Power

The lawyer who helped take down Microsoft says the DOJ’s case against Google is an 'important start'

But says he's skeptical that it could lead to significant benefits for startups until the government decides on particular remedies.

The lawyer who helped take down Microsoft says the DOJ’s case against Google is an 'important start'

Gary Reback has said he doesn't think the U.S. government is ready to bring sweeping antitrust cases against Big Tech.

Gary Reback has been called many names: "technology's trustbuster," Silicon Valley's "dragon slayer," "Bill Gates' worst nightmare," and much worse. He's the veteran Silicon Valley lawyer who played an instrumental role in getting the government to bring a successful antitrust case against Microsoft in the 1990s, and he has continued to fight for aggressive antitrust action in the tech industry to benefit smaller players in the ecosystem.

Reback has said he doesn't think the U.S. government is ready to bring sweeping antitrust cases against Big Tech. He's skeptical that the Department of Justice's case against Google, filed in Washington, D.C., on Tuesday, will successfully combat the search giant's enormous market power. But he thinks it's an "important start."

Protocol chatted with Reback about why the Google antitrust case hews so closely to the Microsoft case, why he thinks the complaint won't benefit startups until the government decides on particular remedies and why the government chose to make such a narrow argument against the search behemoth.

This interview has been edited and condensed for clarity.

What are some of your immediate reactions to the case, now that you've had time to read and digest it?

There are things about it from the beginning that are quite interesting. At the beginning of the complaint it says, "We're relying on the Microsoft decision." That's unusual. Sometimes in federal complaints, there are [citations] on various legal points. But they're not citing this just for [a] specific legal point; they're saying, "This is the case we're relying on, this is like that case."

That case is very important where the Google complaint was filed, in D.C. The Microsoft case went to the District Court of Appeals [in D.C.], and they rendered a very important decision. It was an en banc decision, meaning all the judges participated: liberals, conservatives, Republicans, Democrats, they all agreed to that decision. That decision found Microsoft culpable.

Here, the government complaint is saying, "We're relying on that case." Now, if you're somebody in the press, you might say, "OK, that case had a bunch of inflammatory emails from Bill Gates himself, 'cut off Netscape's air supply,' we're going to do this, we're going to do that." And right at the beginning of this, [DOJ is] saying, no not really, we don't have as much inflammatory stuff, and the reason we don't is because Google has told its people not to say anything. That's unusual, too. So they're saying basically to you, "Hey, don't get too excited. We're going to proceed by the numbers here and not by this inflammatory stuff."

How is this similar to the Microsoft case?

It's similar in two basic ways. First, one of the primary charges against Microsoft is that they used agreements to keep Netscape from getting distribution, very much like the agreements here. Microsoft made an agreement with computer manufacturers such that Netscape couldn't get on the desktop. That's what the government says Google does with respect to search. The government would argue here that all of these interlocking contractual obligations that Google imposes on its partners are even more exclusionary than what happened in the Microsoft case. But in any event they're saying, this is like the Microsoft case because the bad guy is using contracts to thwart competition.

Now, the second thing that's very similar to the Microsoft case is that traditionally, particularly conservatives want to say, "OK if there's an antitrust defense, there must be an overcharge somewhere; the consequence of the bad guy's action is to make consumers pay more." In the Microsoft case, the government said, "No no no no, the primary effect here is that Microsoft's actions hurt innovation, and that's how it hurt consumers." It hurt consumer choice. It killed new technologies and so forth.

And that's basically what the government's saying. Their primary claim basically is that consumer choice is thwarted, technology innovation is impeded, similar to what the Microsoft case was looking at.

But how is it different from Microsoft?

It's not a legal point, but I would not expect the government to come up with these inflammatory language that Bill Gates used. The government has alerted this right up front, they're not going to have that. In addition, Microsoft didn't just engage in contractual things that kept Netscape from getting distribution; they also did things themselves to make it difficult for Netscape to make a good product. That part is not really played out here.

This is, to me, [is] the kind of complaint a more conservative Republican administration would make. We all know that you can't use your market power to engage with others to block distribution. There's two parties involved there: you and the guy you're imposing on. But they're saying they're not going to go into the issue of whether you by yourself without engaging somebody else did something wrong.

There is that complaint with Google, and that's self-preferencing. A lot of people thought the complaint would talk about that, but that's not there. The only place that's there is in the effects; they're saying the effect that Google doing all these things means they can preference their own results. But that unilateral conduct aspect is absent. That's significant because it raises the question of, well, what relief are you going to get here that's going to solve the problem that you've raised? In other words, you've raised the problem that there's all these contracts; what are you going to do, strike down the contracts? OK, strike them down. Google still has a 90% market share, the carriers still need Google.

