“The court of public opinion” is not a court of law.
“The truth” is not sufficient in a court of law like it is in the court of public opinion. In a court of law, the well-known legal “truth” standard and oath is telling “the truth, the whole truth, and nothing but the truth.”
Public relations, politicization, market capitalization, and acclamation, are not relevant antitrust arguments in a court of law. Google’s evident, self-serving, political definition of “the consumer welfare standard” has become damaging dogma politically undermining the legitimacy of antitrust law and antitrust law enforcement based on the facts and the rule of law standard of “the truth, the whole truth, and nothing but the truth.” [See White Paper & Evidence here.]
Whether one thinks the U.S. Government’s antitrust case against Google ultimately will prevail in court or not, will be driven largely by whether one listens only to Google’s “truths”, or whether one listens to Google’s truths and also reads the government’s formal complaint to get the “the truth, the whole truth, and nothing but the truth.” The entire justice system is based on an adversarial process to determine if the law was broken or not.
It’s sad one has to say this, but this is a U.S. Federal Court proceeding based on the law, precedent, evidence, and due process, not a crowd-sourced jury, stock price judge, or a popularity vote.
Why the U.S. v. Google Sherman Antitrust Section II Lawsuit Is Likely to Prevail in Court
Yesterday, the DOJ filed a long-expected, landmark, Sherman Act Section II complaint in the U.S. Circuit Court in the District of Columbia, alleging Google unlawfully maintained monopolies in the markets for general search services, search advertising, and general search text advertising, via anticompetitive exclusionary practices.
This initial part of an expected broader Google antitrust case is likely to ultimately prevail in court for a variety of strong reasons.
Pragmatic Winning Strategy:
This case as currently charged is exceptionally pragmatic, disciplined, and laser-focused, on Google’s core, evident, unlawful exclusionary acts memorialized in copious contracts where the Government’s statutory and evidence case is strongest and Google’s past defenses are least effective.
The DOJ is wisely not making the case 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. DOJ makes its case about Google “anti-competitive and exclusionary” business contractual arrangements, where Google’s good legal defenses are meager.
By design, this case evidently is constructed not to satisfy a broad variety of complainants and grievances, but to win, and win handily in court, on the most unlawful and harmful, “anticompetitive and exclusionary” parts of their core search and search advertising businesses that comprise over 80% of Google’s revenues and most all of Google profits and market valuation.
Think of this DOJ case strategy in part, as purposefully and highly targeted, in effectively applying Pareto’s 80-20 Rule, a widely-used business and economic axiom where one’s focusing on the right 20% of inputs can get one 80% of the desired outputs. The DOJ apparently has learned from the FTC and EU efforts to be pragmatic prosecutors and avoid U.S. antitrust charges where Google’s available legal defenses are relatively strongest.
Text-Based Case:
A reasonable reading of the Government’s complaint would see a case purposefully focused on presenting a strong “textual” Sherman Act Section II antitrust case about how Google has done exactly what Section II makes unlawful -- i.e., “monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations” -- in the defined markets for general search services, search advertising, and general search text advertising.
Hugging and building upon the Sherman Act Section II text is a winning strategy when Google has been so long and so loose with the facts and characterization of U.S. antitrust law.
Alleged Unlawfulness Based on Strongest Precedent:
The complaint makes clear it relies primarily on the most analogous U.S. antitrust precedent, U.S. v. Microsoft. It is evident in reading the complaint that the DOJ is very closely adhering to the winning formula in that case that was affirmed by the U.S. Court of Appeals of the DC Circuit in 2004.
The U.S. v. Google complaint says: “10. Google’s practices are anticompetitive under long-established antitrust law. Almost 20 years ago, the D.C. Circuit in United States v. Microsoft recognized that anticompetitive agreements by a high-tech monopolist shutting off effective distribution channels for rivals, such as by requiring preset default status (as Google does) and making software undeletable (as Google also does), were exclusionary and unlawful under Section 2 of the Sherman Act.”
In hugging so close to the Sherman Act text and the strongest and most analogous U.S. antitrust precedent here, the DOJ has made Google’s defense harder with the task of convincing the court that newer precedents should contravene the text and the most relevant, appeals-court-upheld U.S. v. Microsoft precedent.
Very Strong Fact Set:
This U.S. v. Google case is much stronger than U.S. v. Microsoft, because the Microsoft case was essentially based on an event in an immature PC computer market involving Microsoft anticompetitively harming and excluding Netscape’s browser by tying in Microsoft-OEM licensing agreements that licensers of Microsoft’s OS had to load Microsoft’s browser as the default browser.
A reasonable reading of the U.S. v. Google complaint would glean a case occurring in an ecosystem with multiple mature monopolized markets and with a decade of contractual evidence involving multiple interwoven products involved in interlocking and reinforcing contracts of many business arrangements.
The DOJ has presented copious evidence and quotes of Google’s anticompetitive and exclusionary intent, strategy, and success to prove its anticompetitive conduct charges: “111. Google is a monopolist in the general search services, search advertising, and general search text advertising markets. Google aggressively uses its monopoly positions, and the money that flows from them, to continuously foreclose rivals and protect its monopolies.”
Google is the DOJ’s Best Witness:
This targeted case is so strong because it is almost entirely based on contracts and anticompetitive and exclusionary contractual requirements enforced with penalties, that Google has conceived, written, required, and signed, i.e., contractual conduct involving multiple similar standard Google business contracts with numerous signatories that Google cannot repudiate, deny, or disavow without perjuring themselves in Federal Court or pleading their Fifth Amendment right to not incriminate themselves.
In addition, in most instances the government has incriminating documents and quotes from Google executives, managers, and employees that illuminate its knowing anticompetitive and exclusionary intent and strategy.
Google’s “Deeply Flawed” Defense:
Google’s public statement said: “Today’s lawsuit by the Department of Justice is deeply flawed. People use Google because they choose to, not because they're forced to, or because they can't find alternatives.”
It appears that Google did not read the complaint before publishing its “deeply flawed” rebuttal.
A reasonable reader of the DOJ complaint would find that most of the DOJ’s case and evidence provided copious and compelling proof of the opposite of Google’s public assertion, that Google’s anticompetitive exclusionary provisions in most of Google’s core business contracts were all about Google contractually requiring that en masse users would not have search engine choice, because their search choice would be set by Google’s default and often it could not be changed from the default if a user chose to change it.
In sum, the question Google witnesses clearly do not want to be asked in this trial under oath is if “People use Google because they choose to, not because they're forced to” why would it be necessary for Google to have so many exclusionary contracts for over a decade that force consumers to get Google search installed by default?
This is a simple case. If real consumer choice is a key to consumer welfare, the Government wins.
*****
Scott Cleland is President of Precursor®, a responsible Internet consultancy. He served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration; and Institutional Investor twice ranked him the #1 independent analyst in communications when he was an investment analyst. He is author of Search &Destroy: Why You Can’t Trust Google Inc. and publisher of Googleopoly.net.
