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The Trump DOJ “Slam Dunk” Antitrust Case Against Alphabet-Google

What’s quintessential illegal monopoly behavior?

A dominant company that is proactively, consistently, and purposefully focused on eliminating most of its business competition, not just competing on the merits, but also via illegal collusion, predation, anti-competitive acquisition, and obstruction of justice.

That quintessential illegal monopoly behavior belongs to Alphabet-Google 2007-2017.

The public evidences of Google’s patterns of collusion, predation, anti-competitive acquisition, and obstruction of law enforcement are substantial and hiding in plain sight.

They are just waiting for DOJ antitrust leadership, investigators and prosecutors to connect the dots in an up-to-date theory of the case, after organizing and synthesizing the substantial investigative evidence that already resides in the DOJ’s and FTC’s antitrust files, because of ten different U.S. Google antitrust-related investigations of Google by either the DOJ or FTC from 2007-2013.

In addition, some law enforcement conclusions and actions involving Google from 2007-2013 have been proved either wrong or ineffective with the benefit of hindsight, that now need to be addressed.

In particular, both the 2007 FTC approval of Google-DoubleClick and the 2010 FTC approval of Google-AdMob have proved with hindsight to have illegally “substantially lessened competition.”

And the FTC’s abrupt and chaotic closure of all Google antitrust matters January 3, 2013, (after Google was publicly credited with successfully helping the 2012 Presidential Reelect campaign, see: Bloomberg, Stuff.com.nz, Bloomberg, Built in Chicago, Time Magazine.), U.S. antitrust scrutiny went from intense before the election to nearly non-existent at the FTC and DOJ after January 3, 2013.

During this apparent Google antitrust pardon period, Google acquired 85 companies per Wikpedia.

The recent change in Administrations creates the opportunity for a fresh look at the available evidence without any strictures on which companies the FTC and DOJ can investigate.

If one considers the clear evidentiary patterns that emerge from a decade of Google antitrust investigations, a slam dunk U.S. v. Alphabet-Google antitrust case can come into sharp focus.

The Apparent Slam Dunk U.S. v. Alphabet-Google Antitrust Case

Starting Point: Make the case, not about Google’s discrimination of search results, like the FTC or the EU did, and where Google’s antitrust defense is relatively strongest and most developed, but make the case about the Google anti-competitive behaviors about which Google has virtually no good defenses.

That would be a pure Sherman Act Section II antitrust case about how Google has monopolized, attempted to monopolize, combined, and conspired with multiple companies and persons to monopolize many parts of the trade and commerce in the search advertising and Internet search syndication markets.

Case Focus: This would focus the U.S. v. Alphabet-Google case exactly:

on the text of Sherman Act Section II;

on the worst/criminal antitrust offenses (cartel behavior) that only the DOJ has the legal authority to prosecute;

on the epicenter of Google’s market power and extension/maintenance of its market power;

on well established DOJ/FTC market definitions;

where there is copious evidence of multiple patterns of monopolistic behavior over a period of many years; and

on objective recorded evidence of “hard core” cartel behavior that is per se illegal, and not on subjective assessments of net consumer welfare or innovation benefits under the rule of reason.

Case Foundation: The foundation on which to build a U.S. v. Alphabet-Google case is the W. Bush DOJ Antitrust Division’s November 2008 prepared Sherman Section I & II case that successfully blocked Google’s proposed Google-Yahoo ad agreement.

Many do not know that an actual 2008 Sherman Section I & II U.S. v. Google lawsuit is on file at the DOJ Antitrust Division. At the time, we learned from the DOJ Special Counsel on that matter, Sandy Litvack, that the DOJ was three hours from filing the lawsuit in Federal Court, when Google dropped the proposed illegal agreement and the DOJ dropped its blocking case.

That means the U.S. DOJ believed it could prove a Sherman Section I & II antitrust case against Google based on 2008 evidence. In the 8.5 years since, the evidence of Google’s expanding market dominances and illegal collusion, predation, anti-competitive acquisitions, and obstruction of justice, have only piled up, awaiting an updated Sherman monopolization case AKA: U.S. v. Alphabet-Google.

Current Relevance: This particular case predicate is very relevant now that the Trump DOJ Antitrust Division soon will be led by former W. Bush DOJ antitrust enforcer Makan Delrahim, upon Senate confirmation, and is currently being led on an acting basis by another W. Bush DOJ antitrust enforcer, Andrew Finch.

