The Case That Will Determine the Future of Tech

CHRISTIANE AMANPOUR, CHIEF INTERNATIONAL ANCHOR: And now, does Google have too much power? The United States government thinks so. A high stakes legal battle is taking place right now between the U.S. and the tech giant. Columbia law professor Tim Wu breaks it all down with Hari Sreenivasan now.

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HARI SREENIVASAN, INTERNATIONAL CORRESPONDENT: Christiane, thanks. Tim Wu, thanks so much for joining us. So, last week, a pretty big case kicked off. It’s the United States versus Google about antitrust issues, something you are an expert on. I’m going to break this down for our audience, what’s at the center of the case?

TIM WU, COLUMBIA LAW PROFESSOR AND AUTHOR, “THE CURSE OF BIGNESS”: Center of this case, a big case against Google, first big antitrust case in the last 20 years for monopolization claim. And at the core is the argument that Google has been maintaining its monopoly over general search using a number of agreements and other techniques.

SREENIVASAN: And so, what are those agreements? What are those techniques that they’ve been doing that scream out antitrust?

WU: I think the core of the case revolves around the idea that Google has been spending its money to escape competition. Most clearly through a — an agreement to spend $10 billion or more every year with Apple. To give Apple $10 billion or more a year in order make Google the default search on the iPhone. And also, at least the Justice Department alleges to keep Apple out of search. So, their argument is without these payoffs, there’s other payoffs to Samsung, payoffs to company named Mozilla, other android phone companies. Without all these payoffs, Google would have faced significantly more competition but they’ve been buying their way out of competition.

SREENIVASAN: You know, I’m old enough to remember reporting on the last antitrust case against Microsoft. And back then, we had internet explorer that was bundled into the windows operating system, that seemed to be the, sort of, unfair practice. This, on the other hand, what is the crime in having what Google would call partnerships with companies like Apple and saying, you know what? I’m giving them money. I mean, this is just a deal between two companies?

WU: You know, in this case in some ways is a little bit like Microsoft. Microsoft was worried about losing its monopoly over operating systems. And it used a stick. It threatened anyone who dealt with Netscape, a navigator, all the intermediaries with loss of its operating system. Google has been using the carrot. The argument the Justice Department makes is they were worried about competition. Worried about particularly another search engine showing up on mobile and becoming heavily used. Worried about Apple going into search and decided that they would spend the money to try to avoid that. Now, why is that anti-competitive? I think the antitrust laws say that you’re supposed to stand your ground and fight. Particularly, if you’re a monopolist. It has different rules for the dominant companies than say, you’re, you know, local bakery or something that might make a deal with the local croissant maker or the local bread maker. You know, Microsoft and Google are in a different category of company and they’re not supposed to be allowed to spend money to get away from competition.

SREENIVASAN: OK. So, one of the things that people are going to wonder is, is this bad for consumers? Am I using an inferior product? Am I being forced to do something that otherwise I wouldn’t want to do?

WU: No one doubts that they came to market with a great product that people love. It’s just the spending money to stay there that’s been the problem. I mean, imagine there was an Apple search, for example, a lot of people like Apple phones, Apple stuff. You know, maybe the Apple search will be a lot more privacy protective than Google. But people like Google, they don’t like the fact that they spy on you all the time. So, why isn’t there a more privacy protective alternative? That’s the kind of things that I think the Justice Department is saying when they — when the consumers are better off with more competition.

SREENIVASAN: So, you know, one of the defenses that Google has made for quite some time is that competition is a click away, right? It doesn’t cost the consumer much time to change the default search if that’s what they want to do, or literally use a browser to go to some other search engine. So, we couldn’t possibly be anti-competitive because we’re not constraining the ability of the consumer to use a competitive product.

WU: It’s a good point. And in fact, it’s one that Google has been using as a defense in this trial. The Justice Department’s response has been put on the stand a number of behavioral economists who make the point that, you know, Google understood how important the default was than most people, when a product is shipped with a search engine never change it. You know, whether it’s good, bad you might like. Maybe they like something more privacy protected. Maybe they just never really bothered to change it. And so, Google knew it. Google was battling for the defaults. If search was only one click away or choice, why were they spending billions and billions of dollars to make sure that people had this thing installed as the default? Made sure that other companies didn’t go into the market. So, I think that’s the response. I won’t say it has no appeal, but I think the human psychology suggests that, frankly, when we get locked into something, we don’t want to switch.

