DOJ’s antitrust case versus Google is enthusiastic however dangerous

The Department of Justice’s newest difficulty to Google’s tech empire is an enthusiastic swing at the business with the possible to reorganize the digital marketing market. But together with the possibility of fantastic benefit comes considerable threat in looking for to press the borders of antitrust law.

“DOJ is going big or going home here,” stated Daniel Francis, who teaches antitrust at NYU School of Law and formerly worked as deputy director of the Federal Trade Commission’s Bureau of Competition, where he dealt with the company’s monopoly case versus Facebook

The DOJ’s antitrust chief Jonathan Kanter has actually suggested he’s comfy with taking dangers, frequently stating in public remarks that it is essential to bring cases that look for to challenge existing conventions in antitrust law. He stated he chooses more irreversible solutions like separations compared to pledges to alter habits. That belief comes through in the DOJ’s demand in its newest claim for the court to force Google to spin off parts of its advertisement organization.

Antitrust professionals state the Justice Department paints an engaging story about the methods Google apparently utilized acquisitions and exclusionary methods to ward off competitors and preserve monopoly power in the digital marketing area. It’s one that, if the federal government gets its method, would disintegrate a service that’s produced more than $50 billion in profits for Google in the last quarter, possibly opening a whole market in which Google is presently among the most crucial gamers.

But, they caution, the federal government will deal with considerable obstacles in showing its case in a court system that progressive antitrust enforcers and numerous legislators think has actually handled a myopic view of the scope of antitrust law, particularly when it concerns digital markets.

“If they prove the violations they allege, they’re going to get a remedy that’s going to shake up the market,” stated Doug Melamed, a scholar-in-residence at Stanford Law School who served at the Antitrust Division, consisting of as acting assistant attorney general of the United States, from 1996-2001 throughout the landmark case versus Microsoft “But it’s not obvious they’re going to win this case.”

Experts talked to for this post stated the DOJ will deal with the difficulty of charting fairly underexplored locations of antitrust law in showing to the court that Google’s conduct broke the law and hurt competitors without benefitting customers. Though that’s a high order, it might include a big advantage if the company prospers, perhaps broadening the scope of antitrust law for digital monopoly cases to come.

“All antitrust cases are an uphill battle for plaintiffs, thanks to 40 years of case law,” stated Rebecca Haw Allensworth, an antitrust teacher at Vanderbilt LawSchool “This one’s no exception.”

But, Allensworth included, the federal government’s obstacles might be various than those in numerous other antitrust cases.

“Usually the difficulty, especially in cases involving platforms, is market definition,” she stated. In this case, the federal government argued the appropriate market is publisher advertisement servers, advertisement exchanges, and marketer advertisement networks– the 3 sides of the marketing stack Google has its hand in, which the DOJ stated it’s leveraged to box out competitors. “And here, I think that that is relatively straightforward for the DOJ.”

“One way to look at the latest complaint is that it is the newest and most complete draft of a critique that antitrust agencies in the U.S. and abroad have been building against Google for over a decade,” William Kovacic, who served on the Federal Trade Commission from 2006 to 2011 and is now a teacher at George Washington Law, stated in an e-mail.

Google, for its part, has said the latest DOJ lawsuit “tries to rewrite history at the expense of publishers, advertisers and internet users.” It claims the government is trying to “pick winners and losers” and that its products have expanded options for publishers and advertisers.

Compared to the DOJ’s earlier lawsuit, which argued Google maintained its monopoly over search services through exclusionary contracts with phone manufacturers, this one advances more nontraditional theories of harm, according to Francis, the NYU Law professor and former FTC official. That also 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 breaks much more new ground and it articulates theories, or it seems to articulate theories, that are right out on the border of what existing antitrust prohibits,” Francis said. “And we’re going to find out, when all is said and done, where the boundaries of digital monopolization really lie.”

DOJ took a gamble with this case. But if it wins, the rewards could match the risk.

“In terms of the potential impact of the remedy, this could be a bigger case than Microsoft,” said Melamed.

Still, Francis cautioned, a court could order a less disruptive remedy, like paying damages if it finds 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.

Like all antitrust cases, this one is unlikely to be concluded anytime soon. Still, a key decision by the Justice Department could make it speedier than otherwise 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.

“What that signals to me is that, given the timeframe for antitrust litigation is notoriously slow, DOJ is doing everything that they can in their choice of venue to ensure that this litigation moves forward before technological and commercial changes make it obsolete,” Francis said.

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

“I could imagine that both sides will feel pretty good about having drawn Judge Brinkema as a fair, efficient and sophisticated judge who will move the case along in an expeditious way,” Francis said.

Still, there are hardly any judges who have experience with a case like this one, simply because there haven’t been that many digital monopolization cases decided in court.

 “So any judge who would be hearing this case is going to be confronting frontier issues of antitrust theory and principle,” Francis said.

Outside of the courts, the case could have a more immediate impact in other ways.

“From the point of view of strategy, the case adds a major complication to Google’s defense by increasing the multiplicity and seriousness of public agency antitrust enforcement challenges,” said Kovacic, the former FTC commissioner. “The swarming of enforcement at home and abroad is forcing the company to defend itself in multiple fora in the US and in jurisdictions such as the EU and India.”

Regardless of outcomes, Kovacic said the sheer volume of lawsuits and regulation can create a distraction for top management and will likely lead Google to more carefully consider its actions.

“That can be a serious drag on company performance,” Kovacic wrote.

The suit could also lend credence to 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, so it couldn’t own tools on both the buy and sell side as it currently does.

Importantly, 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.

“An antitrust lawsuit is good, but will take a long time and apply to only one company,” Lee tweeted following the DOJ’s statement, stating he would quickly reestablish the step. “We need to make sure competition works for everyone, and soon.”

Rep Ken Buck, R-Colo, who has actually backed the House variation of the expense, called the digital advertisement legislation “The most important bill we can move forward” in a current interview with The Washington Post.

“This is clearly the blockbuster case so far from the DOJ antitrust division,” Francis stated. “And I think it represents a flagship effort to establish new law on the borders of monopolization doctrine. And at the end of it — win, lose or draw — it’s really going to contribute to our understanding of what the Sherman Act actually prohibits in tech markets.”

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SEE: Here’s why some professionals are requiring a separation of Big Tech after the House antitrust report