Google reportedly wants the US Federal Trade Commission (FTC) to end Microsoft’s exclusive cloud deal with OpenAI that requires anyone wanting access to OpenAI’s models to go through Microsoft’s servers.
Someone “directly involved” in Google’s effort told The Information that Google’s request came after the FTC began broadly probing how Microsoft’s cloud computing business practices may be harming competition.
As part of the FTC’s investigation, the agency apparently asked Microsoft’s biggest rivals if the exclusive OpenAI deal was “preventing them from competing in the burgeoning artificial intelligence market,” multiple sources told The Information. Google reportedly was among those arguing that the deal harms competition by saddling rivals with extra costs and blocking them from hosting OpenAI’s latest models themselves.
In 2024 alone, Microsoft generated about $1 billion from reselling OpenAI’s large language models (LLMs), The Information reported, while rivals were stuck paying to train staff to move data to Microsoft servers if their customers wanted access to OpenAI technology. For one customer, Intuit, it cost millions monthly to access OpenAI models on Microsoft’s servers, The Information reported.
Microsoft benefits from the arrangement—which is not necessarily illegal—of increased revenue from reselling LLMs and renting out more cloud servers. It also takes a 20 percent cut of OpenAI’s revenue. Last year, OpenAI made approximately $3 billion selling its LLMs to customers like T-Mobile and Walmart, The Information reported.
Microsoft’s agreement with OpenAI could be viewed as anti-competitive if businesses convince the FTC that the costs of switching to Microsoft’s servers to access OpenAI technology is so burdensome that it’s unfairly disadvantaging rivals. It could also be considered harming the market and hampering innovation by seemingly disincentivizing Microsoft from competing with OpenAI in the market.
To avoid any disruption to the deal, however, Microsoft could simply point to AI models sold by Google and Amazon as proof of “robust competition,” The Information noted. The FTC may not buy that defense, though, since rivals’ AI models significantly fall behind OpenAI’s models in sales. Any perception that the AI market is being foreclosed by an entrenched major player could trigger intense scrutiny as the US seeks to become a world leader in AI technology development.
Judge: AI will likely play “larger role” in Google search remedies as market shifts.
Google got some disappointing news at a status conference Tuesday, where US District Judge Amit Mehta suggested that Google’s AI products may be restricted as an appropriate remedy following the government’s win in the search monopoly trial.
According to Law360, Mehta said that “the recent emergence of AI products that are intended to mimic the functionality of search engines” is rapidly shifting the search market. Because the judge is now weighing preventive measures to combat Google’s anticompetitive behavior, the judge wants to hear much more about how each side views AI’s role in Google’s search empire during the remedies stage of litigation than he did during the search trial.
“AI and the integration of AI is only going to play a much larger role, it seems to me, in the remedy phase than it did in the liability phase,” Mehta said. “Is that because of the remedies being requested? Perhaps. But is it also potentially because the market that we have all been discussing has shifted?”
To fight the DOJ’s proposed remedies, Google is seemingly dragging its major AI rivals into the trial. Trying to prove that remedies would harm Google’s ability to compete, the tech company is currently trying to pry into Microsoft’s AI deals, including its $13 billion investment in OpenAI, Law360 reported. At least preliminarily, Mehta has agreed that information Google is seeking from rivals has “core relevance” to the remedies litigation, Law360 reported.
The DOJ has asked for a wide range of remedies to stop Google from potentially using AI to entrench its market dominance in search and search text advertising. They include a ban on exclusive agreements with publishers to train on content, which the DOJ fears might allow Google to block AI rivals from licensing data, potentially posing a barrier to entry in both markets. Under the proposed remedies, Google would also face restrictions on investments in or acquisitions of AI products, as well as mergers with AI companies.
Additionally, the DOJ wants Mehta to stop Google from any potential self-preferencing, such as making an AI product mandatory on Android devices Google controls or preventing a rival from distribution on Android devices.
The government seems very concerned that Google may use its ownership of Android to play games in the emerging AI sector. They’ve further recommended an order preventing Google from discouraging partners from working with rivals, degrading the quality of rivals’ AI products on Android devices, or otherwise “coercing” manufacturers or other Android partners into giving Google’s AI products “better treatment.”
Importantly, if the court orders AI remedies linked to Google’s control of Android, Google could risk a forced sale of Android if Mehta grants the DOJ’s request for “contingent structural relief” requiring divestiture of Android if behavioral remedies don’t destroy the current monopolies.
Finally, the government wants Google to be required to allow publishers to opt out of AI training without impacting their search rankings. (Currently, opting out of AI scraping automatically opts sites out of Google search indexing.)
All of this, the DOJ alleged, is necessary to clear the way for a thriving search market as AI stands to shake up the competitive landscape.
“The promise of new technologies, including advances in artificial intelligence (AI), may present an opportunity for fresh competition,” the DOJ said in a court filing. “But only a comprehensive set of remedies can thaw the ecosystem and finally reverse years of anticompetitive effects.”
At the status conference Tuesday, DOJ attorney David Dahlquist reiterated to Mehta that these remedies are needed so that Google’s illegal conduct in search doesn’t extend to this “new frontier” of search, Law360 reported. Dahlquist also clarified that the DOJ views these kinds of AI products “as new access points for search, rather than a whole new market.”
“We’re very concerned about Google’s conduct being a barrier to entry,” Dahlquist said.
Google could not immediately be reached for comment. But the search giant has maintained that AI is beyond the scope of the search trial.
During the status conference, Google attorney John E. Schmidtlein disputed that AI remedies are relevant. While he agreed that “AI is key to the future of search,” he warned that “extraordinary” proposed remedies would “hobble” Google’s AI innovation, Law360 reported.
Microsoft shields confidential AI deals
Microsoft is predictably protective of its AI deals, arguing in a court filing that its “highly confidential agreements with OpenAI, Perplexity AI, Inflection, and G42 are not relevant to the issues being litigated” in the Google trial.
According to Microsoft, Google is arguing that it needs this information to “shed light” on things like “the extent to which the OpenAI partnership has driven new traffic to Bing and otherwise affected Microsoft’s competitive standing” or what’s required by “terms upon which Bing powers functionality incorporated into Perplexity’s search service.”
