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--:-- Sean Rameswaram: The United States is feeling lucky. It's going up against Google for the very first time. The Department of Justice filed an antitrust lawsuit against the giants of all tech giants this week. And it's got people like Attorney General Bill Barr and Senator Elizabeth Warren on the same team. Rare. Surprising. Wow. Russell Brandom has been covering it for The Verge. Russell, what's going on with the government and Google?
--:-- Russell Brandom: For years now, there has been building desire in Washington and sort of in legal circles all around the country to bring some kind of antitrust action against these enormous tech companies that have sprung up in the past 20 years. And this is really the first one we're seeing. It is the government's most aggressive legal challenge to big tech in two decades. The Justice Department and 11 states are suing Google for antitrust violations. Accusing it of abusing its monopoly in search. Google controls about 90% of global web searches.
--:-- Russell Brandom: Google runs the most popular search engine, the most popular browser, and one of the most popular mobile operating systems, along with a bunch of other stuff, isn't that a little weird? Isn't that maybe monopolistic market power? And, you know, now the Justice Department is going to go out and try to make the case that it is. And something like this hasn't happened in two decades.
--:-- Russell Brandom: What did it look like the last time? Good morning and welcome to our hearing today on market power and structural change in the software industry. This hearing is the second in a series of hearings I plan to have in the competition, innovation, and public policy in the digital age. The most recent tech example is Microsoft in the 90s, where essentially Microsoft was running Windows and they were using Windows to promote Internet Explorer. And this was understood to sort of be a bad thing.
--:-- Russell Brandom: Is there a danger that monopoly power is or could be used to stifle innovation in the U.S. software industry today, and perhaps more importantly, looking forward. And there was a huge case that was kind of along similar lines. For a time, it looked like Microsoft was going to be broken up, although at the last minute, the Justice Department sort of backed off. This has the potential to be bigger than the Microsoft case. I think the people who are pushing it certainly are hoping that it will be.
--:-- Russell Brandom: And at that point, you have to go back really even further to like the breakup of Bell Telephone and kind of some of the classic antitrust cases in U.S. history. Okay, and the government is focusing on the search engine, like vintage Google. So the charges are under section two of the Sherman Act, which basically alleges that they're a dominant player in the market and they're using that dominance to push out competitors or sort of maintain their dominance, right?
--:-- Russell Brandom: And specifically, the idea is that Google is doing this in search. So one of the big tests in, I think, the history of Google as a company was after the iPhone came out, it was clear that the shift to mobile was happening. People were going to be doing more and more searches on their phone, but it was not clear that Google was going to be the dominant search engine from people's phones. And one of the points that the Department of Justice makes in the filing is they were correct that this was a challenge.
--:-- Russell Brandom: Now we're seeing the majority of searches being made on mobile devices, right? And this is not generally typing in google.com and and then going to the bar. It's you're using Siri or you're using the sort of Google Voice thing or you just typing it into the address bar Why is Google the one that ends up powering all of those searches It great for Google because more searches means more search revenue for them Because as soon as you go to the page that what Google serves ads on
--:-- Russell Brandom: The claim is that they use their market dominance to ensure that no one could compete with them in mobile search. And part of what you see is this web of contract. We've known for a while that Google pays browsers to be the default search engine, because that's a very valuable thing for any search engine to have. I understand that Google paid Apple $9 billion in 2018 and $12 billion in 2019 for the right to be the default search engine on Safari.
--:-- Congressman: Congressman, I'm not familiar with those numbers. OK, billions are big numbers. So it's big numbers. What's new now is that the Department of Justice is saying these deals are anti-competitive. This is you crowding out any other possible competitor to Google in the search market. What's Google's response to this very specific argument that its search dominance in particular is monopolistic?
--:-- Russell Brandom: It's helpful to look at the deal. So for instance, like if you do a search in Firefox, which isn't run by Google, is a competitor to Google Chrome, it will be a default Google search. And this is something that Mozilla, which runs Firefox for a long time, had a deal with Yahoo for Yahoo to be the default. And then they switched it to Google. What you find when Yahoo is the default is that people just change it to Google because they prefer Google searches. They find the results more accurate. And so that's sort of the heart of Google's defense.
--:-- Russell Brandom: Google, which has become so ubiquitous and synonymous with search that it has become a verb, said the lawsuit is, quote, deeply flawed, adding that people use Google because they want to, not because they are forced to. They say, you know, the minute you give them another option, they go right back to Google search because that's what they trust. And they trust it because we've worked so hard to make it so wonderful. and you worry that if the Justice Department does win, they say, you know, all that's going to happen here is you're going to end up forcing people to use an inferior alternative.
