us v google

judge-mulls-sanctions-over-google’s-“shocking”-destruction-of-internal-chats

Judge mulls sanctions over Google’s “shocking” destruction of internal chats

Antitrust law, department of justice, Google, google monopoly trial, google search ads, Policy, search engines, us v google / /
Kenneth Dintzer, litigator for the US Department of Justice, exits federal court in Washington, DC, on September 20, 2023, during the antitrust trial to determine if Alphabet Inc.'s Google maintains a monopoly in the online search business.

Enlarge / Kenneth Dintzer, litigator for the US Department of Justice, exits federal court in Washington, DC, on September 20, 2023, during the antitrust trial to determine if Alphabet Inc.’s Google maintains a monopoly in the online search business.

Near the end of the second day of closing arguments in the Google monopoly trial, US district judge Amit Mehta weighed whether sanctions were warranted over what the US Department of Justice described as Google’s “routine, regular, and normal destruction” of evidence.

Google was accused of enacting a policy instructing employees to turn chat history off by default when discussing sensitive topics, including Google’s revenue-sharing and mobile application distribution agreements. These agreements, the DOJ and state attorneys general argued, work to maintain Google’s monopoly over search.

According to the DOJ, Google destroyed potentially hundreds of thousands of chat sessions not just during their investigation but also during litigation. Google only stopped the practice after the DOJ discovered the policy. DOJ’s attorney Kenneth Dintzer told Mehta Friday that the DOJ believed the court should “conclude that communicating with history off shows anti-competitive intent to hide information because they knew they were violating antitrust law.”

Mehta at least agreed that “Google’s document retention policy leaves a lot to be desired,” expressing shock and surprise that a large company like Google would ever enact such a policy as best practice.

Google’s attorney Colette Connor told Mehta that the DOJ should have been aware of Google’s policy long before the DOJ challenged the conduct. Google had explicitly disclosed the policy to Texas’ attorney general, who was involved in DOJ’s antitrust suit over both Google’s search and adtech businesses, Connor said.

Connor also argued that Google’s conduct wasn’t sanctionable because there is no evidence that any of the missing chats would’ve shed any new light on the case. Mehta challenged this somewhat, telling Connor, “We just want to know what we don’t know. We don’t know if there was a treasure trove of material that was destroyed.”

During rebuttal, Dintzer told Mehta that Google’s decision to tell Texas about the policy but not the federal government did not satisfy their disclosure obligation under federal rules of civil procedure in the case. That rule says that “only upon finding that the party acted with the intent to deprive another party of the information’s use in the litigation may” the court “presume that the lost information was unfavorable to the party.”

The DOJ has asked the court to make that ruling and issue four orders sanctioning Google. They want the court to order the “presumption that deleted chats were unfavorable,” the “presumption that Google’s proffered justification” for deleting chats “is pretextual” (concealing Google’s true rationale), and the “presumption that Google intended” to delete chats to “maintain its monopoly.” The government also wants a “prohibition on argument by Google that the absence of evidence is evidence of adverse inference,” which would stop Google from arguing that the DOJ is just assuming the deleted chats are unfavorable to Google.

Mehta asked Connor if she would agree that, at “minimum,” it was “negligent” of Google to leave it to employees to preserve chats on sensitive discussions, but Connor disagreed. She argued that “given the typical use of chat,” Google’s history-off policy was “reasonable.”

Connor told Mehta that the DOJ must prove that Google intended to hide evidence for the court to order sanctions.

That intent could be demonstrated another way, Mehta suggested, recalling that “Google has been very deliberate in advising employees about what to say and what not to say” in discussions that could indicate monopolistic behaviors. That included telling employees, “Don’t use the term markets,” Mehta told Connor, asking if that kind of conduct could be interpreted as Google’s intent to hide evidence.

But Connor disagreed again.

“No, we don’t think you can use it as evidence,” Connor said. “It’s not relevant to the claims in this case.”