These insights, Google seemingly hopes, will convince Mehta that Google’s AI deals and investments are the norm in the AI search sector. But Microsoft is currently blocking access, arguing that “Google has done nothing to explain why” it “needs access to the terms of Microsoft’s highly confidential agreements with other third parties” when Microsoft has already offered to share documents “regarding the distribution and competitive position” of its AI products.
Microsoft also opposes Google’s attempts to review how search click-and-query data is used to train OpenAI’s models. Those requests would be better directed at OpenAI, Microsoft said.
If Microsoft gets its way, Google’s discovery requests will be limited to just Microsoft’s content licensing agreements for Copilot. Microsoft alleged those are the only deals “related to the general search or the general search text advertising markets” at issue in the trial.
On Tuesday, Microsoft attorney Julia Chapman told Mehta that Microsoft had “agreed to provide documents about the data used to train its own AI model and also raised concerns about the competitive sensitivity of Microsoft’s agreements with AI companies,” Law360 reported.
It remains unclear at this time if OpenAI will be forced to give Google the click-and-query data Google seeks. At the status hearing, Mehta ordered OpenAI to share “financial statements, information about the training data for ChatGPT, and assessments of the company’s competitive position,” Law360 reported.
But the DOJ may also be interested in seeing that data. In their proposed final judgment, the government forecasted that “query-based AI solutions” will “provide the most likely long-term path for a new generation of search competitors.”
Because of that prediction, any remedy “must prevent Google from frustrating or circumventing” court-ordered changes “by manipulating the development and deployment of new technologies like query-based AI solutions.” Emerging rivals “will depend on the absence of anticompetitive constraints to evolve into full-fledged competitors and competitive threats,” the DOJ alleged.
Mehta seemingly wants to see the evidence supporting the DOJ’s predictions, which could end up exposing carefully guarded secrets of both Google’s and its biggest rivals’ AI deals.
On Tuesday, the judge noted that integration of AI into search engines had already evolved what search results pages look like. And from his “very layperson’s perspective,” it seems like AI’s integration into search engines will continue moving “very quickly,” as both parties seem to agree.
Whether he buys into the DOJ’s theory that Google could use its existing advantage as the world’s greatest gatherer of search query data to block rivals from keeping pace is still up in the air, but the judge seems moved by the DOJ’s claim that “AI has the ability to affect market dynamics in these industries today as well as tomorrow.”
Ashley is a senior policy reporter for Ars Technica, dedicated to tracking social impacts of emerging policies and new technologies. She is a Chicago-based journalist with 20 years of experience.
One of the fastest monopoly trials on record wound down Monday, as US District Court Judge Leonie Brinkema heard closing arguments on Google’s alleged monopoly in a case over the company’s ad tech.
Department of Justice lawyer Aaron Teitelbaum kicked things off by telling Brinkema that Google “rigged” ad auctions, allegedly controlling “multiple parts” of services used to place ads all over the Internet, unfairly advantaging itself in three markets, The New York Times reported.
“Google is once, twice, three times a monopolist,” Teitelbaum said, while reinforcing that “these are the markets that make the free and open Internet possible.”
Teitelbaum likened Google to a “predator,” preying on publishers that allegedly had no viable other options for ad revenue but to stick with Google’s products. An executive for News Corp. testified that the news organization felt it was being held “hostage” because it risked losing $9 million in 2017 if it walked away from Google’s advertising platform.
Brinkema, who wasted no time and frequently urged lawyers to avoid repeating themselves or dragging out litigation with unnecessary testimony throughout the trial, reportedly pushed back.
In one instance she asked, “What would happen if a company had produced the best product,” but Teitelbaum rejected the idea that Google’s ad tech platform had competed on the merits.
“The problem is Google hasn’t done that,” Teitelbaum said, alleging that instead better emerging products “died out,” unable to compete on the merits.
According to Vidushi Dyall, the director of legal analysis for the Chamber of Progress (a trade group representing Google), this lack of advertiser testimony or evidence of better products could be key flaws in the DOJ’s argument. When Brinkema asked what better products Google had stamped out, the DOJ came up blank, Dyall posted in a thread on X (formerly Twitter).
Further, Dyall wrote, Brinkema “noted that the DOJ’s case was notably absent of direct testimony from advertisers.” The judge apparently criticized the DOJ for focusing too much on how publishers were harmed while providing “no direct evidence about advertisers and how satisfied/dissatisfied they are with the system,” Dyall wrote.
Hepner expects that the DOJ plan may be measured enough that the court may only “be interested in a nip-tuck, not a wholesale revision of what plaintiffs have put forward.”
Kamyl Bazbaz, SVP of public affairs for Google’s more privacy-focused rival DuckDuckGo, released a statement agreeing with Hepner.
“The government has put forward a proposal that would free the search market from Google’s illegal grip and unleash a new era of innovation, investment, and competition,” Bazbaz said. “There’s nothing radical about this proposal: It’s firmly based on the court’s extensive finding of fact and proposes solutions in line with previous antitrust actions.”
Bazbaz accused Google of “cynically” invoking privacy among chief concerns with a forced Chrome sale. That “is rich coming from the Internet’s biggest tracker,” Bazbaz said.
Will Apple finally compete with Google in search?
The remedies the DOJ has proposed could potentially be game-changing, Bazbaz told Ars, not just for existing rivals but also new rivals and startups the court found were previously unable to enter the market while it was under Google’s control.
If the DOJ gets its way, Google could be stuck complying with these proposed remedies for 10 years. But if the company can prove after five years that competition has substantially increased and it controls less than 50 percent of the market, the remedies could be terminated early, the DOJ’s proposed final judgment order said.
That’s likely cold comfort for Google as it prepares to fight the DOJ’s plan to break up its search empire and potentially face major new competitors. The biggest risk to Google’s dominance in AI search could even be its former partner, whom the court found was being paid handsomely to help prop up Google’s search monopoly: Apple.
On X (formerly Twitter), Hepner said that cutting off Google’s $20 billion payments to Apple for default placements in Safari alone could “have a huge effect and may finally kick Apple to enter the market itself.”
