I read through the US v. Google complaint this morning and I have a few thoughts. As I am neither a government attorney nor an attorney representing Google, I don't have any real window into the actual evidence or the outcome, but I have thoughts about what's in the complaint. 1/

And, major disclaimer, this is me speaking on my own behalf and not on behalf of my firm or clients. 2/

The US is alleging that Google in a monopolist in general search services, search advertising, and general search text advertising. The government is alleging that Google has 88% share in search services, higher in mobile search. 3/

The US is also alleging that Google has 70% or higher share in search advertising and general search text advertising. 4/

The complaint alleges that Google maintains that alleged position in part through exclusive dealing contracts and licensing restrictions with phone manufacturers, mobile phone carriers, and computer manufacturers. 5/

Basically the US is alleging that the reason your phone and your computer browser default to Google search is because Google forces or pays all the relevant players to make its search engine the default to the detriment of other search engines. 6/

Small aside, it isn't illegal to be a monopolist. If you develop a monopoly in a product due to having the best product, better business acumen, or through historical accident, that's not an antitrust issue. 7/

If a hurricane knocks out all the shrimping boats, like in Forrest Gump, being the only shrimping company isn't illegal. Same if you build a better product and everyone wants it. It is illegal, however, to acquire or maintain a monopoly by engaging in exclusionary conduct. 8/

The US will have to prove that these markets are relevant antitrust markets (that's a whole thread on its own), that Google has monopoly power in those markets, and that it keeps that power by excluding other search providers through the alleged distribution agreements. 9/

For example, the US alleges that Google uses distribution agreements requiring that the Google search widget have prominent placement on the home screen, that Google is the default search engine, and that Android phones come with a suite of default, non-deletable apps. 10/

There's a lot in the complaint. The allegations suggest that the US is trying to make this case look a lot like US v. Microsoft browser case, with both tying and exclusive dealing claims. 11/

So what’s tying? Tying is when a company that has market or monopoly power in one product (really high market share, ability to set prices in the market) conditions the sale of that product (the tying product) on the purchase of another, separate product (the tied product). 12/

A tying arrangement decreases competition in the market for the tied product by piggybacking on the market dominance of the tying product. 13/

Exclusive dealing contracts are all over the place. A requirements contract -- a customer will buy all of its products from one seller -- is an example. An exclusive distribution contract -- a manufacturer will only sell through one distributor -- is another. Very common. 14/

Exclusive dealing contracts can be antitrust violations if they foreclose enough commerce in a relevant market such that "the opportunities for other traders to enter or remain in that market [are] significantly limited" Tampa Elec. v. Nashville Coal, 365 US 320, 328 (1961). 15/

Microsoft was both a tying and an exclusive dealing case. In Microsoft, the US alleged that Microsoft crushed a web browser called Netscape (the dominant browser) by licensing Windows to computer manufacturers only if Explorer was a part of the software bundle 16/

and with prominent placement on the desktop. Microsoft also had contractual restrictions on the manufacturers to prevent OEMs from reconfiguring the desktop to remove the IE icon or add the Netscape icon. The result was that the OEMs stopped distributing Netscape preloaded. 17/

Microsoft also had contracts with the internet access providers like AOL and others to distribute Explorer for free with their software (this was the olden days when AOL was software actually loaded on your computer). 18/

So a free browser that came with your software was probably what you were going to use. Microsoft also offered rebates to IAPs if they distributed Explorer alone and not Netscape. The result was a massive drop in Netscape’s sales. 19/

The alleged point of all this was to protect the Windows operating system from competition that might develop as programmers started to use Netscape as a platform for other apps that would threaten Microsoft's OS dominance. (Complicated case but that’s the gist of it.) 20/

You can see the same types of allegations in the complaint against Google. The US is alleging that Google required the Google search widget to be on the home screen of Android phones, required Google to be the default search engine, etc. 21/

The US alleges that even though consumers can change the defaults, they rarely do, so licensing agreements that pick Google as the default at the outset result in significant exclusion of other search providers. 22/

Further, the US is alleging that Google also limits development of other versions of Android (an open source software platform) through anti-forking agreements that prevent “fragmentation” of Android into a bunch of competing versions. 23/

Why sign that, you say? Because, allegedly, getting access to the Play Store and the Google APIs that allow third party apps to function is conditioned on adhering the anti-forking agreement. 24/

And, the US alleges that Google requires that as part of the license to the Play Store and the APIs, manufacturers have to preinstall Gmail, YouTube, Chrome, Google search widget, and Google Assistant. Google search is allegedly the default search engine for all of these. 25/

If you want any part of this ecosystem, the US alleges, you have to take it all. And all of it defaults to the Google search engine. There are claims of both tying and exclusive dealing alleged on those facts. 26/

I would imagine that we’ll see in subsequent briefing by the US a reference to LePage’s v. 3M. In that case, 3M (Scotch tape) was trying to prevent other tape manufacturers from competing in the transparent tape market. 27/

LePage’s made private label tape – basically store brand rather than name brand. 3M tried to fight this competition by providing rebates to big stores if they met purchase levels across 6 categories of products. 28/

If a store failed to meet the threshold purchases in one category, it lost the rebates in all categories. LePage’s couldn’t discount its tape enough to make up for that kind of rebate volume and its sales dried up. 29/

The 3rd Circuit held that this was a de facto exclusive dealing arrangement that violated the antitrust laws. 30/

Here, the US alleges that Google is using revenue sharing agreements (RSAs) on search ad revenue only if all of the Android phones sold by that counterparty have Google search as the default search engine. 31/

The US also alleges that Google pays Apple to have Google search be the default search engine for Safari, Siri, and Spotlight. And the US alleges that Google has RSAs with every significant non-Google browser, including Firefox, Opera, and UCWeb. 32/

Ok, so the US has alleged that there is all of this anticompetitive activity and anticompetitive harm. So what can Google do? Google has a number of avenues to challenge this. 33/

The biggest avenue is to show that even if the US can show that there is some anticompetitive harm from this conduct, that there are also procompetitive justifications for that conduct, and that the procompetitive justifications outweigh the anticompetitive harm. 34/

If Google can show that it practices have actually fostered competition in these areas more than it has hindered competition, no liability. Similarly, Google might try to show that manufacturers and consumers actually want their phones/computers loaded with Google search. 35/

If the business practices complained of are actually favored by the customers for their own reasons, that’s a pretty good fact deployed in defense to exclusive dealing claims. 36/

Google has already made this argument today saying, “People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.”

https://blog.google/outreach-initiatives/public-policy/response-doj

37/

There are a lot of other avenues Google may pursue as well, but I’ll leave that to them. 38/38