But during rebuttal, Dintzer argued that there was evidence of its relevance. He said that testimony from Google employees showed that Google’s chat policy “was uniformly used as a way of communicating without creating discoverable information” intentionally to hide the alleged antitrust violations.

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Apple deal could have been “suicide” for Google, company lawyer says

Antitrust law, Apple, department of justice, Google, google monopoly trial, monopoly, Policy, us v google / /

Woulda coulda shoulda? —

Judge: What should Google have done to avoid the DOJ’s crosshairs?

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John Schmidtlein, partner at Williams & Connolly LLP and lead litigator for Alphabet Inc.'s Google, arrives to federal court in Washington, DC, US, on Monday, Oct. 2, 2023.

Enlarge / John Schmidtlein, partner at Williams & Connolly LLP and lead litigator for Alphabet Inc.’s Google, arrives to federal court in Washington, DC, US, on Monday, Oct. 2, 2023.

Halfway through the first day of closing arguments in the Department of Justice’s big antitrust trial against Google, US District Judge Amit Mehta posed the question that likely many Google users have pondered over years of DOJ claims that Google’s market dominance has harmed users.

“What should Google have done to remain outside the crosshairs of the DOJ?” Mehta asked plaintiffs halfway through the first of two full days of closing arguments.

According to the DOJ and state attorneys general suing, Google has diminished search quality everywhere online, primarily by locking rivals out of default positions on devices and in browsers. By paying billions for default placements that the government has argued allowed Google to hoard traffic and profits, Google allegedly made it nearly impossible for rivals to secure enough traffic to compete, ultimately decreasing competition and innovation in search by limiting the number of viable search engines in the market.

The DOJ’s lead litigator, Kenneth Dintzer, told Mehta that what Google should have done was acknowledge that the search giant had an enormous market share and consider its duties more carefully under antitrust law. Instead, Dintzer alleged, Google chose the route of “hiding” and “destroying documents” because it was aware of conflicts with antitrust law.

“What should Google have done?” Dintzer told Mehta. “They should have recognized that by demanding locking down every default that they were opening themselves up to a challenge on the conduct.”

The most controversial default agreement that Google has made is a 21-year deal with Apple that Mehta has described as the “heart” of the government’s case against Google. During the trial, a witness accidentally blurted out Google’s carefully guarded secret of just how highly it values the Apple deal, revealing that Google pays 36 percent of its search advertising revenue from Safari just to remain the default search tool in Apple’s browser. In 2022 alone, trial documents revealed that Google paid Apple $20 billion for the deal, Bloomberg reported.

That’s in stark contrast to the 12 percent of revenue that Android manufacturers get from their default deals with Google. The government wants the court to consider all these default deals to be anti-competitive, with Dintzer suggesting during closing arguments that they are the “centerpiece” of “a lot” of Google’s exclusionary behavior that ultimately allowed Google to become the best search engine today—by “capturing the default and preventing rivals from getting access to those defaults.”

Google’s lawyers have argued that Google succeeds on its merits. Today, lead litigator John Schmidtlein repeatedly pointed out that antitrust law is designed to protect the competitive process, not specific competitors who fail to invest and innovate—as Microsoft did by failing to recognize how crucial mobile search would become.

“Merely getting advantages by winning on quality, they may have an effect on a rival, but the question is, does it have an anti-competitive effect?” Schmidtlein argued, noting that the DOJ hadn’t “shown that absent the agreements, Microsoft would have toppled Google.”

But Dintzer argued that “a mistake by one rival doesn’t mean that Google gets to monopolize this market forever.” When asked to explain why everyone—including some of Google’s rivals—testified that Google won contracts purely because it was the best search engine, Dintzer warned Mehta that the fact that Google’s rivals “may be happy cashing Google’s checks doesn’t tell us anything.”

According to Schmidtlein, Google could have crossed the line with the Apple deal, but it didn’t.