--:-- Russell Brandom: And so what will actually happen is that the sort of experience of web searching will get worse just because you don't want it all to come through the best search engine, the one we've built. So what would this mean for certainly the world's most formidable search engine, if not one of the world's most formidable companies, if the United States government stepped in and said, you got to start breaking this thing up. You got to have a Yahoo search toolbar in Google Chrome. You have to make room for these other players. DuckDuckGo is going to be the default.
--:-- Russell Brandom: Yeah, I mean, I don't think we'll have mandatory DuckDuckGo search as much as that would thrill the DuckDuckGo vote. Nobody trust me. Nobody. I think it's easy to focus on the specific order of the court. I think the real upshot here is, and this is another thing you saw from Microsoft after the 90s, Google is going to be the subject of very intense regulatory scrutiny for the next 10 years. And part of that is going to be this specific case.
--:-- Russell Brandom: But then another part of it is, however the case is resolved, there will then be other US attorneys who want to make their name by making a similar case, but pushing it two steps further. Or they agree to some consent decree, but then people are keeping a very close eye on whether they're fulfilling that consent decree. And what you saw with Microsoft is they got very, very gun shy about entering new areas. Specifically for Microsoft, it was mobile. They weren't as aggressive as they could have been in promoting the mobile operating system they had.
--:-- Russell Brandom: And as a result, they got pushed out pretty fast. And we now have Apple and Google in the mobile operating system. So we're used to Google taking a lot of sort of big risky bets. As soon as there's a possibility for these personal home assistants, the voice activated ones like Alexa and Siri, we know Google's going to have one. They're working on self-driving cars. They're working on these smart home appliances. They almost built a sort of miniature city in Toronto. They're just taking a lot of different bets in a lot of different areas.
--:-- Russell Brandom: But I think if you're being actively regulated by the government and every time you buy a company, the Department of Justice says, OK, prove to us that this is not anti-competitive, that you're not crowding out other players in the personal voice assistant market. Then as an executive those bets start to look a lot less enticing and they may just be focusing more on how do we wring every last dollar out of our search business and our smartphone business And if you want to go do self car things you should go start a self car startup because we don't want to get in trouble with the government
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--:-- Sean Rameswaram: How this lawsuit made some unlikely allies out of Attorney General Bill Barr and Senator Elizabeth Warren. That's after a break on Today Explained. Support for Today Explained comes from Built Rewards. These days, it seems like everybody has a rewards program. You swipe your card and you get one cent on the hundred dollars. But with your rent, frequently, you just pay month after month. You never get anything from it other than that roof over your head. Not anymore, says Built Rewards.
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--:-- Sean Rameswaram: Thank you, thank you. This is Mark Raymondi with DOJ. Thank you all for joining us this morning, and I apologize for slight delay. This is On the Record, and you may broadcast the recording if you wish. And we're going to start off with the Deputy Attorney General, Jeff Rosen. So the first thing I want to just address is this morning, the Department of Justice in 11 states filed an antitrust civil lawsuit against Google for unlawfully maintaining a monopoly. Peter Kafka, you're a senior correspondent at Recode. Why is Google bringing this suit right now?
--:-- Peter Kafka: Because bill barr the attorney general was insistent that this happened this fall he wanted it to happen by the end of september reportedly and it was clearly important for him to get it done before the election huh is this kind of like the trump versus tiktok wechat thing like where there seems to be some sort of political motive or the trump versus at&t time warner case there's a bunch of these where people are wondering why the Department of Justice has behaved a certain way under Donald Trump.
--:-- Peter Kafka: We don't know. There are two schools with thought. One is this is a politically motivated case and that Bill Barr, Donald Trump's crony, as Elizabeth Warren calls him, is doing this to score political points for Donald Trump. It's somehow important for the election. And the other is this is a case that is 10 years in the making, it's 10 years overdue, that it should have been brought at any time over the last decade, and that Bill Barr wants to get it done now because maybe Bill Barr won't be attorney general in January and he wants to make sure this case has been filed.
--:-- Peter Kafka: Hmm. When people think of Bill Barr, they probably don't think of his keen interest in big tech, right? What's weird is Bill Barr has made a point of saying he has been interested in big tech and that he thinks the big tech companies have grown too big without check and something should be done about it. He's been very vocal about that in a way attorney generals often aren't. He's made it clear that he's interested in this case as well, in a way that attorney generals don't normally sort of signal publicly. He's had his sort of hands all over it.