Even if you went in and struck the anti-forking provisions and stuff like that, would that be enough to correct the situation here? The government I think is saying two things. One is, it might be enough because if we didn't have the forking approach, these big carriers and handset makers might create their own search engines or do a deal with Bing or something like that and they might make an alternative search engine. So contractual relief might be enough, particularly if we don't let Google condition its app store on adherence to these contractual provisions. But they're also saying, if that's not enough, we might have to get structural relief here.

Why do you think they decided to make it this narrowly tailored?

Because for conservatives and Republicans, this is the surest route. In other words, conservatives and most Republicans might have a problem with unilateral conduct, which is what self-preferencing is. "I'm using my market power on my own software to disadvantage you." And conservatives might want to say, ideologically, "Hey this is your product, you can do whatever you want with it." I don't agree with that, of course, but that's a Scallia-type viewpoint.

Once you step out of your own company, you're over the line — these are conservative beliefs. So I think that that's a pathway that doesn't cause angst in conservatives, and it's a path that might get them to where they need to be.

If you go back to the FTC's investigation during the Obama administration, you remember [Google] inadvertently released their staff report, which had all kinds of inflammatory things and statements about self-preferencing. That was all available, but the government chose to not go in that direction. The benefit here is they don't think they have to go after some controversial theory. The vulnerability is Google will say that contracts of this type are common; exclusivity contracts are common. But when you've got 90% of the market and have contracts, they become exclusionary. Google will play the card that they're just doing what anybody else does, and the government will have to show they're not anybody else. Conservatives will ask, how does Google know when it's over the line? Is 63% share enough? And the government will say, "I don't know, but 90% is enough." So that's where you can expect the case to go at this stage.

What do you think this case will mean for the other big tech companies?

Had they brought a case on self-preferencing, that would apply to Amazon as well, and they didn't. So it's narrow and it's fact-driven, meaning what they're saying is [Google has] got all these contracts, very specific contracts, with these specific people, [they] cover this percent of the market and therefore what [they've] done is bad. So a company looking at this might say, "Well, I don't cover 87% of the market, I cover 42% of the market." Its effect is less direct. I wouldn't go so far as to say as they're out of the woods; the fact the [DOJ] is bringing a lawsuit means there's something there.

But does the lawsuit read as much on these other companies? We don't know. It's so factual; it's not just that it's narrow, it's factual and narrow, and that may limit its scope. This is intentional in a lot of ways. If you're going to try to prove this case, you need the help of these other companies. It would be good if Amazon did testify.

Which elements of the case do you think are the most damning for Google?

I think they do a very good job of constructing this web: web of exclusions, through contracts and applications and penalties and incentives. The government does a good job of laying that out in a way that does show both power and effect. Now of course, the vulnerability is they're laying out a bunch of different things so there are a lot of different ways for Google to attack. Nevertheless, the contracts are well-known and provable and so forth. So what's damning to Google is, I think it's going to be hard to argue against the facts. They're going to have to argue on some quasi-legal basis, "These are just ordinary-course exclusive dealing agreements."

You recall the Obama administration didn't do anything. A reasonable person might ask, "Weren't all these facts available at that time?" The answer is, pretty much. Restrictions on Android were just getting started. The Obama administration faced a lot of criticism at the time that they were covering for Google. The government shut down a search manipulation case, and they also shut down all the other things they were looking at in Google, including Android. We knew at the time that this is what was going to happen, and if you stop it now, you don't have to do structural relief. That's the thing about these contractual things: If you get in early and fix them early, your remedy is a lot less. It becomes easier to fix them.

If you prevented the Android stuff back in 2012, 2013, you could've done it by precluding these contracts. The market shares weren't that different: 82[%] as opposed to 88%. This is something that could have been brought earlier and somebody needs to ask, what in the world?

Do you think startups could potentially benefit from this case?

I don't think startups are going to benefit unless there's something further down the line that's a remedy that's going to benefit startups. These carriers … have been chafing under this for a long time. Would one of them set up its own search? Yeah, maybe. Where does the primary benefit flow? I think it flows to companies like that.

There's some people mentioned in the complaint, like the handset makers. Maybe the handset makers would like to auction off this slot, and this would be good for them. I don't know. But is it going to benefit startup innovation? Not until we see something more, I don't think. These other big companies, though, they might be able to get into a situation where they pay Google a lot less. And so if you consider that a benefit, then that's a benefit.

We're currently anticipating more antitrust cases against Google by coalitions of attorneys general. Do you think those cases, taken together, could do more to change the ecosystem?

I wouldn't get it way over my ski tips. We've just started this case, and this is a big start, an important start. It doesn't have a lot of that conservative rhetoric that people were afraid of, [like] search bias against conservatives. It doesn't have any of that. It's a standard, traditional type of antitrust complaint. It's backed by the Republican AGs, who may or may not back some broader theory. But we know now what everybody agrees with: I think all the Democrats would agree with this, and Republicans would agree with this as well.

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