“Google didn’t go on to say to Apple, if you don’t make us the default, no Google search on Apple devices at all,” Schmidtlein argued. “That would be suicide for Google.”

It’s still unclear how Mehta may be leaning in this case, interrogating both sides with care and making it clear that he expects all his biggest questions to be answered after closing arguments conclude Friday evening.

But Mehta did suggest at one point today that it seemed potentially “impossible” for anyone to compete with Google for default placements.

“How would anybody be able to spend billions and billions of dollars to possibly dislodge Google?” Mehta asked. “Is there any real competition for the default spot?”

According to Schmidtlein, that is precisely what “competition on the merits” looks like.

“Google is winning because it’s better, and Apple is deciding Google is better for users,” Schmidtlein argued. “The antitrust laws are not designed to ensure a competitive market. They’re designed to ensure a competitive process.”

Proving the potential anti-competitive effects of Google’s default agreements, particularly the Apple deal, has long been regarded as the most critical point in order to win the government’s case. So it’s no surprise that the attorney representing state attorneys general, Bill Cavanaugh, praised Mehta for asking, “What should Google have done?” According to Cavanaugh, that was the “right question” to pose in this trial.

“What should they have done 10 years ago when there was a recognition” that “we’re monopolists” and “we have substantial control in markets” is ask, “How should we proceed with our contracts?” Cavanaugh argued. “That’s the question that they answered, but they answered it in the wrong way.”

Seemingly if Google’s default contracts posed fewer exclusionary concerns, the government seems to be arguing, there would be more competition and therefore more investment and innovation in search. But as long as Google controls the general search market, the government alleged that users won’t be able to search the web the way that they want.

Google is hoping that Mehta will reject the government’s theories and instead rule that Google has done nothing to stop rivals from improving the search landscape. Early in the day, Mehta told the DOJ that he was “struggling to see” how Google has either stopped innovating or degraded its search engine as a result of lack of competition.

Closing arguments continue on Friday. Mehta is not expected to rule until late summer or early fall.

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Email Microsoft didn’t want seen reveals rushed decision to invest in OpenAI

antitrust, Bill Gates, department of justice, Google, google antitrust trial, google monopoly trial, microsoft, openai, Policy, Satya Nadella, us v google / /

I’ve made a huge mistake —

Microsoft CTO made a “mistake” dismissing Google’s AI as a “game-playing stunt.”

–

Email Microsoft didn’t want seen reveals rushed decision to invest in OpenAI

In mid-June 2019, Microsoft co-founder Bill Gates and CEO Satya Nadella received a rude awakening in an email warning that Google had officially gotten too far ahead on AI and that Microsoft may never catch up without investing in OpenAI.

With the subject line “Thoughts on OpenAI,” the email came from Microsoft’s chief technology officer, Kevin Scott, who is also the company’s executive vice president of AI. In it, Scott said that he was “very, very worried” that he had made “a mistake” by dismissing Google’s initial AI efforts as a “game-playing stunt.”

It turned out, Scott suggested, that instead of goofing around, Google had been building critical AI infrastructure that was already paying off, according to a competitive analysis of Google’s products that Scott said showed that Google was competing even more effectively in search. Scott realized that while Google was already moving on to production for “larger scale, more interesting” AI models, it might take Microsoft “multiple years” before it could even attempt to compete with Google.

As just one example, Scott warned, “their auto-complete in Gmail, which is especially useful in the mobile app, is getting scarily good.”

Microsoft had tried to keep this internal email hidden, but late Tuesday it was made public as part of the US Justice Department’s antitrust trial over Google’s alleged search monopoly. The email was initially sealed because Microsoft argued that it contained confidential business information, but The New York Times intervened to get it unsealed, arguing that Microsoft’s privacy interests did not outweigh the need for public disclosure.

