Discover more from Big Tech on Trial
What makes Google great?
On Day 2, the DOJ pushed its theory that Google's dominance comes from scale and defaults — not innovation.
The heart of Google’s defense is that people use Google because it’s the best — and it’s not against antitrust laws to be the best. But this case isn’t as simple as deciding whether people use Google because it’s the best or because it’s what’s put in front of them as the default.
Even if Google is better than its competitors like Bing and DuckDuckGo, it matters why it’s the best. Is Google the best because of its algorithm and innovations? Or is it the best because it’s the biggest — and can leverage the data it gets from its many users in a way that makes it impossible for smaller search engines to compete effectively?
These questions are why the DOJ spent much of its examination of Google chief economist Hal Varian over the last two days pressing him on his multiple claims over the years that downplayed the role Google’s scale played in its dominance. DOJ attempted to paint a picture of Varian incorrectly pushing a narrative that Google’s scale contributed little.
Yesterday, DOJ highlighted the internal pushback Varian received from Google colleagues after he claimed in 2009 that search scale is “bogus”. According to Varian, Google wasn’t the best because of the “quantity or quality of its ingredients,” but because it had “better recipes.”
Today, DOJ called Varian back up to the stand to ask him about his 2011 email to New York Times reporter Steve Lohr. Varian told Lohr he thought it was inaccurate to call Google search’s cycle of “more users, more data, and more ad dollars” a network effect.
The DOJ’s focus on Varian’s claims about scale seems to be an attempt to do at least two things: 1) develop its theory that Google’s “anticompetitive practices are especially pernicious because they deny rivals scale to compete effectively”; and 2) damage the credibility of a prominent longtime Google employee. You’d have to ask Judge Mehta how effective he found these tactics, but for whatever it’s worth, former Biden antitrust policy advisor Tim Wu seemed to think it was an effective impeachment of Varian.
Here are a few other highlights from Day 2 of the trial:
Apple makes an appearance
Before testimony started today, a lawyer for Apple made an appearance to claim that DOJ provided a false impression of sensitive numbers during its opening statement yesterday. He didn’t say what those numbers were, but he was likely referring to numbers DOJ provided about how much Google paid Apple and other partners for default search engine status. Google lawyer John Schmidtlein added that DOJ’s statement suggested the numbers came from either Google or Apple.
The exact size of Google’s payments to Apple remains unknown, but has been estimated to be as high as $20 billion in 2022.
Google’s mobile distribution efforts
This morning, the DOJ also called Shazam founder and former Google employee Chris Barton to the stand. Barton was the first employee at Google to work on distributing Google search through mobile device makers and carriers and he led the negotiations for several default search engine deals with mobile partners during his tenure at Google from 2004 to 2011.
The DOJ presented emails and elicited testimony from Barton that demonstrated the priority Google placed on ensuring search distribution deals guaranteed exclusive default placement. During cross-examination, Google attempted to show that Barton’s pitch to potential partners extended beyond revenue share — Barton testified that he also tried to sell potential partners on the superior product and monetization that Google search offered as compared to its competitors.
The behavioral-economic power of defaults
In the afternoon, the DOJ continued its case by calling its first expert witness to the stand: Cal Tech professor Antonio Rangel, who specializes in a field called “neuro-economics”. Rangel came off as a seasoned expert witness, speaking deliberately and turning to face Judge Mehta directly when he gave his answers.
Rangel provided the court with an introduction to what he said were several fundamental behavioral-economic principles. He shared multiple conclusions from his expert report including that “search engine defaults generate a sizeable and robust bias towards the default.” He also walked through a demonstration he made of how many steps it took to change the Android Google search widget to a different search engine: 10 to be exact. And he pointed out that those 10 steps required a user to actually know exactly what the 10 steps for changing the default widget were.
We will hear more from Professor Rangel tomorrow as the government finishes its direct-examination of him and Google gets its chance to cross-examine.
That’s all for today — I’ll be back in the courtroom tomorrow to report on Day 3.