“Right now, China is afraid of Google,” Trump said at a Chicago event. If that threat were dismantled, Trump suggested, China could become a greater threat to the US, because the US needs to have “great companies” to compete.
Trump’s comments came about a week after the US Department of Justice proposed remedies in the Google monopoly trial, including mulling a breakup.
“I’m not a fan of Google,” Trump insisted. “They treat me badly. But are you going to destroy the company by doing that? If you do that, are you going to destroy the company? What you can do, without breaking it up, is make sure it’s more fair.”
Now that Trump is presumed to soon be taking office before the remedies phase of the DOJ’s litigation ends next year, it seems possible that Trump may sway the DOJ away from breaking up Google.
Experts told Reuters that a final ruling isn’t expected until August, giving Trump plenty of time to possibly influence the DOJ’s case. But Trump’s stance on Google has seemed to shift throughout his campaign, so there’s no predicting his position once he takes power.
Business Insider noted that Trump was extremely critical of Google on the campaign trail, vowing to “do something” to curtail Google’s power after accusing the search giant of only highlighting negative stories about him in search results. (Google has repeatedly denied the accusation.) On Truth Social as recently as September, Trump vowed to prosecute Google “at the maximum levels,” seemingly less concerned then about how this could influence competition with China.
It would be unusual for Trump to meddle with the DOJ’s ongoing litigation, antitrust expert George Hay told Business Insider, but then again, “Trump is a bit more of a wild card.”
“It’s very rare that, at the presidential level, there’s any attempt to influence the course of cases which have already been filed. Those have a life of their own,” Hay said. “They depend on the judge, the courts, the lawyers who carry on a case. It’s extraordinarily unusual for the administration to become at all active.”
Trump may still feel some ownership over the DOJ’s investigation into Google’s core business since it began in 2019 under his administration, and tensions between Trump and Google have not diminished much since. The Verge noted that Trump warned Google to “be careful” in August because he “had a feeling Google is going to be close to shut down.” And earlier this year, Trump’s running mate, JD Vance, called for Google’s breakup on X (formerly Twitter), proclaiming that a stop to Google’s “monopolistic control of information” was “long overdue.”
Trump’s on-and-off feud with Google
For Trump, disabling Google’s search monopoly might feel personal, as he has spent years accusing Google of manipulating results to disfavor him.
His feud with Google appear to have begun in 2016 when Trump falsely accused Google of manipulating votes, claiming Google wanted to make it appear that he didn’t have a “big victory” over Hillary Clinton, CNN reported.
The feud continued through the 2020 election, Politico reported, with Trump warning Google that his administration was “watching Google very closely” after a former Google employee went on Fox News to claim that Google search results were biased against Trump. Google disputed the employee’s report.
And yet throughout this feud, there have also been times where Trump seems to warm to Google. During his last administration, he backtracked a threat to investigate Google’s alleged work with China’s military, Politico noted, after meeting with Google CEO Sundar Pichai. Most recently, he claimed Pichai reached out to praise Trump’s ability to trend on the search engine during Trump’s McDonald’s campaign stunt, SF Gate reported.
So far, Google is not commenting on Trump’s comments on the DOJ’s proposed breakup of its search business. But Pichai did send an internal memo to Google staff on the night before the election, The Verge reported, praising them for boosting accurate information during the US election and reminding them that “the outcome will be a major topic of conversation in living rooms and other places around the world.”
At a time when Trump might continue heavily criticizing Google from the Oval Office, Pichai told Googlers that maintaining trust in Google is a top priority.
“Whomever the voters entrust, let’s remember the role we play at work, through the products we build and as a business: to be a trusted source of information to people of every background and belief,” Pichai’s memo said. “We will and must maintain that.”
The DOJ may not even want to seek a breakup
When the DOJ finally proposed a framework for remedies last month, they emphasized that there’s still so much more to consider before landing on final remedies and that the DOJ reserves “the right to add or remove potential proposed remedies.”
That means that while the DOJ has said that requiring a divestment of Chrome or Android isn’t completely off the table, they currently aren’t committed to following through on ordering a breakup.
Through the remedies phase of litigation, the DOJ expects that discovery will reveal more about whether requiring a breakup is needed or if other remedies might resolve antitrust concerns while preserving Google’s search empire.
One reason it might be necessary to spin off Chrome or Android, however, would be to “prevent Google from using products such as Chrome, Play, and Android to advantage Google search and Google search-related products and features—including emerging search access points and features, such as artificial intelligence—over rivals or new entrants,” the DOJ said.
Google has warned that a breakup could hurt small businesses that depend on open source code Google develops for Android and Chrome. Costs of Android devices could also rise, Google warned.
Adam Epstein—the president and co-CEO of adMarketplace, which bills itself as “the largest consumer search technology company outside of Google and Bing”—told Ars last September that spinning out Android and Chrome may inflict “maximum pain” on Google. But it could also “cause pain to users and publishers and might not be the best way to create competition in search results and advertising.”
Buried in a story from The New York Times is perhaps the biggest clue that Trump may again be warming to Google as he likely heads back to Washington. The Times noted that at the Chicago event, Trump seemed to be echoing a Google talking point.
Google has argued that “a breakup could hurt America’s interests in a heated geopolitical competition with China over dominance in areas like artificial intelligence,” The Times reported. And Trump appeared to be running with that same logic when seemingly shifting his position on wanting to destroy Google in his final days on the campaign trail.
“It’s a very dangerous thing, because we want to have great companies,” Trump said. “We don’t want China to have these companies.”
Ashley is a senior policy reporter for Ars Technica, dedicated to tracking social impacts of emerging policies and new technologies. She is a Chicago-based journalist with 20 years of experience.
On Monday, Microsoft came out guns blazing, posting a blog accusing Google of “dishonestly” funding groups conducting allegedly biased studies to discredit Microsoft and mislead antitrust enforcers and the public.
In the blog, Microsoft lawyer Rima Alaily alleged that an astroturf group called the Open Cloud Coalition will launch this week and will appear to be led by “a handful of European cloud providers.” In actuality, however, those smaller companies were secretly recruited by Google, which allegedly pays them “to serve as the public face” and “obfuscate” Google’s involvement, Microsoft’s blog said. In return, Google likely offered the cloud providers cash or discounts to join, Alaily alleged.