In an order unsealing the email among other documents requested by The Times, US District Judge Amit Mehta allowed to be redacted some of the “sensitive statements in the email concerning Microsoft’s business strategies that weigh against disclosure”—which included basically all of Scott’s “thoughts on OpenAI.” But other statements “should be disclosed because they shed light on Google’s defense concerning relative investments by Google and Microsoft in search,” Mehta wrote.

At the trial, Google sought to convince Mehta that Microsoft, for example, had failed to significantly invest in mobile early on, giving Google a competitive advantage in mobile search that it still enjoys today. Scott’s email seems to suggest that Microsoft was similarly dragging its feet on investing in AI until Scott’s wakeup call.

Nadella’s response to the email was immediate. He promptly forwarded the email to Microsoft’s chief financial officer, Amy Hood, on the same day that he received it. Scott’s “very good email,” Nadella told Hood, explained “why I want us to do this.” By “this,” Nadella presumably meant exploring investment opportunities in OpenAI.

Mere weeks later, Microsoft had invested $1 billion into OpenAI, and there have been billions more invested since through an extended partnership agreement. In 2024, the two companies’ finances appeared so intertwined that the European Union suspected Microsoft was quietly controlling OpenAI and began investigating whether the companies still operate independently. Ultimately, the EU dismissed the probe, deciding that Microsoft’s $13 billion in investments did not amount to an acquisition, Reuters reported.

Officially, Microsoft has said that its OpenAI partnership was formed “to accelerate AI breakthroughs to ensure these benefits are broadly shared with the world”—not to keep up with Google.

But at the Google trial, Nadella testified about the email, saying that partnering with companies like OpenAI ensured that Microsoft could continue innovating in search, as well as in other Microsoft services.

On the stand, Nadella also admitted that he had overhyped AI-powered Bing as potentially shaking up the search market, backing up the DOJ by testifying that in Silicon Valley, Internet search is “the biggest no-fly zone.” Even after partnering with OpenAI, Nadella said that for Microsoft to compete with Google in search, there are “limits to how much artificial intelligence can reshape the market as it exists today.”

During the Google trial, the DOJ argued that Google’s alleged search market dominance had hindered OpenAI’s efforts to innovate, too. “OpenAI’s ChatGPT and other innovations may have been released years ago if Google hadn’t monopolized the search market,” the DOJ argued, according to a Bloomberg report.

Closing arguments in the Google trial start tomorrow, with two days of final remarks scheduled, during which Mehta will have ample opportunity to ask lawyers on both sides the rest of his biggest remaining questions.

It’s somewhat obvious what Google will argue. Google has spent years defending its search business as competing on the merits—essentially arguing that Google dominates search simply because it’s the best search engine.

Yesterday, the US district court also unsealed Google’s proposed legal conclusions, which suggest that Mehta should reject all of the DOJ’s monopoly claims, partly due to the government’s allegedly “fatally flawed” market definitions. Throughout the trial, Google has maintained that the US government has failed to show that Google has a monopoly in any market.

According to Google, even its allegedly anticompetitive default browser agreement with Apple—which Mehta deemed the “heart” of the DOJ’s monopoly case—is not proof of monopoly powers. Rather, Google insisted, default browser agreements benefit competition by providing another avenue through which its rivals can compete.

The DOJ hopes to prove Google wrong, arguing that Google has gone to great lengths to block rivals from default placements and hide evidence of its alleged monopoly—including training employees to avoid using words that monopolists use.

Mehta has not yet disclosed when to expect his ruling, but it could come late this summer or early fall, AP News reported.

If Google loses, the search giant may be forced to change its business practices or potentially even break up its business. Nobody knows what that would entail, but when the trial started, a coalition of 20 civil society and advocacy groups recommended some potentially drastic remedies, including the “separation of various Google products from parent company Alphabet, including breakouts of Google Chrome, Android, Waze, or Google’s artificial intelligence lab Deepmind.”

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