They are unlikely to ignore or repudiate their W. Bush colleague, DOJ Antitrust Division Chief, Tom Barnett’s, seminal Sherman Act antitrust groundwork on Google’s attempted monopolization of the search advertising and Internet search syndication markets. It is a traditional antitrust enforcement foundation to build upon, not neglect. Nor are they likely to depart significantly from Mr. Barnett’s 2006 “The U.S. Model for Criminal Enforcement of Antitrust Laws,” see here.

Since November 2008, the public evidence is also overwhelming that Google has continued and then succeeded in accomplishing what the 2008 DOJ rejection of the Google-Yahoo ad agreement tried to prevent – monopolization/cartelization of the search advertising and Internet search syndication markets.

Sadly, Google has anti-competitively achieved exactly what the 2008 threatened DOJ U.S. v. Google case tried to prevent.

Headliner Offense: The headliner and worst single illegal act Google apparently committed to successfully monopolize the search advertising and Internet search syndication businesses in the desktop and especially the mobile markets, was the apparent collusion and digital ad cartelization between Google and Facebook. (See evidence here.)

In one fell swoop, one collusive deal between Google and Facebook to stop competing against each other in their core businesses, conveniently eliminated or crippled Google’s top three and only serious competitors or potential competitors in the search advertising and Internet search syndication markets -- Facebook, Yahoo and Microsoft.

Consider Google’s massive monopolization benefits from Google apparently persuading Facebook to stop being a search advertising and Internet search syndication partner with the combined Microsoft-Yahoo in late 2014.

Per Alexa’s ranking of U.S. websites, Facebook (with 2b users and the most potential demand for a syndicated search offering) is the #3 most visited website after #1 Google and #2 Google-YouTube.

Eliminating Facebook as a syndication partner to Microsoft-Yahoo, kneecapped the syndication scale that Microsoft, Yahoo and the DOJ knew competitors needed to compete with Google.

Interestingly, in 2009 when Microsoft and Yahoo were proposing to combine Microsoft and Yahoo’s back office search operations to aggregate enough scale to compete with Google, then private antitrust lawyer Makan Delrahim, explained in Roll Call that “without the right amount of searches, you can’t have a very significant competitor.”

Since Facebook is mostly mobile, this Google-Facebook ad cartel collusion -- to deny its only syndication competitors the scale they had, and needed, to compete with Google -- has enabled Google to monopolize 96% of the U.S. mobile search market per StatCounter. Game. Set. Match.

In apparently colluding to get Facebook to forego the revenue that it was earning from a Facebook-Microsoft search syndication deal, Google anti-competitively made it no longer practical or economical to continue to compete against Google in search advertising and Internet search syndication.

After over $15b in operating losses and write-offs trying exceptionally hard to be a viable search advertising and Internet search syndication competitor, new Microsoft CEO Satya Nadella effectively admitted Google’s collusion with Facebook, made it necessary for Microsoft to sell much of its display ad capability to AOL-Verizon, and sell its Bing Maps to Uber. Microsoft also effectively had to completely cede the mobile search market space to Google, ensuring a de facto Google 96% mobile search monopoly.

And because Google predatorily forced Microsoft out of the competitive search syndication business by foreclosing it from the necessary scale with Facebook, it no longer made sense for Microsoft to have an antitrust effort, when it was clear Google had gotten a de facto antitrust pardon from the Obama Administration.

Thus, Google also effectively forced Microsoft to exit from FairSearch USA and to submit to a joint agreement to drop all regulatory complaints against each other. Game. Set. Match. Again.

Android Syndication Tying: Another big monopolistic behavior that has enabled Google to further monopolize search advertising and Internet search syndication is Google-Android’s full-line-forcing contracts with handset manufacturers and carriers, that tie/force manufacturers and carriers to have Google as default search on all Android authorized and updated devices.

Tellingly, of the 22 Android apps downloaded over a billion times per Wikipedia, 17 are Google apps and four are Facebook apps, which means 95% of top smartphone apps are controlled and coordinated by the Goobook ad cartel.

No surprise either that Google and Facebook jointly command between 85-99% of all digital advertising revenue growth,  see here and here.

More Syndication Collusion: In 2012, when Google senior executive Marisa Mayer left Google to become CEO of Yahoo, Google Chairman Eric Schmidt apparently tried to collude with his old report to break up the Microsoft-Yahoo search partnership, and do an ad agreement with Yahoo similar to the one DOJ threatened a monopolization antitrust suit over.