The Open Cloud Coalition is just one part of a “pattern of shadowy campaigns” that Google has funded, both “directly and indirectly,” to muddy the antitrust waters, Alaily alleged. The only other named example that Alaily gives while documenting this supposed pattern is the US-based Coalition for Fair Software Licensing (CFSL), which Alaily said has attacked Microsoft’s cloud computing business in the US, the United Kingdom, and the European Union.
That group is led by Ryan Triplette, who Alaily said is “a well-known lobbyist for Google in Washington, DC, but Google’s affiliation isn’t disclosed publicly by the organization.” An online search confirms Triplette was formerly a lobbyist for Franklin Square Group, which Politico reported represented Google during her time there.
Ars could not immediately reach the CFSL for comment. Google’s spokesperson told Ars that the company has “been a public supporter of CFSL for more than two years” and has “no idea what evidence Microsoft cites that we are the main funder of CFSL.” If Triplette was previously a lobbyist for Google, the spokesperson said, “that’s a weird criticism to make” since it’s likely “everybody in law, policy, etc.,” has “worked for Google, Microsoft, or Amazon at some point, in some capacity.”
Following an investigation, Elon Musk’s X has won its fight to avoid gatekeeper status under the European Union’s strict competition law, the Digital Markets Act (DMA).
On Wednesday, the European Commission (EC) announced that “X does indeed not qualify as a gatekeeper in relation to its online social networking service, given that the investigation revealed that X is not an important gateway for business users to reach end users.”
Since March, X had strongly opposed the gatekeeper designation by arguing that although X connects advertisers to more than 45 million monthly users, it does not have a “significant impact” on the EU’s internal market, a case filing showed.
A gatekeeper “is presumed to have a significant impact on the internal market where it achieves an annual Union turnover equal to or above EUR 7.5 billion in each of the last three financial years,” the case filing said. But X submitted evidence showing that its Union turnover was less than that in 2022, the same year that Musk took over Twitter and began alienating advertisers by posting their ads next to extremists’ tweets.
Throughout Musk’s reign at Twitter/X, the social networking company told the EC, both advertising revenue and users have steadily declined in the EU. In particular, “X Ads has a too small and decreasing scale in terms of share of advertising spend in the Union to constitute an important gateway in the market for online advertising,” X argued, further noting that X had a “lack of platform power” to change that anytime soon.
“In the last 15 months, X Ads has faced a decline in number of advertising business users, as well as a decline in pricing,” X argued.
Google called the DOJ extending search remedies to AI “radical,” an “overreach.”
The US Department of Justice finally proposed sweeping remedies to destroy Google’s search monopoly late yesterday, and, predictably, Google is not loving any of it.
On top of predictable asks—like potentially requiring Google to share search data with rivals, restricting distribution agreements with browsers like Firefox and device makers like Apple, and breaking off Chrome or Android—the DOJ proposed remedies to keep Google from blocking competition in “the evolving search industry.” And those extra steps threaten Google’s stake in the nascent AI search world.
This is only the first step in the remedies stage of litigation, but Google is already showing resistance to both expected and unexpected remedies that the DOJ proposed. In a blog from Google’s vice president of regulatory affairs, Lee-Anne Mulholland, the company accused the DOJ of “overreach,” suggesting that proposed remedies are “radical” and “go far beyond the specific legal issues in this case.”
From here, discovery will proceed as the DOJ makes a case to broaden the scope of proposed remedies and Google raises its defense to keep remedies as narrowly tailored as possible. After that phase concludes, the DOJ will propose its final judgement on remedies in November, which must be fully revised by March 2025 for the court to then order remedies.
Even then, however, the trial is unlikely to conclude, as Google plans to appeal. In August, Mozilla’s spokesperson told Ars that the trial could drag on for years before any remedies are put in place.
In the meantime, Google plans to continue focusing on building out its search empire, Google’s president of global affairs, Kent Walker, said in August. This presumably includes innovations in AI search that the DOJ fears may further entrench Google’s dominant position.
Scrutiny of Google’s every move in the AI industry will likely only be heightened in that period. As Google has already begun seeking exclusive AI deals with companies like Apple, it risks appearing to engage in the same kinds of anti-competitive behavior in AI markets as the court has already condemned. And giving that impression could not only impact remedies ordered by the court, but also potentially weaken Google’s chances of winning on appeal, Lee Hepner, an antitrust attorney monitoring the trial for the American Economic Liberties Project, told Ars.
Ending Google’s monopoly starts with default deals
In the DOJ’s proposed remedy framework, the DOJ says that there’s still so much more to consider before landing on final remedies that it reserves “the right to add or remove potential proposed remedies.”
Through discovery, DOJ said that it plans to continue engaging experts and stakeholders “to learn not just about the relevant markets themselves but also about adjacent markets as well as remedies from other jurisdictions that could affect or inform the optimal remedies in this action.
“To be effective, these remedies… must include some degree of flexibility because market developments are not always easy to predict and the mechanisms and incentives for circumvention are endless,” the DOJ said.
Ultimately, the DOJ said that any remedies sought should be “mutually reinforcing” and work to “unfetter” Google’s current monopoly in general search services and general text advertising markets. That effort would include removing barriers to competition—like distribution and revenue-sharing agreements—as well as denying Google monopoly profits and preventing Google from monopolizing “related markets in the future,” the DOJ said.
Any effort to undo Google’s monopoly starts with ending Google’s control over “the most popular distribution channels,” the DOJ said. At one point during the trial, for example, a witness accidentally blurted out that Apple gets a 36 percent cut from its Safari deal with Google. Lucrative default deals like that leave rivals with “little-to-no incentive to compete for users,” the DOJ said.
“Fully remedying these harms requires not only ending Google’s control of distribution today, but also ensuring Google cannot control the distribution of tomorrow,” the DOJ warned.
To dislodge this key peg propping up Google’s search monopoly, some options include ending Google’s default deals altogether, which would “limit or prohibit default agreements, preinstallation agreements, and other revenue-sharing arrangements related to search and search-related products, potentially with or without the use of a choice screen.”