--:-- Peter Kafka: No longer are tech companies the underdog upstarts. They have become titans of U.S. industry. Given this changing technological landscape, valid questions have been raised on whether Section 230's broad immunity is still necessary, at least in its current form. We know that prior to becoming the AG, Bill Barr worked for a long time for Verizon. Verizon and other telco companies, other cable companies generally aren't big fans of the internet and internet companies, so there's some conspiracy mongering there.
--:-- Peter Kafka: The more charitable way to look at it is this is a landmark case, and it is now Bill Barr's landmark case. And this could be sort of his sort of the thing that he would like to be remembered for And you mentioned Elizabeth Warren She involved too in some way Elizabeth Warren is on the sidelines cheering very loudly for Bill Barr Department of Justice to bring this suit And to make it clear, she despises Bill Barr and thinks he should resign. She calls him a corrupt crony. But she wants the United States Department of Justice to pursue this case and says it has been long overdue.
--:-- Peter Kafka: So Warren's putting her feelings about Bill Barr aside because her feelings about Google might be a little stronger at the moment? Yeah. And I mean, this was fascinating to me in the run up to the suit. I kept wondering if people who were aligned ideologically, Elizabeth Warren would say, I would love Google to be under the gun here, but I don't want to do it with Bill Barr, either because I just can't detest him and I won't work with him or because I'm worried that Bill Barr's politics will taint the case.
--:-- Peter Kafka: I have not been able to find anyone who said, yeah, I really think this is going to be a problem. Now, there may be people who think that, but just don't want to tell me slash a reporter. And those concerns are being put aside even in the very close lead up to a presidential election. Yes. I also wondered about that. If you think this is politically motivated and you think that the president and or Bill Barr thinks this is going to help their reelection case, why would you advocate for that now? Why not hold off?
--:-- Peter Kafka: You've had reporting from The New York Times that said a bunch of people internally at the Department of Justice thought this case was getting rushed. It's not idle speculation about the timeline. There's real concerns about this. And then everyone I talked to said, you know what? We can't wait for the perfect timing. This is overdue. We got to do it.
--:-- Peter Kafka: There was something that I brought up over and over when I was doing this reporting, which is a clip of Bill Barr on Fox News this summer, which to me strikes me as sort of the Nathan Jessup. You can't handle the truth. From A Few Good Men, where Bill Barr says out loud that there's anti-conservative bias in big tech. And that one way this can be addressed is through the antitrust laws and challenging companies that engage in monopolistic practices. Which is sort of a staggering thing to hear someone say, because what he's saying is antitrust law, which is supposed to sort of protect consumers from economic harm, would be a good club to hit the big tech companies with for their alleged conservative bias.
--:-- Peter Kafka: That sort of confirms everyone's worst fears. And Google will certainly bring this up in their defense. But that may not matter. You know, Russell mentioned that this is like the first big antitrust lawsuit of its kind since like 120 years ago against Microsoft. And it's obviously a big deal because it's the U.S. government suing Google. But for all the big dealness of it, it just doesn't sound as big when you actually get into the details. It's like this kind of convoluted thing about like search engine dominance. Like, do you think there was something splashier they could have said here with this statement?
--:-- Peter Kafka: I'm going to both sides it here. It's a really big deal when the U.S. government brings an antitrust suit against a big tech company. It's also a big deal because you've been hearing and maybe you've been talking about the idea that the government's going to do something about big tech. and there was a congressional report out this month, and there's a lot of folks saying that something should be done. But this is actually something happening. And everything else is a discussion about maybe we should change the law one day, but not right now, but maybe Congress will get around to it. And this is actually action against a big tech company.
--:-- Peter Kafka: So that is notable by itself. Yes, this is a wonky suit about search. It's also in the eyes of a lot of people who than they thought because it's really only about search engine dominance and there's other things you can attack Google for. But this case could expand over time. There's a bunch of attorney generals who are going to bring a similar suit. So this is sort of the first of the problems Google's going to have legally. So that's one way to look at it.
--:-- Peter Kafka: But if your regular person life goes on, what you do get to see is your government funded by your taxpayer dollars trying to rein in a big tech company in a way that no one has tried to do for two decades. It's a thing. It's a thing.
--:-- Sean Rameswaram: Okay, Google, brush my teeth. Okay, Google, mow my lawn. Okay, Google, text my mom. And tell her that I love her. Okay, Google, do my taxes. Okay, Google, hold me closer. Okay, Google, play this song. Again, a hundred times. Ah, I forgot you have to deal with this anti-dress lawsuit. That's okay. I'll just ask DuckDuckGo or something. Mommy!
