For the last several years, antitrust enforcement has been on the rise. Recent antitrust enforcement has focused on several sectors, including Big Tech. As Silicon Valley's influence has grown, so has the scrutiny it has received from Washington. And over the last four years, some of the biggest companies in the tech space have been under a microscope when it comes to their compliance with the antitrust laws.
The Department of Justice and 11 states sued one such tech giant — Google — in October 2020 contending that Google had unlawfully maintained its monopoly thus violating Section 2 of the Sherman Act. Two months later, 38 states jointly filed another lawsuit, which the court consolidated for discovery and trial.
In September 2023, after more than two years of discovery including millions of pages of documents and depositions of high-ranking executives at some of the world's largest technology companies, the U.S. Court for the District of Columbia held a nine-week bench trial presided over by Judge Amit P. Mehta. On Aug. 5, 2024, Judge Mehta delivered his long-awaited opinion finding Google violated Section 2 of the Sherman Act.
The court found that Google has monopoly power over two product markets: (1) general internet search services provided by a general search engine (such as Google), and (2) general search text advertising markets (which are the "sponsored" links one sees when conducting a Google search). The court found that Google had a dominant market share in both markets. Google has an 89.2% to 94.9% market share, depending on the device used, in the general search services market. For the general search text ad market, Google's market share was 88%.
To maintain its monopoly power, the court found that Google engaged in exclusionary conduct in violation of Section 2 of the Sherman Act. Specifically, the court held that Google had maintained its monopoly in the two markets through exclusive distribution agreements. These agreements ensured Google was the preloaded default search engine on certain devices and other general search engines. In the general search services market, although Google's distribution agreement foreclosed only 50% of the market, the court still found these agreements significantly foreclosed that market given other factors such as contract duration and an inability to easily exit the agreements. And for the general search text advertising ad market, the court held Google's exclusive distribution agreements enabled Google to charge supra-competitive prices. The court rejected Google's claim that it obtained default distribution by providing a superior product and not through exclusionary conduct. According to Judge Mehta, the "market reality is that Google is the only real choice as the default" general search engine, and that "Google understands there is no genuine competition for the defaults because it knows that its partners cannot afford to go elsewhere."
But the opinion was not a complete win for the government. The court held that search advertising was a relevant market, but Google has no monopoly power over it. The court also rejected the government's argument that a general search advertising market exists. And the court has yet to decide Google's fate with respect to the remedy it will impose.
Especially noteworthy is the court's admonition about a litigant's duty to preserve relevant evidence. The government accused Google of the "systemic destruction of documents," referring to Google's default practice of deleting employee chat messages after 24 hours. Google did not change that default practice even after receiving a notice to preserve all relevant documents in anticipation of litigation. Not until the government moved for sanctions did Google change the policy. By then, Google had deleted years' worth of chats. Although the court did not sanction Google, it came down heavily on the company for its failure to preserve possibly relevant evidence. In the court's words, a company that fails to preserve evidence, or puts the burden to preserve evidence on its employees, "does so at its own peril."
Thus, when faced with the possibility of litigation, businesses are advised to take the initiative in preserving potentially relevant evidence, even if that means reexamining longstanding policies that result in the automatic deletion of data, such as chat logs.
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