SREENIVASAN: You know, there’s also a question that the judge is going to have to consider of intent or did they know what they were doing? And just — I know it’s only been in the first week and this is a trial that could take months, but are there any kind of smoking guns? Are there e-mails? Are there — is there something within Google that shows that they knew this is what they were carrying out?

WU: Yes. I mean, I think that’s what has been effective about the Justice Department’s presentation. You know, Google has a great image, it’s a friendly company. You know, it has a nice, colorful logo and an inspiring story, the garage start-up. But I think what the Justice Department’s case is showing is kind of different Google. A very calculating. A lot of e- mails that recognize that they’re concerned about Apple, naturally. They’re very worried they want to spend this money to try to make sure they don’t face serious competitive forces. So, I think what you see and what emerges from this trial is a much more calculating Google. A Google that knows what it’s doing and knows what it wants to do and has been, in some ways, planning on maintaining dominance all along.

SREENIVASAN: You know, I wonder if this case would be different if it was, say, starting a year ago. And why I say that is before, kind of, the rise of these OpenAI or these kind of large language models using artificial intelligence. Google has their own. Microsoft is partnered with a big one named OpenAI. And I wonder if that’s not a significant enough threat to the existing search business where Google can say, look — I mean, look at all these people that are using these A.I. tools. They’re not coming to Google or we’re trying to, you know, stay competitive. We’re kind of the underdog almost here.

WU: Yes, I think it’s an important point that A.I. has become significant. And it seems like something, no one knows exactly what, is on the horizon. But in my view, that makes the case more important. We have an opportunity here for, you know, technological succession. And if there’s anything, history of tech suggests is that companies try and prevent the next thing from coming along and replacing them. Now, there’s some chance it will happen naturally, but I think we were in a better world where Google is forced to fight fair. Where, you know, the strategy of using defaults, spending tens of billions of dollars to make sure your product is in front of everybody and not other people’s is actually more important. Scrutiny on mergers, you don’t want Google to buy out its greatest and most dangerous competitors. Now is the time, in fact, for enhanced scrutiny. You know, one of the important things about the Microsoft trial back in the 90’s is that it came at a point where Microsoft was facing incredible competitive pressure. And in fact, it created a lot of room for companies like Google to emerge because Microsoft was handcuffed, was under a consent decree and had just been beaten up by the Justice Department for five years. So, I think in these moments of technical succession, it’s very important that companies feel pressure from the government to fight fair. And that’s why I think the timing actually of A.I. makes this more important that we have this case now.

SREENIVASAN: So, what does the government have to prove to the judge? I mean, it’s a bench trial. There’s not a jury here. What do they have to say, all right, this is our case. Open and shut. What does a judge have to completely understand?

WU: They have to have two things. First, that Google had a monopoly over general search, which I think they should be able to prove. And second, to prove that Google used its monopoly to maintain its position — used its economic power to maintain its position. And I think that’s the more challenging question. You know, there’s large jurisprudence as to what exactly it means to effectively fight unfair versus fight fair. And, as you said, Google will just say, look, we made good product. People liked it. And the core of the Justice Department’s case will be you had a monopoly. You maintained your monopoly by making deals to keep competitors out. I think the strongest argument in that, sort of, on the street, kind of, argument is the idea that they paid Apple in particular to stay out, to not develop itself into a search. Apple was starting to handle search traffic. Google said, listen if you still want this money, you need to stay out. And I think that doesn’t sound like fair competition to me.

SREENIVASAN: What is Google’s defense going to be in this case? What have they said so far? What are they likely to say?

WU: You know, I think their defense is straightforward. People like our product because we have a better product. Given the choice, over and over, we’ve seen that people choose Google over Bing, over DuckDuckGo. So, it’s really — all of our so-called power is really about consumer choice. I think that’s the core of their argument. Nothing else matters. And if people really wanted to switch, they would have switched.

SREENIVASAN: So, what are the remedies that the judge could hand down? Let’s say the government makes its case and proves those two things. What can the judge — what kind of power does the judge have?

