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The DOJ's antitrust case against Google is risky but ambitious

The Department of Justice's latest challenge to Google's tech empire is an ambitious attempt to change the digital advertising market. However, this comes with significant risk, as it is pushing the boundaries of antitrust law.

January 27, 2023
9 minutes
minute read

The Department of Justice's latest challenge to Google's tech empire is an ambitious attempt to change the digital advertising market. However, this comes with significant risk, as it is pushing the boundaries of antitrust law.


"The DOJ is really going for it with this case," said Daniel Francis, who teaches antitrust at NYU School of Law and previously worked as deputy director of the Federal Trade Commission's Bureau of Competition. He added that the agency's monopoly case against Facebook is a big deal, and they're going to give it their all.
DOJ antitrust chief Jonathan Kanter has indicated that he is comfortable with taking risks, often saying in public remarks that it is important to bring cases that seek to challenge current conventions in antitrust law. He has said that he prefers more permanent remedies like breakups, compared to promises to change behavior. This sentiment is reflected in the DOJ's request in its latest lawsuit for the court to force Google to spin off parts of its ad business.


Antitrust experts say the Justice Department has presented a strong case against Google, alleging that the company used acquisitions and exclusionary strategies to maintain its monopoly power in the digital advertising space. If the government is successful in its lawsuit, Google could be forced to break up its business, which generated more than $50 billion in revenue in the last quarter. This would open up the market to new competition, and Google would no longer be the dominant player.
However, critics warn that the government will face significant challenges in proving its case in a court system that many progressive antitrust enforcers and lawmakers believe has taken on a myopic view of the scope of antitrust law, especially when it comes to digital markets.


Doug Melamed, a scholar-in-residence at Stanford Law School who served at the Antitrust Division, including as acting assistant attorney general, from 1996-2001 during the landmark case against Microsoft, said that if the violations they allege are proven, the remedy will be one that shakes up the market. However, he noted that it is not obvious that they will win the case.


The experts interviewed for this article said that the DOJ will face the challenge of charting relatively underexplored areas of antitrust law in order to prove to the court that Google's conduct violated the law and harmed competition without benefitting consumers. Though this may be a tall order, it could come with a huge upside if the agency succeeds, possibly expanding the scope of antitrust law for digital monopoly cases to come.


"Antitrust cases are always difficult for plaintiffs, due to decades of established case law," said Rebecca Haw Allensworth, an antitrust professor at Vanderbilt Law School. "This case is no different."


However, Allensworth noted that the government's challenges in this case may be different than in other antitrust cases.
"The main challenge in these types of cases is defining the relevant market," she said. In this case, the government argued that the relevant market is publisher ad servers, ad exchanges, and advertiser ad networks - the three sides of the advertising stack that Google has a grip on, which the DOJ said it used to shut out rivals. "I think the DOJ has a pretty strong case here."


According to William Kovacic, a professor at George Washington Law and former member of the Federal Trade Commission, the latest complaint against Google can be seen as the most complete and up-to-date draft of a critique that antitrust agencies in the U.S. and abroad have been compiling for over a decade. Google has said that the latest DOJ lawsuit is an attempt to rewrite history at the expense of publishers, advertisers and internet users. It claims that the government is trying to pick winners and losers, and that its products have actually expanded options for publishers and advertisers.


According to Francis, a professor at NYU Law and former FTC official, the DOJ’s new lawsuit against Google advances more nontraditional theories of harm than its earlier lawsuit. This makes it more likely that Google will move to dismiss the case to at least narrow the claims it may have to fight later on — a move it did not take in the earlier suit, he added.


"This case is breaking new ground and articulating theories that are right on the border of what existing antitrust law prohibits," Francis said. "We're going to find out, when all is said and done, where the boundaries of digital monopolization really lie." The Department of Justice took a gamble with this case. But if it wins, the rewards could match the risk. "This case could have a bigger impact than Microsoft," said Melamed.


Despite this, Francis warned that a court could order a less disruptive remedy, like paying damages if it finds that the government was harmed as an advertising purchaser, or simply requiring Google to stop the allegedly illegal conduct, even if it rules in the DOJ’s favor.


This antitrust case is unlikely to be concluded anytime soon. However, a key decision by the Justice Department could make it speedier than expected. The agency filed the case in the Eastern District of Virginia, which has gained a reputation as the "rocket docket" for its relatively efficient pace in moving cases along. "In my opinion, the DOJ's choice of venue signals that they want to move forward with this litigation as quickly as possible, before technological and commercial changes make it obsolete," Francis said.


He added that the judge who has been assigned to the trial, Clinton appointee Leonie Brinkema, is considered to be smart and fair. She has handled antitrust cases before, including one that Francis litigated years ago.


"I think both sides will be happy with Judge Brinkema," Francis said. "She's a fair, efficient and sophisticated judge who will move the case along quickly."
There are very few judges who have experience with a case like this one, because there have been very few digital monopolization cases decided in court.
"Any judge who hears this case will be confronted with novel issues of antitrust theory and principle," Francis said.

Kovacic
, a former FTC commissioner, said that from a strategic standpoint, the case complicates Google's defense by increasing the number and severity of antitrust enforcement challenges from public agencies. He added that the company is now being forced to defend itself in multiple forums in the US and in other jurisdictions such as the EU and India.


Kovacic
said that the large number of lawsuits and regulations can be a distraction for top management and that it is likely that Google will be more careful in its actions as a result.'


Kovacic wrote that a lack of diversity can have a negative impact on company performance.
The suit could also bolster lawmakers' efforts to legislate around digital ad markets. One proposal, the Competition and Transparency in Digital Advertising Act, would prohibit large companies like Google from owning more than one part of the digital advertising system. This would prevent Google from owning both the tools for buying and selling ads, as it currently does.


The bill is sponsored by Sen. Mike Lee, R-Utah, the ranking member of the Senate Judiciary subcommittee on antitrust. Lee has remained skeptical of some other digital market antitrust reforms, but his leadership on this bill suggests there may be a broader group of Republicans willing to support this kind of measure. This is important because it shows that there is bipartisan support for this bill.


"I welcome the DOJ's antitrust lawsuit against Google, but we need to do more to ensure that competition works for everyone," Lee tweeted following the announcement. "I will soon reintroduce my measure to promote competition in the tech sector." In a recent interview with The Washington Post, Rep. Ken Buck called the digital ad legislation "The most important bill we can move forward." Buck has backed the House version of the bill.


"This is clearly the most significant antitrust case from the DOJ division so far," Francis said. "And I think it represents a flagship effort to establish new law on the edges of monopolization doctrine. Regardless of the outcome, it's really going to contribute to our understanding of what the Sherman Act actually prohibits in tech markets."
After the House antitrust report was released, some experts are calling for a breakup of Big Tech. Here's why they believe this is necessary.

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