While unsuccessful in 2012, persistence pays off, because it appears that Google was successful in colluding with Google in 2015, inking a three-year, partial, Google-Yahoo search syndication deal.

Also in 2012, the FTC Staff Report on page 102 of its Google antitrust investigation stated: “We conclude that these agreements [“Google’s Exclusive and Restrictive Syndication Agreements”] violate Section II” of the Sherman Antitrust Act.

Additional Google Collusion Enforcements: In 2009, the DOJ sanctioned Google officially for anticompetitively colluding in the marketplace with other companies to prevent their employees from getting a fair market value for their services. The six colluding companies ultimately settled privately with the injured employees for $415m.

Importantly, last November the DOJ made the type of collusion of underpaying employees that Google got caught doing in 2009, a criminal offense going forward, underscoring the serious illegality of cartel/collusion behavior.

Again in 2009, the FTC investigated Google for potential collusion under Section 8 of the Clayton Act for having “overlapping directorates” given that Google and Apple shared board members. Google’s CEO Eric Schmidt stepped down from Apple’s board during the time Apple’s iPhone iOS and Google’s Android were the two-leading smartphone operating systems.

Google Obstruction of Law Enforcement: In addition to an apparent pattern of colluding in the marketplace to eliminate or cripple Google’s main competition and competitors, it is apparent that Google also was successful in colluding with government to shut down antitrust law enforcement scrutiny of Google.

First see the evidence here that Google got former Google execs or outside consultants positioned in most every position of commercial importance to Google as de facto “Google guardians,” in the second term of the Obama Administration, at the DOJ, the FTC, the White House, and the USPTO. They also had extraordinary White House access relative to every other company.

Second, see here for the extraordinary commercial and policy benefits that flowed to Google from having de facto “Google guardians” protecting Google from law enforcement and adverse policy developments.

Third, consider here how abrupt, chaotic and non-standard the shutdown of all FTC enforcement investigations of Google were in January 2013.

Fourth, consider here how the FTC was at the apparent beck and call of Google in issuing public statements that Google requested.

Finally, consider this telling timeline of how a top outside Google antitrust counsel, Renata Hesse, leaves Google’s employ in June 2011, 17 months later was appointed Acting DOJ Assistant Secretary for Antitrust, just when the FTC was publicly threatening to sue Google for multiple antitrust violations, then just 44 days later the FTC abruptly and chaotically shut down all FTC Google antitrust probes, and then the next day after that, the new Senate-confirmed DOJ Antitrust Chief, William Baer, was sworn into office. Convenient.

Update 6-29-17:

Google’s Prior DOJ-Punished Criminal Behavior: Some readers who may think recommending criminal prosecution of Google for criminal cartel behavior is too harsh for a company that has done so much good, may not know that the DOJ already has investigated and officially punished Google in 2011 with a $500m criminal forfeiture penalty for criminal violations of Federal drug importation laws, which forced Google to admit criminal wrongdoing, and commit to changes in Google business practices in a 2011-2013 DOJ-Google Non-Prosecution Agreement (NPA).

The criminal charges were serious.

The United States Attorney for Rhode Island and the DOJ found after an extensive investigation and sting operation, that Google willfully, systematically, over a period of years, and after repeated warnings from law enforcement, illegally profited ~$500m from advertising for known illegal drug websites selling steroids and other illegal pharmaceuticals online. Specifically, Google admitted to illegally facilitating the “unsafe and unlawful importation of prescription drugs” into the U.S.

The Rhode Island U.S. Attorney, who led the Google Criminal probe, said the Google founder and CEO “Larry Page knew what was going on.”

In addition, to engaging in a multi-year criminal conspiracy, it appears that the Google NPA may not have been seriously overseen for compliance, to make it’s lapse legitimate and legally valid.

Tellingly, the DOJ Deputy Assistant Attorney General for Antitrust for Criminal and Civil enforcement that likely would have had an oversight or sign-off role prior to the Google-criminal-NPA lapsing in the summer of 2013, just happened to be Renata Hesse, who apparently successfully orchestrated the resolution of all of Google’s antirust liabilities in late 2012, as Acting Assistant Attorney General for Antitrust from 11-19-12 to 1-3-13 -- as previously discussed above.

At the time, before the NPA was scheduled to lapse, this analyst submitted detailed evidence to the DOJ, here and here, of "The public evidence Google violated the DOJ-Google criminal non-prosecution agreement."