A breakup could be necessary
Behavior and structural remedies may also be needed, the DOJ proposed, to “prevent Google from using products such as Chrome, Play, and Android to advantage Google search and Google search-related products and features—including emerging search access points and features, such as artificial intelligence—over rivals or new entrants.” That could mean spinning off the Chrome browser or restricting Google from preinstalling its search engine as the default in Chrome or on Android devices.
In her blog, Mulholland conceded that “this case is about a set of search distribution contracts” but claimed that “overbroad restrictions on distribution contracts” would create friction for Google users and “reduce revenue for companies like Mozilla” as well as Android smart phone makers.
Asked to comment on supposedly feared revenue losses, a Mozilla spokesperson told Ars, “[We are] closely monitoring the legal process and considering its potential impact on Mozilla and how we can positively influence the next steps. Mozilla has always championed competition and choice online, particularly in search. Firefox continues to offer a range of search options, and we remain committed to serving our users’ preferences while fostering a competitive market.”
Mulholland also warned that “splitting off” Chrome or Android from Google’s search business “would break them” and potentially “raise the cost of devices,” because “few companies would have the ability or incentive to keep them open source, or to invest in them at the same level we do.”
“We’ve invested billions of dollars in Chrome and Android,” Mulholland wrote. “Chrome is a secure, fast, and free browser and its open-source code provides the backbone for numerous competing browsers. Android is a secure, innovative, and free open-source operating system that has enabled vast choice in the smartphone market, helping to keep the cost of phones low for billions of people.”
Google has long argued that its investment in open source Chrome and Android projects benefits developers whose businesses and customers would be harmed if those efforts lost critical funding.
“Features like Chrome’s Safe Browsing, Android’s security features, and Play Protect benefit from information and signals from a range of Google products and our threat-detection expertise,” Mulholland wrote. “Severing Chrome and Android would jeopardize security and make patching security bugs harder.”
Hepner told Ars that Android could potentially thrive if broken off from Google, suggesting that through discovery, it will become clearer what would happen if either Google product was severed from the company.
“I think others would agree that Android is a company that is capable [being] a standalone entity,” Hepner said. “It could be independently monetized through relationships with device manufacturers, web browsers, alternative Play Stores that are not under Google’s umbrella. And that if that were the case, what you would see is that Android and the operating system marketplace begins to evolve to meet the needs and demands of innovative products that are not being created just by Google. And you’ll see that dictating the evolution of the marketplace and fundamentally the flow of information across our society.”
Mulholland also claimed that sharing search data with rivals risked exposing users to privacy and security risks, but the DOJ vowed to be “mindful of potential user privacy concerns in the context of data sharing” while distinguishing “genuine privacy concerns” from “pretextual arguments” potentially misleading the court regarding alleged risks.
One possible way around privacy concerns, the DOJ suggested, would be prohibiting Google from collecting the kind of sensitive data that cannot be shared with rivals.
Finally, to stop Google from charging supra-competitive prices for ads, the DOJ is “evaluating remedies” like licensing or syndicating Google’s ad feed “independent of its search results.” Further, the DOJ may require more transparency, forcing Google to provide detailed “search query reports” featuring currently obscured “information related to its search text ads auction and ad monetization.”
Stakeholders were divided on whether the DOJ’s initial framework is appropriate.
Matt Schruers, the CEO of a trade association called the Computer & Communications Industry Association (which represents Big Tech companies like Google), criticized the DOJ’s “hodgepodge of structural and behavioral remedies” as going “far beyond” what’s needed to address harms.
“Any remedy should be narrowly tailored to address specific conduct, which in this case was a set of search distribution contracts,” Schruers said. “Instead, the proposed DOJ remedies would reshape numerous industries and products, which would harm consumers and innovation in these dynamic markets.”
But a senior vice president of public affairs for Google search rival DuckDuckGo, Kamyl Bazbaz, praised the DOJ’s framework as being “anchored to the court’s ruling” and appropriately broad.
“This proposal smartly takes aim at breaking Google’s illegal hold on the general search market now and ushers in a new era of enduring competition moving forward,” Bazbaz said. “The framework understands that no single remedy can undo Google’s illegal monopoly, it will require a range of behavioral and structural remedies to free the market.”
Bazbaz expects that “Google is going to use every resource at its disposal to discredit this proposal,” suggesting that “should be taken as a sign this framework can create real competition.”
AI deals could weaken Google’s appeal, expert says
Google appears particularly disturbed by the DOJ’s insistence that remedies must be forward-looking and prevent Google from leveraging its existing monopoly power “to feed artificial intelligence features.”
As Google sees it, the DOJ’s attempt to attack Google’s AI business “comes at a time when competition in how people find information is blooming, with all sorts of new entrants emerging and new technologies like AI transforming the industry.”
But the DOJ has warned that Google’s search monopoly potentially feeding AI features “is an emerging barrier to competition and risks further entrenching Google’s dominance.”
The DOJ has apparently been weighing some of the biggest complaints about Google’s AI training when mulling remedies. That includes listening to frustrated site owners who can’t afford to block Google from scraping data for AI training because the same exact crawler indexes their content in Google search results. Those site owners have “little choice” but to allow AI training or else sacrifice traffic from Google search, The Seattle Times reported.
Remedy options may come with consequences
Remedies in the search trial might change that. In their proposal, the DOJ said it’s considering remedies that would “prohibit Google from using contracts or other practices to undermine rivals’ access to web content and level the playing field by requiring Google to allow websites crawled for Google search to opt out of training or appearing in any Google-owned artificial-intelligence product or feature on Google search,” such as Google’s controversial AI summaries.
Hepner told Ars that “it’s not surprising at all” that remedies cover both search and AI because “at the core of Google’s monopoly power is its enormous scale and access to data.”
“The Justice Department is clearly thinking creatively,” Hepner said, noting that “the ability for content creators to opt out of having their material and work product used to train Google’s AI systems is an interesting approach to depriving Google of its immense scale.”
The DOJ is also eyeing controls on Google’s use of scale to power AI advertising technologies like Performance Max to end Google’s supracompetitive pricing on text ads for good.
It’s critical to think about the future, the DOJ argued in its framework, because “Google’s anticompetitive conduct resulted in interlocking and pernicious harms that present unprecedented complexities in a highly evolving set of markets”—not just in the markets where Google holds monopoly powers.
