Google is a monopoly and the judges want to fix that. The results are hard to predict.

Eva Dou
| The Washington Post

Google is making a ton of money, but it’s had a disastrous year in court, and its legal woes are far from over.

In late 2023, a federal jury in San Francisco found Google’s app store to be an illegal monopoly. In August, a federal judge in D.C. issued the same ruling against the backbone of its $300 billion-plus annual revenue: Google’s search engine. And on Monday, the company will face trial again in Virginia, this time on monopoly charges related to its online advertising business.

Monopoly lawsuits of this size are rare. Google is one of the few corporate giants to be brought to court under federal monopoly law since the 1970s. For decades, U.S. officials have treated high-tech companies with caution, fearing they would damage the country’s economic engines and punish examples of innovation and free enterprise.

The spate of cases against Google suggests that this reluctance is coming to an end, reflecting a shift toward greater oversight amid growing concerns across the political spectrum about the influence exerted by tech giants.

“It’s more of a 1950s antitrust approach,” said Tim Wu, a lawyer who helped craft the Biden administration’s antitrust approach. “This is the judiciary thinking about how to shake up innovation and make things happen.”

Of course, each case is different, but the few comparable precedents indicate that judges’ decisions regarding the promotion of innovation through antitrust law are not always final, as they are also influenced by unpredictable events in politics and business.

Judges in San Francisco and Washington are currently considering what so-called remedies to impose on Google to restore competition in the app store and online search markets. A decision on the app store is expected to come first from Judge James Donato of the U.S. District Court for the Northern District of California, after court arguments concluded last month in a case brought by Epic Games.

In a much broader search case filed by the Justice Department, Judge Amit P. Mehta of the U.S. District Court for the District of Columbia has already ruled that Google’s conduct was illegal and monopolistic and is now preparing to determine what remedies to impose. On Friday, Mehta scheduled hearings on the remedies for next spring and said he would issue a ruling next summer.

The Justice Department’s second case against Google, targeting the company’s online advertising business, is set to begin trial Monday in Alexandria, Virginia, meaning Google will have to fight federal prosecutors in two courts at the same time.

The internet giant has already gotten off to a bad start with Judge Leonie M. Brinkema of the U.S. District Court for the Eastern District of Virginia. The judge chastised Google at a hearing last month for deleting files requested by Justice Department prosecutors in the case, calling it “absolutely inappropriate” and “a very serious issue for Google in terms of how much credibility the Court will be able to give” to Google’s witnesses.

As the justices deliberate, there is the prospect of political unknowns. Antitrust cases have historically been stricken by changes in presidential administrations or interventions by senior officials in other departments.

The Justice Department abandoned a years-long effort to break up Microsoft in 2001 after George W. Bush became president, instead settling an antitrust case with the company. Bush raised concerns about breaking up Microsoft during the 2000 election campaign, saying he worried about the company’s future as an “engine of change.”

Decades earlier, defense officials had halted efforts to break up AT&T in the 1950s, with the defense secretary telling the Justice Department that breaking up the company, which had supplied defense technologies such as radars during the Korean War, would be “contrary to the vital interests of the Nation.” Antitrust enforcers finally prevailed over Washington security hawks and other skeptics in 1974, when they brought a monopoly case that ended in a 1982 consent decree to break up AT&T.

The November election comes at a time when the Biden administration has filed a series of lawsuits not only against Google but also against Amazon, Apple, Meta and other tech giants.

Vice President Kamala Harris has taken a populist stance on the campaign trail, pledging to continue President Joe Biden’s work of holding big corporations accountable. But she also has ties to Silicon Valley companies, dating back to her early days in California. Harris’ top adviser, Karen Dunn, is leading Google’s defense in an antitrust trial starting Monday in Virginia. Her campaign did not respond to a request for comment.

Harris’ opponent, Donald Trump, was president when the Justice Department brought its case against Google. As a candidate, he promised to reduce obstacles for companies, though he posted on Truth Social in July that authorities should “go after Meta and Google,” accusing the companies of censorship.

While both parties agree that big tech companies have become enormously powerful and require greater oversight, economic nationalism is also gaining strength, with both major political parties favoring building strong tech leaders that can compete with China.

In addition to political uncertainty, there’s also no predicting the course of business development. Antitrust crackdowns have sometimes had unexpected consequences years later, says Rob Atkinson, founder of the Information Technology and Innovation Foundation. He points, for example, to the government’s requirement in the 1950s that AT&T license its transistor patents to other companies at a low price as part of an antitrust settlement. That move leveled the global playing field, allowing the rise of new Asian electronics players that eventually outstripped some American players.

“A small Japanese company at the time called Sony got it,” Atkinson said of the transistor patent. “There was no way Sony could afford the market price.”

Google was founded in 1998 as an offshoot of a web-indexing project called BackRub that Larry Page and Sergey Brin had started a few years earlier as graduate students at Stanford University. Google’s search engine performed far better than its competitors, and as it gained momentum, it made headlines for making principled decisions, such as withdrawing from the Chinese market in 2010 over censorship concerns and encouraging employees to spend 20 percent of their time on passion projects. The company adopted the motto “Don’t be evil.”

But Google soon began to draw criticism from smaller rivals as well, who complained that it was using elbow grease and elbows, using its dominance in the search engine market to take over related sectors. Google introduced the Android operating system in 2007 and the Chrome browser and Google Play app store in 2008. Chrome has two-thirds of the global browser market, while Android accounts for about 70 percent of the global smartphone market.

Alphabet, Google’s parent company, is currently the fourth-largest company in the world, with a market capitalization of $1.9 trillion. In 2015, it retired its motto, “Don’t be evil,” changing it to “Do what’s right.”

The most serious possibility Google faces is a court-ordered breakup of its business. Legal experts say the odds of a divestiture could be higher for the Virginia advertising business if a court finds that Google’s advertising business violates the law because that unit is an ancillary unit built largely through acquisitions.

“A sell-off of the ad tech business seems like a more likely possibility in some ways,” said Phil Verveer, a former Justice Department antitrust lawyer.

Prosecutors would likely have a harder time convincing a judge to break up the search case, said Doug Melamed, a Stanford Law Visiting Fellow who previously worked at the Justice Department when it litigated Microsoft’s antitrust case. In a previous Microsoft case, the appeals court urged caution in breaking up “stand-alone” companies that had grown organically rather than through acquisition.

“There would have to be very unusual circumstances and compelling evidence to justify a solution involving the sale of assets to an organically growing company,” Melamed said.

But even if Google isn’t broken up, there’s a good chance the court will bar it from continuing the business practices it used to maintain its leading market share, such as buying the default home for its search engine on electronic devices. If its revenues are cut, Google will have a harder time keeping up with rivals like Apple, Microsoft and Amazon in expensive research and development projects.

Whatever the constraints, past cases suggest that once they are imposed, Google may face challenges in staying at the forefront of its industry. Since the breakup of AT&T in 1982, the company has gradually lost its place among the most innovative American companies. Bell Labs, AT&T’s renowned research and development unit, once one of the most technologically advanced American companies, with a long list of inventions including the transistor, the laser, and the solar cell, is now a unit of the Finnish company Nokia.

Microsoft also began to decline after the Justice Department brought antitrust charges against it in 1998. The then-dominant software company became cautious and ultimately missed the opportunity to enter the mobile market, struggling for years to make up ground as new competitors like Google took the lead.

But now it is bigger than Google again.