeable future before it starts shrinking or before we figure out what the end game might look like.

Dave Rohrer: [00:41:58] Last question, would that be [00:42:00] good for Google or bad or good for the DOJ or bad? If it was to grow, is it, you know, w then becomes like a scattered, like we’re just throwing as many things up against the wall or is that actually hurt?

Steve Cernak: [00:42:12] Yeah, no, no, those are, those are great questions and I’m sure that all sides have thought about it.

And I don’t think there’s an easy answer for you, the defense or the plaintiff. Yeah, because if you’re the plaintiff, um, you’re the justice department, you kind of like to have your own case and you know, you know how you’re going to. Um, how you’re going to run it and somebody else comes in, um, and they want to run it or have their own case.

And it’s a slightly different, or maybe more than slightly different. Yeah. That could be confusing. Um, or, um, even conceivably, you know, some evidence might help you, but harm the other plaintiff’s case or vice versa, you know? Um, on the Google side, I don’t know. I mean, you’d probably like to have. You know, fewer forums where you have to fight.

[00:43:00] Um, and so if you, you know, if we know that the other AGS are going to bring their, their lawsuit, maybe you want them to, to bring it in and consolidate it. And you know, at least we have one big battle here rather than lots of little ones. But, um, if you have one big battle, boy, you better win. Yeah.

Dave Rohrer: [00:43:16] I think for Google, to me in my head, you know, would you, it’s almost like question, do you want to take on like, One big, you know, fill in the blank or a hundred of these little things, um, for Google, it’s probably, I’d rather take on one big fight because then, like you said, anything that one side or the other could, you know, could hurt themselves because if they’re trying to attack them on eight different things, one might cancel out the other and then the end, there’s really nothing to standing.

Yep. Sorry. So

Steve Cernak: [00:43:45] we’ll see. Yep. It could

Dave Rohrer: [00:43:46] be Matt Elmer, Steve, anyone else?

Steve Cernak: [00:43:50] That was super insightful.

Dave Rohrer: [00:43:51] Call it a day and we’ll reconvene in another year.

Steve Cernak: [00:43:55] I’ll put it on my calendar.

Dave Rohrer: [00:43:57] This at the same time, same bat channel another [00:44:00] year from now

Steve Cernak: [00:44:01] two years, you said

Matt Siltala: [00:44:02] never.

Dave Rohrer: [00:44:03] Well, we’ll, we’ll probably have something maybe in a year who knows?

There’s Facebook and Amazon still. So who knows we can,

Steve Cernak: [00:44:10] Oh yeah, no, the FTC is looking at both of those and

Dave Rohrer: [00:44:13] I’m sure they are.

Steve Cernak: [00:44:14] Supposedly moved here or something, maybe even still this calendar year. So there is plenty of time.

Dave Rohrer: [00:44:20] Nothing, nothing, nothing you sell on Amazon. Won’t be reproduced by Amazon within weeks.

So, Hey,

Matt Siltala: [00:44:26] Oh man. Well guys, thanks again. And, uh, just a quick reminder, uh, to everyone listening. Um, we are on iTunes. So make sure to go and give that a five star rating. We appreciate your love and that’s how we keep bringing these to you. Uh, but for C for Steve and for Elmer and Dave, I’m Matt, and thanks guys for joining us and we will hit you back on the next one of these,

Dave Rohrer: [00:44:49] but I do look at the writeup.

Um, dear God, how many notes I have and how many links. So there’ll be a ton if you want to learn, you know what everything is. [00:45:00] So thanks again. Thank you all, Marie. Thank you Steve for your time.

Steve Cernak: [00:45:03] Thank you.

Elmer Boutin: [00:45:03] Thank you for having us,



E178 – Google Antitrust 2020 Update Hosts:





The Business of Digital © 2020