Google disagrees with this alleged “government overreach.”
“Hampering Google’s AI tools risks holding back American innovation at a critical moment,” Mulholland warned, claiming that AI is still new and “competition globally is fierce.”
“There are enormous risks to the government putting its thumb on the scale of this vital industry—skewing investment, distorting incentives, hobbling emerging business models—all at precisely the moment that we need to encourage investment, new business models, and American technological leadership,” Mulholland wrote.
Hepner told Ars that he thinks that the DOJ’s proposed remedies framework actually “meets the moment and matches the imperative to deprive Google of its monopoly hold on the search market, on search advertising, and potentially on future related markets.”
To ensure compliance with any remedies pursued, the DOJ also recommended “protections against circumvention and retaliation, including through novel paths to preserving dominance in the monopolized markets.”
That means Google might be required to “finance and report to a Court-appointed technical committee” charged with monitoring any Google missteps. The company may also have to agree to retain more records for longer—including chat messages that the company has been heavily criticized for deleting. And through this compliance monitoring, Google may also be prohibited from owning a large stake in any rivals.
If Google were ever found willfully non-compliant, the DOJ is considering a “range of provisions,” including risking more extreme structural or behavioral remedies or enduring extensions of compliance periods.
As the remedies stage continues through the spring, followed by Google’s prompt appeal, Hepner suggested that the DOJ could fight to start imposing remedies before the appeal concludes. Likely Google would just as strongly fight for any remedies to be delayed.
While the trial drags on, Hepner noted that Google already appears to be trying to strike another default deal with Apple that appears pretty similar to the controversial distribution deals at the heart of the search monopoly trial. In March, Apple started mulling using Google’s Gemini to exclusively power new AI features for the iPhone.
“This is basically the exact same anticompetitive behavior that they were found liable for,” Hepner told Ars, suggesting this could “weaken” Apple’s defense both against the DOJ’s broad framework of proposed remedies and during the appeal.
“If Google is actually engaging in the same anti-competitive conduct and artificial intelligence markets that they were found liable for in the search market, the court’s not going to look kindly on that relative to an appeal,” Hepner said.
Ashley is a senior policy reporter for Ars Technica, dedicated to tracking social impacts of emerging policies and new technologies. She is a Chicago-based journalist with 20 years of experience.
Google wound down its defense in the US Department of Justice’s ad tech monopoly trial this week, following a week of testimony from witnesses that experts said seemed to lack credibility.
The tech giant started its defense by showing a widely mocked chart that Google executive Scott Sheffer called a “spaghetti football,” supposedly showing a fluid industry thriving thanks to Google’s ad tech platform but mostly just “confusing” everyone and possibly even helping to debunk its case, Open Markets Institute policy analyst Karina Montoya reported.
“The effect of this image might have backfired as it also made it evident that Google is ubiquitous in digital advertising,” Montoya reported. “During DOJ’s cross-examination, the spaghetti football was untangled to show only the ad tech products used specifically by publishers and advertisers on the open web.”
One witness, Marco Hardie, Google’s current head of industry, was even removed from the stand, his testimony deemed irrelevant by US District Judge Leonie Brinkema, Big Tech On Trial reported. Another, Google executive Scott Sheffer, gave testimony Brinkema considered “tainted,” Montoya reported. But perhaps the most heated exchange about a witness’ credibility came during the DOJ’s cross-examination of Mark Israel, the key expert that Google is relying on to challenge the DOJ’s market definition.
Google’s case depends largely on Brinkema agreeing that the DOJ’s market definition is too narrow, with an allegedly outdated focus on display ads on the open web, as opposed to a broader market including display ads appearing in apps or on social media. But experts monitoring the trial suggested that Brinkema may end up questioning Israel’s credibility after DOJ lawyer Aaron Teitelbaum’s aggressive cross-examination.
According to Big Tech on Trial, which posted the exchange on X (formerly Twitter), Teitelbaum’s line of questioning came across as a “striking and effective impeachment of Mark Israel’s credibility as a witness.”
During his testimony, Israel told Brinkema that Google’s share of the US display ads market is only 25 percent, minimizing Google’s alleged dominance while emphasizing that Google faced “intense competition” from other Big Tech companies like Amazon, Meta, and TikTok in this broader market, Open Markets Institute policy analyst Karina Montoya reported.
On cross-examination, Teitelbaum called Israel out as a “serial ‘expert’ for companies facing antitrust challenges” who “always finds that the companies ‘explained away’ market definition,” Big Tech on Trial posted on X. Teitelbaum even read out quotes from past cases “in which judges described” Israel’s “expert testimony as ‘not credible’ and having ‘misunderstood antitrust law.'”
Israel was also accused by past judges of rendering his opinions “based on false assumptions,” according to USvGoogleAds, a site run by the digital advertising watchdog Check My Ads with ad industry partners. And specifically for the Google ad tech case, Teitelbaum noted that Israel omitted ad spend data to seemingly manipulate one of his charts.
“Not a good look,” the watchdog’s site opined.
Perhaps most damaging, Teitelbaum asked Israel to confirm that “80 percent of his income comes from doing this sort of expert testimony,” suggesting that Israel seemingly depended on being paid by companies like Jet Blue and Kroger-Albertsons—and even previously by Google during the search monopoly trial—to muddy the waters on market definition. Lee Hepner, an antitrust lawyer with the American Economic Liberties Project, posted on X that the DOJ’s antitrust chief, Jonathan Kanter, has grown wary of serial experts supposedly sowing distrust in the court system.
“Let me say this clearly—this will not end well,” Kanter said during a speech at a competition law conference this month. “Already we see a seeping distrust of expertise by the courts and by law enforcers.”
“Best witnesses money can buy”
In addition to experts and Google staffers backing up Google’s proposed findings of fact and conclusions of law, Google brought in Courtney Caldwell—the CEO of a small business that once received a grant from Google and appears in Google’s marketing materials—to back up claims that a DOJ win could harm small businesses, Big Tech on Trial reported.
Google’s direct examination of Caldwell was “basically just a Google ad,” Big Tech on Trial said, while Check My Ads’ site suggested that Google mostly just called upon “the best witnesses their money can buy, and it still did not get them very far.”
