Google and the Department of Justice were questioned by a US federal judge today over the market impact of a forced sale of the Chrome browser, with the judge saying he finds a divestiture remedy a “little cleaner and a little bit more elegant” from a judicial standpoint than behavioral remedies.
Google and the Department of Justice were questioned by a US judge today over the market impact of a forced sale of the Chrome browser, with the judge saying he finds a divestiture remedy a “little cleaner and a little bit more elegant” from a judicial standpoint than behavioral remedies.US District Judge Amit Mehta heard closing arguments in a Washington, DC, federal courthouse at the wrap-up of an evidentiary trial over proposed remedies in the DOJ and a multistate coalition’s lawsuit over internet search monopolization.
The judge had countless questions throughout the hearing that ran almost nine hours, playing devil’s advocate to both sides with sharp queries to tease out the market impact of various remedy options.
Mehta said that unlike a lot of the other options, the proposed divestiture of Chrome by the government “arguably involves less speculation in terms of how it would impact the market.” It requires less speculation than having Google share user search queries and syndicate ads because that really depends on somebody coming forward and saying, “we want to be as good as Google,” the judge said.
Addressing Google’s counsel, the judge asked: “This [Chrome divestiture] seems to less so require that. In some sense, traditionally from a judicial standpoint, it is a little cleaner and a little bit more elegant and a little less speculative than the other remedies. Would you agree with that?”
“Absolutely 100 percent disagree,” John Schmidtlein replied.
Schmidtlein said conclusions by the DOJ’s expert, Tasneem Chipty, are based on a number of assumptions that haven't been established. One of them is that Chrome will continue to have the same popularity, the same usage and the same support that it has had under Google's stewardship, innovation and investment.
There are a variety of reasons that can't be guaranteed in a divestiture world, including the fact that the DOJ has made it clear Google can't pay to be the default search engine on devices, Schmidtlein said.
The Google attorney argued that with the government proposing payment bans against having Google Search as the default in Chrome and on devices, it's hard to expect that the new Chrome buyer will raise the type of revenue needed to support it and innovate.
“Presumably, an owner of new Chrome would come forward with the kind of capital to ensure that kind of continued development, absolutely, because otherwise, I'm not sure why anybody would want to come forward to begin with,” Mehta said.
“Because it’s a bargain basement,” Schmidtlein replied. “It's a bargain basement for an incredibly valuable asset that they can buy at a bargain basement price.”
“I heard for the first time here today Microsoft won't be allowed to buy it. So, now we're talking about Yahoo, DuckDuckGo,” the Google attorney said.
DuckDuckGo already has its own browser and generative AI firm Perplexity is working on a Chromium browser of its own. OpenAI has been working on a possible Chromium browser as well, he said.
Mehta asked about the possibility of permitting Google to pay for placement on Chrome. “And I know the initial response is that wouldn't help competition in the search market because Google's still the default, but at least it's in the hands of a different owner that could make different choices in the future,” the judge said.
As it stands right now, there's zero prospect Google's ever going to change the default on Chrome from Google Search, the judge said.
Schmidtlein immediately replied that users can change the default search engine on the Chrome browser as opposed to DuckDuckGo.
“But in terms of talking about trying to pry over the market… we have more market actors in the market with the opportunity and the incentive to try and capitalize on their investment. It seems like at least there is an incentive for a new Chrome owner to contemplate a different general search engine, so long as Google can pay Chrome in the first instance,” the judge said.
People use Chrome in part because they love Google Search, Schmidtlein said. He cited the instance of Firefox’s experience with Yahoo Search and the massive drop in users of the Firefox browser. “Eighty-five percent users fled Yahoo. What percentage are going to flee Chrome?”
— New buyers for Chrome —
Mehta quizzed counsel for the government for their position on the legal authority for a contingent remedy.
Earlier in the hearing, David Dahlquist, counsel for the DOJ, argued that a divested asset allows an asset to break free of the control of its monopolist owners. A “clean break that doesn't have any entanglements that can tie back” to the monopolist can help to restore competition, he said.
Chrome must be divested because 35 percent of Google's total queries begin through Chrome, while 78 percent of all of Google's queries come from all browsers combined. “But Chrome is specifically powerful,” Dahlquist said.
The judge asked if it would be a condition that the owner of new Chrome wouldn't place Google as a default search engine.
“I think short answer is no, Your Honor. We're not trying to put conditions on the new owner of Chrome,” the DOJ attorney replied.
The government doesn’t know exactly who the new owner of Chrome would be, but what it does know is it would break that connection between Chrome and Google being able to set it as the immediate search default out of the box and have no other competition for that search access point. It would allow rivals the opportunity to get into that search access point, Dahlquist said.
Mehta questioned him about concerns that new Chrome owner would lack the incentive to continue to invest in Chromium in the same way that Google has done. Dahlquist said the divestiture of Chrome includes the people working on the product. “It's not like it's just the piece of software. That comes with the human beings who are working on Chrome today and that make it what it is today.”
“Is there evidence that, for example, Microsoft has said, if Chrome were to be divested, then we would come forward and fill the void, or at least attempt to?” Mehta asked. “Because if there's anybody that has something to lose here from a degraded Chromium, it's Microsoft.”
Dahlquist said they do have an interest but didn't recall testimony stating so specifically.
“Is it your contemplation that a new purchaser of Chrome would effectively have to be able to operate Chrome as it is operating now? And if that's so, is that possible with anyone other than perhaps Microsoft, just from a resource standpoint?” the judge asked.
Dahlquist said it's a faulty premise that it has to operate as it does today. Citing testimony by a government expert, he said Chrome is a piece of client software which connects into the rest of Chromium and into Google through an application programming interface.
“There's no reason that couldn't continue tomorrow. There'd be a negotiation. There'd have to be an agreement, and that's one reason why it'd be beneficial for the divestiture to occur under a court order, because then you would have the United States and the states to make sure that a new owner of Chrome gets the transition services that are necessary to make sure that it happens,” Dahlquist said.
— Fruits of monopoly, injunction —
Earlier in the hearing, as Mehta quizzed the DOJ counsel over other behavioral remedies, he gave a glimpse of how he may rule
Mehta noted that one of the advantages Google has is user data and scale advantage that let it maintain its monopoly. “That's an advantage, that's a fruit [of monopoly],” he said.
“It seems to me that to simply say, ‘look, just open up the avenues of distribution without providing any further remedies that are forward-looking would allow competitors to actually be real rivals here,’ sort of sells the revenues portion of this short, and we all could have just closed up shop if the only thing that needed to be done was to do an injunction.”
As the parties wrapped up the three-week long trial, the DOJ’s political leadership appeared in court as a show of support to the trial team that has been working on the lawsuit for six years. Gail Slater, assistant attorney general for the DOJ’s antitrust division, was in the courtroom along with Roger Alford, the principal assistant attorney general. Mark Hamer, the deputy assistant attorney general for civil litigation at the Antitrust Division, was also present.
Todd Blanche, the DOJ’s deputy attorney general, Emil Bove, the principal associate deputy attorney general, and Stanley Woodward, the associate attorney general, were also present to support the trial team.
Mehta previously indicated he would rule on the proposed remedies in August.
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