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The Battle of Experts
Day 33-34: The past engagements of Google's economic expert Mark Israel have come into focus on both direct and cross-examination
For the last two days of trial, we’ve heard testimony from Google’s economic expert witness, Dr. Mark Israel.1 On Thursday, Israel was direct-examined for almost the entire day by Google, and he has since faced several hours of cross-examination by the DOJ. Both the DOJ and the States still have more questions for him, so he will return to the stand on Monday.
Like the economic experts called by the DOJ and the States — Professors Michael Whinston and Jonathan Baker — Dr. Israel has impressive credentials. He has a PhD in economics from Stanford and spent several years teaching at Northwestern.
Unlike Whinston and Baker, though, Israel left academia. For much of the last two decades, he has worked full-time as an expert economic witness and consultant. On Thursday during Google’s direct-examination, it became clear for the first time that Israel’s background would carry some special significance in this case.
During Judge Mehta’s first full year on the bench in 2015, he granted the FTC’s motion for a preliminary injunction against a $8.2 billion merger between Sysco and US Foods. That ruling directly led to the competitors abandoning the deal entirely. Israel was the FTC’s economic expert witness in that case, and Judge Mehta specifically credited Israel’s conclusions as being “more persuasive than that advanced by Defendants’ expert.” Much of Judge Mehta’s 88-page opinion was spent discussing Israel’s testimony and analysis.
My article from a couple of weeks ago provides some more details, but the Sysco case featured a market definition issue with clear parallels to a critical market definition issue in this case: whether the function of general search engines as a “one-stop shop” means they compete in a relevant antitrust market from which other vertical search providers like Amazon and Yelp are excluded.
Israel’s analysis supported a one-stop shop theory in the Sysco case, but he’s refuting that kind of theory applying to this case. Judge Mehta brought that up early on during Israel’s direct-examination testimony on Thursday morning. Here’s exactly what Judge Mehta asked Israel:
So to draw an analogy that's sort of near and dear to our hearts, some time ago we talked about broadline distribution. And like broadline distribution, which was intended to provide a variety of different types of foods and services to particular vendors of all different shapes and sizes, the advantage was that you could one-stop shop, get everything you needed through the broadline. There's some analogy here, and I query -- “query,” no pun intended -- where in your mind, if you will, does the analogy break down?
Israel’s response was lengthy, but he explained his view that the difference lies in whether or not consumers are looking to buy the product(s) at issue as a bundle. Here are some of the key snippets from his answer to Judge Mehta:2
There's two separate concepts in economics. One is a bundle market, which is what you're describing, which is, I'm going to buy a bundle. I'm going to decide where I'm going to get 50 things, and I'm going to make that decision at one time. That applied in Sysco. I don't see that as applying here.
. . .
The user usually sits down and wants to get shoes or wants to get travel, they say, who can answer my query now? And the fact that I used Google five minutes ago to look up shoes or who the seventh president was doesn't mean that I'm not going to go to Expedia for my travel services. They're just not linked in that way.
. . .
The other concept is a cluster market, which is, they really are different things. I can group some of them together for analytical convenience because I can group travel together, even though there's lots of queries, because if I group it together, I see basically the same component. Different travel queries are still distinct, but I can look at them as a group because it gives me a good answer of who the competitors are.
It was after 4:00 PM on Thursday by the time DOJ began its cross-examination of Israel, but DOJ wasted very little time before asking Israel about another case he worked on in the past.
That case was US v. American Airlines Group, in which Judge Sorokin from the District of Massachusetts struck down the “Northeast Alliance” between American Airlines and JetBlue, ruling that the NEA partnership “plainly violated” Section 1 of the Sherman Act. Israel had served as the lead-expert for the defendants in the case.
The issues in that case were less analogous to issues in this case against Google — but that wasn’t the reason DOJ wanted to ask Israel about it. Instead, it was a clear attempt to attack Israel’s credibility, as the DOJ confronted Israel with several criticisms that Judge Sorokin wrote about Israel in his opinion. Here are some of the lines from that opinion, which the DOJ read aloud from while Israel was on the stand:
“In his lengthy testimony, Dr. Israel also demonstrated a misunderstanding and misapplication of antitrust concepts, rendered opinions based on false assumptions, and failed to account for the circumstances presented by the NEA.”
“When it comes to Dr. Israel's analysis predicting the NEA's benefits, his projections are contaminated by his reliance on scenarios designed and selected by the defendants.”
“Moreover, each defense expert exhibited during his testimony, to varying degrees, the demeanor and tone of an advocate invested in the outcome of this case.”
Footnote: “This was especially the case with respect to Drs. Lee and Israel. It stood in marked contrast to the forthright manner in which Dr. Miller addressed the Court.”
“For these reasons, and having considered his demeanor and evaluated the basis for all of his testimony, the Court finds Dr. Israel's opinions rendered in this case are entitled to no weight.”
These kinds of credibility attacks on expert witnesses are not necessarily just side-shows. Reflecting on his role as special trial counsel for the DOJ in its case against Microsoft 25 years, David Boies commented that “credibility matters the most in the most complex, science-based cases, because it is in those cases that the judge … is less capable of deciding for themselves whether what the witness is saying makes sense or not.”
Judge Sorokin echoed a similar sentiment in his NEA opinion: “[D]espite its unusual complexity, this case requires the Court to call upon familiar tools of the judicial trade — observations of witness demeanor, common sense, and a general understanding of human behavior — as it evaluates the credibility and assesses the motivation of people describing their roles in conceiving, debating, and implementing business decisions on behalf of their employers.”
On Friday, the DOJ’s questioning delved deeper into the substance of Israel’s analysis. This included several lines of questioning about the nature of Google’s relationships with other tech giants like Apple and Amazon.
At one point, Judge Mehta interceded with a series of questions on what he should conclude about potential competition between Google and Amazon given the fact that Google has found Amazon users use Google more. It was one of the only times I can think of from the whole trial that Judge Mehta actually engaged in follow-up with a witness on one of his own questions. (Judge Mehta regularly asks questions to the witnesses, but I’ve noticed that he rarely engages in back-and-forth with witnesses — even when it seems like the witness’s answer to his question may not be getting at what Judge Mehta was really curious about.)
Israel will re-take the stand tomorrow (Monday) for additional cross and possible re-direct examination from Google. While much of Israel’s testimony has criticized the analysis of DOJ’s economic expert Professor Michael Whinston, Whiston may also be re-called during the DOJ’s rebuttal case to defend his analysis and critique Israel’s.
I will try to update this article with the slide deck demonstrative used for Israel’s direct examination once it is publicly available. For reference and comparison, here are the slide decks that were used for the DOJ’s direct examination of Professor Whinston: https://www.justice.gov/d9/2023-10/416945.pdf and https://www.justice.gov/d9/2023-10/417254.pdf.
(Nov. 8 update — here is the slide deck that was used for Dr. Israel’s direct examination: https://drive.google.com/file/d/15WU8qeQzc8PQQFDzw78jIWWHW_Lmb_MR/view?usp=drivesdk).
Dr. Israel summarized his analysis into the six following high-level opinions: 1) Plaintiffs improperly combine distinct user search products that belong in separate markets and thus define away competition; 2) Google does not have monopoly power in user search; 3) Plaintiffs define away the strong search advertising competition Google faces; 4) Google does not have search advertising monopoly power; 5) Google has not harmed search advertising competition or advertisers; 6) Google’s SA360 has not harmed competition or advertisers.
Note that these snippets are all from the same response to Judge Mehta’s question, but for the sake of increased clarity, they are not presented in the exact order that Israel said them.