According to Big Tech on Trial, Google is using a “light touch” in its defense, refusing to go “pound for pound” to refute the DOJ’s case. Using this approach, Google can seemingly ignore any argument the DOJ raises that doesn’t fit into the picture Google wants Brinkema to accept of Google’s ad empire growing organically, rather than anti-competitively constructed with the intent to shut out rivals through mergers and acquisitions.
Where the DOJ wants the judge to see “a Google-only pipeline through the heart of the ad tech stack, denying non-Google rivals the same access,” Google argues that it has only “designed a set of products that work efficiently with each other and attract a valuable customer base.”
Evidence that Brinkeman might find hard to ignore include a 2008 statement from Google’s former president of display advertising, David Rosenblatt, confirming that it would “take an act of god” to get people to switch ad platforms because of extremely high switching costs. Rosenblatt also suggested in a 2009 presentation that Google acquiring DoubleClick for Publishers would make Google’s ad tech like the New York Stock Exchange, putting Google in a position to monitor every ad sale and doing for display ads “what Google did to search.” There’s also a 2010 email where now-YouTube CEO Neal Mohan recommended getting Google ahead in the display ad market by “parking” a rival with “the most traction.”
On Friday, testimony concluded abruptly after the DOJ only called one rebuttal witness, Big Tech on Trial posted on X. Brinkema is expected to hear closing arguments on November 25, Big Tech on Trial reported, and rule in December, Montoya reported.
As the US Department of Justice aims to break up Google’s alleged ad tech monopoly, experts say that remedies sought in the antitrust trial could potentially benefit not just advertisers and publishers but also everyone targeted by ads online.
So far, the DOJ has argued that through acquisitions, Google allegedly monopolizes the ad server market, taking a substantial cut of every online ad sale by tying together products on the buyer and seller sides. Locking publishers into using its seller-side platform to access its large advertiser demand, Google also allegedly shut out rivals by pushing advertisers into a corner, then making it hard for publishers to switch platforms.
This scheme also allegedly set Google up to charge higher “monopoly” fees, the DOJ argued, allegedly putting some publishers out of business and raising costs for advertisers.
But while the harms to publishers and advertisers have been outlined at length, there’s been less talk about the seemingly major consequences for consumers perhaps harmed by the alleged monopoly. Those harms include higher costs of goods, less privacy, and increasingly lower-quality ads that frequently bombard their screens with products nobody wants.
By overcharging by as much as 5 or 10 percent for online ads, Google allegedly placed a “Google tax” on the price of “everyday goods we buy,” Tech Oversight’s Sacha Haworth explained during a press briefing Thursday, where experts closely monitoring the trial shared insights.
“When it comes to lowering costs on families,” Haworth said, “Google has overcharged advertisers and publishers by nearly $2 billion. That’s just over the last four years. That has inflated the price of ads, it’s increased the cost of doing business, and, of course, these costs get passed down to us when we buy things online.”
But while it’s unclear if destroying Google’s alleged monopoly would pass on any savings to consumers, Elise Phillips, policy counsel focused on competition and privacy for Public Knowledge, outlined other benefits in the event of a DOJ win.
She suggested that Google’s conduct has diminished innovation, which has “negatively” affected “the quality diversity and even relevancy of the advertisements that consumers tend to see.”
Were Google’s ad tech to be broken up and behavioral remedies sought, more competition might mean that consumers have more control over how their personal data is used in targeted advertising, Phillips suggested, and ultimately, lead to a future where everyone gets fed higher-quality ads.
That could happen if, instead of Google’s ad model dominating the Internet, less invasive ad targeting models could become more widely adopted, experts suggested. That could enhance privacy and make online ads less terrible after The New York Times declared a “junk ad epidemic” last year.
The thinking goes that if small businesses and publishers benefited from potentially reduced costs, increased revenues, and more options, consumers might start seeing a wider, higher-quality range of ads online, experts suggested.
Better ad models “are already out there,” Open Markets Institute policy analyst Karina Montoya said, such as “conceptual advertising” that uses signals that, unlike Google’s targeting, don’t rely on “gigantic, massive data sets that collect every single thing that we do in all of our devices and that don’t ask for our consent.”
But any emerging ad models are seemingly “crushed and flattened by this current dominant business model that’s really arising” from Google’s tight grip on the ad tech markets that the DOJ is targeting, Montoya said. Those include markets “for publisher ad servers, advertiser ad networks, and the ad exchanges that connect the two,” Reuters reported.
At the furthest extreme, loosening Google’s grip on the online ad industry could even “revolutionize the Internet,” Haworth suggested.
One theory posits that if publishers’ revenues increased, consumers would also benefit from more information potentially becoming available on the open web—as less content potentially gets stuck behind paywalls as desperate publishers seek ways to make up for lost ad revenue.
Montoya—who also is a reporter for the Center for Journalism & Liberty, which monitors how media outlets can thrive in today’s digital economy—noted that publishers depending on reader funding through subscriptions or donations is not sustainable if society wants to “have an open in free market where everybody can access information that they deserve and have a right to access.” By reducing Google’s control, the DOJ argues that publishers would be more financially stable, and Montoya hopes the public is starting to understand how that could benefit the open web.
“The trial is really allowing the public to see a full display of Google’s pattern of retaliatory behavior, really just to protect its monopoly power,” Montoya sad. “This idea that innovation and ways to monetize journalistic content has to come only from Google is wrong and this is really their defense.”
Enlarge/ A staffer with the Paul, Weiss legal firm wheels boxes of legal documents into the Albert V. Bryan US Courthouse at the start of a Department of Justice antitrust trial against Google over its advertiing business in Alexandria, Virginia, on September 9, 2024. Google faces its second major antitrust trial in less than a year, with the US government accusing the tech giant of dominating online advertising and stifling competition.
Just a couple of days into the Google ad tech antitrust trial, it seems clear that the heart of the US Department of Justice’s case is proving that Google Ad Manager is the key to the tech giant’s alleged monopoly.