In a nutshell, the public evidence showed that the NPA did not deter more Google criminal activity because:

State Attorneys General are publicly charging Google continues to aid and abet criminal activity in violation of the NPA;

State Attorneys General investigators have easily found evidence of continued Google criminal advertising on YouTube;

Google has been found by the Federal Government to have violated five additional laws during the NPA probation period;

Google has spurned several obvious, common sense, measures that would help prevent more criminal activity on Google;

Google has ignored NPA prevention requirement for YouTube ads, apparently engaging in willful blindness to the NPA/law; &

Google apparently deliberately provided “false, incomplete, and misleading” representations to DOJ prosecutors.

This update is important to any potential criminal cartel investigation of Google or Google-Facebook, because it proves Google is willing and capable of engaging in a willful criminal conspiracy to violate federal criminal statutes involving many people over a period of many years.

It is telling that the alleged apparent ad cartel collusion between Google and Facebook apparently began around seven months after the Criminal NPA lapsed in August of 2013 and fifteen months after the FTC shut down any serious antirust oversight of Google in January 2013.

Context matters in a theory of a case, especially one apparently involving a broad criminal conspiracy over an extended period of time.

End of update:

Conclusion

There is a slam dunk Trump DOJ antitrust case against Alphabet-Google discussed above, that is supported with copious links to lots more evidence, if the DOJ is interested in criminally investigating the apparent Google-Facebook digital advertising cartel collusion where Google and Facebook apparently agreed to stop directly competing with each other, to profit more from dividing up the digital ad market.

It is a slam dunk U.S. v. Alphabet-Google case precisely because of the unusual circumstances of a history of ten DOJ/FTC google-related antitrust investigations; plus an apparent improper four-year Google antitrust pardon from 2013-2016; plus an exceptional baseline of antitrust investigative evidence and conclusions; plus exceptional evidence of Google’s extensive extension of its monopoly power; and finally exceptional evidence of patterns of cartelization and monopolization behaviors by Google.

It is not an easy case to bring, but if it is brought, it ultimately is a slam dunk case on the merits.

Forewarned is forearmed.

 

***

 

Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, an internetization consultancy for Fortune 500 companies, some of which are Google competitors, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests. He is also author of “Search & Destroy: Why You Can’t Trust Google Inc.” Cleland has testified before both the Senate and House antitrust subcommittees on Google and before the relevant House oversight subcommittee on Google’s privacy problems.

 

Online Winner-Take-All Platforms Antitrust Series

 

Part i: Why Did Google & Facebook Stop Competing with Each Other? [8-3-16]

 

Part ii: Google’s Information is Power, Info-poly Power [9-18-16]

 

Part iii: What No Bids for Twitter Tell Us about Google-Facebook & Online Advertising [10-21-16]

 

Part iv: Five Worst Google Antitrust Decisions [11-4-16]

 

Part 1: America’s Indefensible Media Concentration Double Standard [12-5-16]

 

Part 2: The Google-Facebook Online Ad Cartel is the Biggest Competition Problem [1-12-17]

 

Part 3: Twitter & Snap Evidence Confirm Goobook Ad Cartel Crushing Competition [2-15-17]

 

Part 4: Look What’s Happened Since the FTC Stopped Google Antitrust Enforcement [3-13-17]

 

Part 5: Google Antitrust Implications of Makan Delrahim as DOJ Antitrust Chief [3-28-17]

 

Part 6: Trump Administration Implications for Google Antitrust in EU, US & Markets [4-7-17]

 

Part 7: 6 Reasons Trump DOJ Will Take Lead from FTC in Google Antitrust Enforcement [4-13-17]

 

Part 8: Google-Russia Antitrust Deal Has Big Implications for EU Cases, Trump DOJ [4-19-17]

 

Part 9: Google Takeaways from Trump Antitrust Chief’s Senate Confirmation Hearing [5-11-17]

 

Part 10: New Evidence Google Facebook Ad Cartel Crushing Competition Market Failing [5-18-17]

 

Part 11: Alphabet-Google Big Takeaways from Trump Antitrust Chief’s Senate Answers [6-1-17]

 

Part 12: Trump Administration Lets Last Google Government Guardian Go – Michelle Lee [6-9-17]

 

Part 13: The Internet Association Proves Extreme US Internet Market Concentration [6-15-17]

 

Part 14: Why Amazon-WholeFoods Will Attract Serious Antitrust Scrutiny [6-16-17]

Part 15:  Why US Antitrust Non-Enforcement Produces Online Winner-Take-All Platforms [6-22-17]

Q&A One Pager Debunking Net Neutrality Myths