Google Pays 'Huge' Sums to Maintain Search Engine Dominance, DOJ Says

(Bloomberg) — Alphabet Inc.’s Google. pays billions of dollars each year to Apple Inc., Samsung Electronics Co. and other telecommunications giants to illegally maintain its position as the No. 1 search engine, the US Department of Justice told a federal judge Thursday.

DOJ attorney Kenneth Dinzer did not disclose how much Google is spending to be the default search engine on most browsers and all cell phones in the US, but described the payments as “huge numbers.”

“Google invested billions in insolvency knowing people weren’t going to change them,” Dinzer told Judge Amit Mehta at a hearing in Washington that marked the first major face-off in the case and drew top DOJ antitrust officials and the Nebraska attorney general among the spectators. . “They buy exclusivity by default because default matters a lot.”

Google’s contracts form the basis of the DOJ’s landmark antitrust case, which alleges the company tried to maintain its monopoly on online search in violation of antitrust laws. Attorneys general are pursuing a parallel antitrust suit against the search giant that is also pending before Mehta.

The trial is not expected to formally begin until next year, but Thursday’s hearing was the first substantive one in the case, a day-long lesson in which each side presented its views on Google’s business.

Google’s antitrust lawsuit, filed in the final days of the Trump administration, was the federal government’s first major effort to rein in the power of the tech giants, which continues under President Joe Biden. On Thursday, the White House hosted a panel discussion with experts to examine the damage big tech platforms can do to the economy and children’s health.

Google attorney John Schmidtlein said the Justice Department and states don’t understand the market and are focusing too narrowly on smaller search engine competitors like Bing and Microsoft Corp.’s DuckDuckGo. Instead, Google faces competition from dozens of other companies, he said, including ByteDance Ltd.’s TikTok, Meta Platforms Inc., Amazon.com Inc., Grubhub Inc. and other sites where users search for information.

“You don’t have to go to Google to shop on Amazon. You don’t have to go to Google to buy plane tickets from Expedia,” he said. “Just because Google doesn’t face the same competition for every query doesn’t mean the company doesn’t face serious competition.”

Having fresh data on user search queries is key to the search engine’s success, lawyers for the DOJ, the states and Google agree. Google controls the most popular Chrome browser and the second most popular Android mobile operating system.

In his presentation, the DOJ’s Dintzer focused on the mechanics of Google’s search engine and how its default contracts have affected potential competitors. For mobile devices, Google has contracts with Apple, smartphone makers such as Samsung and Motorola Solutions Inc., most browsers and the three U.S. telecommunications carriers AT&T Inc., Verizon Communications Inc. and T-Mobile US Inc. — to ensure its search engine is set as standard and comes pre-installed on new phones, Dinzer said. Microsoft’s search engine, Bing, is the default on the company’s Edge browser and Amazon’s Fire tablets, he said.

Google’s contracts make it the “gateway” through which most people find websites on the Internet, allowing it to prevent rivals from gaining the scale it would need to challenge its search engine, Dinzer said.

“Default exclusivity allows Google to systematically deny data to competitors,” he said.

Google’s Schmidtlein said the company has had contracts with Apple and browsers such as Mozilla since the early 2000s. The DOJ and the states have not explained why these deals are now problems, he said. The revenue-sharing deals Google offers browsers are essential to companies like Mozilla Corp., he said, because they offer their products to users for free.

“The reason they partnered with Google is not because they had to; it’s because they want to,” Schmidlein said. The company “was extremely successful and doing something incredibly valuable. Competition on merit is not illegal.’

The case is United States v. Google, 20-cv-3010, U.S. District Court, District of Columbia, Washington.

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