Google Ad Manager is the buy-and-sell side ad tech platform launched following Google’s acquisition of DoubleClick and AdX in 2008 for $3 billion. It is currently used to connect Google’s publisher ad servers with its ad exchanges, tying the two together in a way that allegedly locks the majority of publishers into paying higher fees on the publisher side because they can’t afford to drop Google’s ad exchange.
The DOJ has argued that Google Ad Manager “serves 90 percent of publishers that use the ad tech tools to sell their online ad inventory,” AdAge reported, and through it, Google clearly wields monopoly powers.
In her opening statement, DOJ attorney Julia Tarver Wood argued that acquisitions helped Google manipulate the rules of ad auctions to maximize profits while making it harder for rivals to enter and compete in the markets Google allegedly monopolized. The DOJ has argued those alleged monopolies are in markets “for publisher ad servers, advertiser ad networks, and the ad exchanges that connect the two,” Reuters reported.
Google has denied this characterization of its ad tech dominance, calling the DOJ’s market definitions too narrow. The tech company also pointed out that the Federal Trade Commission (FTC) investigated and unconditionally approved the DoubleClick merger in 2007, amidst what the FTC described as urgent “high profile public discussions of the competitive merits of the transaction, in which numerous (sometimes conflicting) theories of competitive harm were proposed.” At that time, the FTC concluded that the acquisition “was unlikely to reduce competition in any relevant antitrust market.”
But in its complaint, the DOJ argued that the DoubleClick “acquisition vaulted Google into a commanding position over the tools publishers use to sell advertising opportunities, complementing Google’s existing tool for advertisers, Google Ads, and set the stage for Google’s later exclusionary conduct across the ad tech industry.”
To set things right, at the very least, the DOJ has asked the court to order Google to spin off Google Ad Manager, which may or may not include valuable products like Google’s Display and Video 360 (DV360) platform. There is also the possibility that the US district judge, Leonie Brinkema, could order Google to sell off its ad tech business entirely.
One problem with those proposed remedies, analysts told AdAge, is that no one knows how big Google’s ad tech business really is or the actual value of Google Ad Manager.
Google Ad Manager could be worth less if Google’s DV360 platform isn’t included in the sale or if selling either the publisher or advertiser side cuts out data allowing Google to set the prices that it wants. The CEO of an ad platform called Permutive, Joe Root, told AdAge that “it is hard to say how much of the value of Google’s ads business is because it has this advertiser product and DV360, versus how much of its value comes from Google Ad Manager alone.”
Root doubts that Google Ad Manager is “on its own that valuable.” However, based on “newly released documents for the trial,” some analysts predict that “any new entity spun out of Google” would be “almost too big for any buyer,” AdAge reported.
One estimate from an ad tech consultant who helms a strategic advisory firm called Luma Partners, Terence Kawaja, suggested that Google’s ad tech business as a standalone company “could be worth up to $95 billion” today, AdAge reported.
“You can’t divest $100 billion,” Kawaja said. “There is no buyer for it. [Google] would have to spin it off to shareholders, that’s how any forced remedy would manifest.”
Enlarge/ Karen Dunn, one of the lawyers representing Google, outside of the Albert V. Bryan US Courthouse at the start of a Department of Justice antitrust trial against Google over its advertiing business in Alexandria, Virginia, on September 9, 2024.
“One monopoly is bad enough,” Wood said. “But a trifecta of monopolies is what we have here.”
In its complaint, the DOJ argued that Google broke competition in the ad tech space “by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers, and brokers, to facilitate digital advertising.”
The result of such “insidious” allegedly anti-competitive behavior is that today Google pockets at least 30 cents “of each advertising dollar flowing from advertisers to website publishers through Google’s ad tech tools … and sometimes far more,” the DOJ alleged.
Meanwhile, as Google profits off both advertisers and publishers, “website creators earn less, and advertisers pay more” than “they would in a market where unfettered competitive pressure could discipline prices and lead to more innovative ad tech tools,” the DOJ alleged.
On Monday, Wood told Brinkema that Google intentionally put itself in this position to “manipulate the rules of ad auctions to its own benefit,” The Washington Post reported.
“Publishers were understandably furious,” Wood said. “The evidence will show that they could do nothing.”
Wood confirmed that the DOJ planned to call several publishers as witnesses in the coming weeks to explain the harms caused. Expected to take the stand will be “executives from companies including USA Today, [Wall Street] Journal parent company News Corp., and the Daily Mail,” the Post reported.
The ad tech trial, which is expected to last four to six weeks, may be the most consequential of the monopoly trials Google has recently faced, experts have said.
That’s because during the DOJ’s trial proving Google’s monopoly in search, it remained unclear what remedies the DOJ sought. Some ways to destroy Google’s search monopoly could be “unlikely to create meaningful competition” or hurt Google’s bottom line, experts told Ars, but a more drastic order to spin out its Chrome browser or Android operating system could really impact Google’s revenue. It won’t be until December that the DOJ will even provide a rough outline of proposed remedies in that case, Reuters reported, with the judge not expected to rule until next August.
But the DOJ has been very clear about the remedies needed in the ad tech case, “asking Brinkema to order a divestment of Google’s Ad Manager suite of services, which is responsible for many of the rectangular ads that populate the tops and sides of webpages across the Internet,” the Post reported.
Because the most “obvious” remedy would be to require Google to sell off parts of its ad business, experts told AP News that the ad tech trial “could potentially be more harmful to Google” than the search trial. Perhaps at the furthest extreme, antitrust expert Shubha Ghosh told Ars that “if this case goes against Google as the last one did, it could set the stage for splitting it into separate search and advertising companies.”
In the DOJ’s complaint, prosecutors argued that it “is critical to restore competition in these markets by enjoining Google’s anticompetitive practices, unwinding Google’s anticompetitive acquisitions, and imposing a remedy sufficient both to deny Google the fruits of its illegal conduct and to prevent further harm to competition in the future.”
Ghosh said that undoing Google’s acquisitions could lead to Google no longer representing both advertisers’ and sellers’ interests in each ad auction—instead requiring Google to either pick a side or perhaps involve a broker.
Although the Post reported that Google has argued that “customers prefer the convenience of a one-stop shop,” the DOJ hopes to prove that Google’s alleged monopoly has shuttered newspapers across the US and threatens to do more harm if left unchecked.
