It is this Tuesday that the famous trial of the United States against the giant Google begins. The U.S. government blames the company for nothing less than stifling its competitors by abusing its power. Billions of dollars are at stake, and the web search landscape could be transformed by the end of this 10-week trial. Two experts dissect this lawsuit for us.
Q. How would Google have stifled its competitors?
A. The federal government and 18 American states claim that Google has entered into exclusivity agreements with three major players:
– the Apple company;
– phone manufacturers like Samsung;
– internet service providers like AT&T.
“Google requires that its search engine be offered by default on these companies’ devices in order to prevent Bing, Yahoo! and DuckDuckGo to break into the market. In exchange, Google pays them a percentage of its advertising revenue,” explains M.e Daniel Martin Bellemare, lawyer registered with the Quebec Bar and the Vermont Bar.
“In paragraph 118 of this lawsuit filed almost three years ago, the government claims that Apple receives between $8 billion and $12 billion. Phone manufacturers receive 1 billion, according to what is claimed,” he continues.
“The US government claims that these agreements are anti-competitive while Google, in its 42-page defense, claims that they are pro-competitive. It’s THE debate before the court and it starts on Tuesday,” adds the lawyer, who follows each legal stage of this case.
Q. What will happen if Google loses the lawsuit?
A. In the 58-page suit, the government does not go into detail about the sentence it intends to seek.
The request opens a door. The United States retained the possibility of asking the judge that Google be obliged to divest itself of certain assets or to restructure the market to make it more competitive. It could go very far.
Me Daniel Martin Bellemare
“For the contract with Apple, if it is declared illegal, it will fall,” adds Pierre Larouche, vice-dean of the faculty of law at the University of Montreal. “The orders would force Google to stop linking the search engine to Apple devices and other brands by default,” adds this competition law specialist.
New players in online search (or lesser known players) could therefore emerge and succeed in capturing market share.
Q. Is this the first time that the United States has taken on a giant like Google?
A. The case between the United States and Google is the first monopoly trial of the modern Internet era, according to major American media.
But there was the lawsuit against Microsoft in the late 1990s. “Do you remember Netscape, the first browser? Netscape was unceremoniously crushed by Microsoft, which decided that Windows was with Explorer and that was the end of it,” says Mr. Larouche.
PHOTO HUGO-SÉBASTIEN AUBERT, LA PRESSE ARCHIVES
The vice-dean of the faculty of law at the University of Montreal, Pierre Larouche
At the time, the federal government launched antitrust proceedings against Microsoft and won its case. “This case gave the signal that even though it is in the wonderful world of the Internet, with all kinds of new innovations, the rules still apply,” explains Mr. Larouche, who believes that the United States are trying to send the same message to Google.
Mr. Larouche also recalls the “remarkable” case of AT&T, which had to split into seven entities following an amicable agreement with the American government in the 1980s. This division had a significant impact on prices in the telecommunications sector, just before the rise of cell phones.
Q. Canada is currently in negotiations with Google regarding the Online News Act which will apply in December. Could the trial in our neighbors to the South have an impact here in Canada?
A. The Canadian government in fact adopted Bill C-18 in June, which will force web giants to pay a royalty to the country’s media in exchange for their content. Meta has stopped publishing news on its social networks Facebook and Instagram since 1er august. Google also made this threat, but did not carry it out.
Competition Bureau “reviews” news blocking by Facebook and Instagram.
“This complaint [au Bureau de la concurrence], it’s fair game, it’s the right thing to do, but it would surprise me if it led to anything,” adds Professor Pierre Larouche. “Our laws are not completely up to date,” he maintains. They are not always well written, they have several exceptions and they are difficult to enforce, he adds.
Canadian law specifies that anti-competitive actions must be directed against competitors. In a lawsuit, Meta could therefore defend itself by saying that the media are not competitors and that Facebook even needs Canadian content, so it is definitely not trying to eliminate it, explains Mr. Larouche.
“Competition law should be not just about eliminating a competitor, but also about using one’s dominant position to exploit the parties with which the company does business. This idea of exploitation is not very solid in Canadian law, whereas it is more solid in Europe,” underlines Mr. Larouche.