WU: You know, the judge has the power and equity, at least traditionally, to go as far as to break Google up, or cause it to divest or parts of Google. At an extreme, it could ask it to divest, sell the Chrome browser, sell the android operating system. Those would be strong remedies, kind of, a mini breakup. At lesser degrees of intensity, it could ask Google to stop doing deals like this. It could put it, in some ways, under parole. Traditionally, at least in other cases, the justice or judges have ordered companies to stay out of certain businesses. Might be weird to order Google to stay out of A.I. search or something, but things like that had been done. AT&T was ordered to stay out of computing in 1956, which had enormous consequences for all of computing, obviously. And so, there’s a large range. It’s a court of equity. And if the Justice Department wins, I think it will be a very interesting and hard question to figure out what the right remedy is.

SREENIVASAN: You know, when you talk about antitrust cases going back into say, the AT&T days back in the 80’s. What was the consequence of breaking up a big company like this? I mean, what were the things that consumers felt? What were the things that businesses felt? How did the ecosystem or landscape change if Google is to be broken up or Microsoft or anybody else in the tech space? What do we know from history that happens?

WU: Yes, it’s a good question because we’ve been down this route before, frankly starting the ’50s with initial antitrust cases against and IBM, AT&T, and a company called RCA. In the ’70s and ’80s IBM, AT&T, again leading to that AT&T breakup. The 90’s with Microsoft. And now we’re in the current generation, it’s not just Google, there’s also a significant case against Facebook, seeking a break up. And another big Google advertising case. So, we’re in something — we’re in a repeat of something that has happened every 20 or 30 years or so. I would say, looking at history, the short-term consequence has been chaos and uncertainty. But the long-term consequence is almost always been a big jump in technological development and the birth of new companies and new industries. It kind of stirs the pot. You know, monopolies have their positive features, they’re very familiar. And often they have strong research laboratories. But they have a tendency, unsurprisingly, towards stagnation. They usually have an existing business model that they don’t want to cannibalize. You know, you take Google right now, one of the challenges with AI. for it is it challenges the advertising model that it’s the core of Google. So, something emerging that somehow isn’t quite that model for them is very, very dangerous. AT&T was always concerned about the rise of an internet or — what later became known as the internet that it didn’t control. That is businesses that were on top of the phone lines. AT&T wanted everything to be operated by AT&T, that was their way of doing business. And if — I don’t know. I think we’re old enough to really remember AT&T at its glory days, but it controlled everything. The phones were sold by AT&T, Western Electric. The long-distance service was AT&T, the local service — everything had to be AT&T. Business services. So, you know, long story short, it makes a lot of room for other companies. It has jump started some of the most important computer revolutions, antitrust break-ups and antitrust attacks, including software industries, the internet industries. Frankly, the American economy would not look the way it does without some of the big antitrust cases we’ve had. And so, you know, it’s obviously too early to say whether the current attack on big tech will have similar effects. But if history is any guide, relaxing the grip of the monopolist usually leads in good directions.

SREENIVASAN: Given the amount of money that large tech companies are able to spend, lobbying the legislative branch certainly. It has been really difficult to try and get what might be common sense measures about privacy or antitrust further down the road. Even when there’s some bipartisan agreement on these things. So, is there actually possibility here that what this judge decides on Google can do what Congress doesn’t seem to be able to?

WU: I guess I’d say yes and no. First, I will agree with your sediments that passing what seemed like very obvious piece of legislation, privacy, children’s privacy has been almost impossible in ways that are frustrating, embarrassing, frankly shameful for this country. You know, who you would think that Congress — anyone in Congress would be opposed to better privacy for children? But we couldn’t get it done. I was in the government until earlier this year and we just could not get things through Congress. So, you’re right about that. Fortunately, in the United States, we have courts as well as Congress. We have Justice Department and independent prosecution. And I think that is ending up being very important. You know, the influence of large companies over the legislature is well-known, well-documented, and make certain things almost impossible. But I would say that Justice Department and the courts are just less, you know, you can higher extremely good lawyers. You can try and influence them, but they have a certain level of independence and have always had a level of independence. It had a tradition of taking on the biggest monopolist ever in the antitrust division in justice. And I think that’s very important, frankly, for American democracy.

SREENIVASAN: Tim Wu, thanks so much for joining us.

WU: Pleasure. Thanks for having me on.