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What the Google case means for tech

Image: Marco Verch / Protocol
Google antitrust

Good morning! This Wednesday, we're digging into the DOJ's antitrust case against Google, which says a lot about what's coming for the rest of Big Tech.

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The Big Story

What the Google case is really about

Anyone wanting to sue tech companies on antitrust grounds has to figure out an answer to the argument that "competition is just a click away." If you pare down all the hearings, blog posts and legal filings, that's the closest thing there is to a universal argument in support of Big Tech on the issue.

In its complaint against Google, the DOJ tries to combat that argument. The filing is full of vague frustration about Chrome being too popular and Bing being unpopular, but the strongest parts of its argument are about how Google makes sure search-engine competition stays at least a click away.

  • Google spends billions of dollars every year — with Apple, Mozilla, carriers, device makers — making sure Google search is the default practically everywhere. And nobody, the DOJ alleges, ever changes their default settings. (Fact check: true.)
  • "For both mobile and computer search access points," the complaint says, "being preset as the default is the most effective way for general search engines to reach users, develop scale, and become or remain competitive."
  • That means any company wanting to compete with Google has to build a great search engine, which is itself prohibitively difficult, but then also outspend Google to put that search engine in front of people. Which is pretty much impossible.
  • By making revenue-sharing deals with carriers and device makers, too, and by connecting its most popular and important services to search-default status, Google also makes sure companies would be stupid to not take its deal.

Google thinks all this is nonsense, of course. It had a blog post, a slide deck and a press call ready to go once the lawsuit was filed. And its argument continues to be: We have lots of competition, everywhere you look, one click away.

  • But now the DOJ is out there shouting: One click is the whole problem.

There is more of this fight to come. The DOJ frequently refused to discuss details, but implied heavily that there's more in the works. It's been widely reported that Bill Barr rushed this process to fruition, and the complaint's many half-arguments and conclusion-less frustrations show that pretty clearly. But so far, as Tim Wu pointed out, this is basically a carbon copy of the fight against Microsoft. Which is to say, it's a fight about everything that turns out to be about distribution.

  • Gary Reback, one of the lawyers who helped bring the case against Microsoft, told Protocol's Emily Birnbaum that, "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."
  • A company being too good at winning is rarely grounds for a successful antitrust case. But when it's wheeling and dealing to keep everyone else out of the game? That might be. (Which should make Mark Zuckerberg nervous, given Facebook's propensity to spend big to acquire every plausible competitor.)

So what happens next? Not much, at least not immediately. Deputy Attorney General Jeff Rosen said on a call with reporters the goal is "at a minimum, stopping that conduct," which would presumably mean keeping Google from renewing any of these default deals. That seems pretty unlikely to cause a sudden exodus to DuckDuckGo, though. Beyond that, DOJ advisor Ryan Shores said, "nothing's off the table."

  • Losing those deals would be bad for Google, but brutal for companies like Mozilla (which relies on that deal for virtually all its revenue) and Apple (which, the suit alleges, gets almost a fifth of its profit from the Google deal).
  • The EU's an interesting precedent, too, since Google's been fighting most of this same fight there for years. It already agreed to let European Android users pick their search engine directly when they set up their phone.

More Google

Small tech takes a victory lap

Google's telling employees to keep their head down: Kent Walker emailed the company to tell staff, "While we can expect some tough criticism and even misleading claims about our work, it's important not to get distracted by this process, including speculating on legal issues internally or externally."

  • Sundar Pichai wrote in a separate note that: "I've had Googlers ask me how they can help, and my answer is simple: Keep doing what you're doing. Scrutiny is nothing new for Google, and we look forward to presenting our case."
  • Google's been careful to tell employees exactly how — and how not — to talk about all things antitrust, likely to avoid the sorts of bullying accusations that got Bill Gates into so much trouble. But nothing says "everything's not fine" like two emails from senior leaders telling you everything's fine.

Google's opponents, meanwhile, are shouting from the rooftops. While the DOJ was announcing its suit, some of the people who have spent years pushing for just this kind of case took a moment to savor the whole thing.

  • DuckDuckGo's Gabriel Weinberg said: "Historians will hopefully look at today as the beginning of the end of the surveillance economy. But the only way that happens is through action that achieves meaningful results, and we are in support of such efforts by regulators across the globe."
  • Yelp's policy chief Luther Lowe, who has been louder, longer on this issue than almost anybody, argued that there's nothing partisan about this suit. "That is the false narrative Google wants you to hear," he said.
  • House antitrust chief David Cicilline said: "This step is long overdue. It is time to restore competition online."
  • Josh Hawley, Mr. Mad At Tech himself, said that, "To be clear — this is just a first step, and I will continue to fight for the legislative solutions needed to end the tyranny of Big Tech."
  • David Heinemeier Hansson agreed there's more to come. "The backlog of antitrust abuses is so long that we need to keep raining suits for a decade to come," he said.

People Are Talking

Snap just had a monster quarter, and Evan Spiegel said AR deserves the credit:

  • "The adoption of augmented reality is happening faster than we had previously anticipated, and we are working together as a team to execute on the many opportunities in front of us."

Zoom's still figuring out how to turn everyday consumers into paying customers, COO Aparna Bawa said:

  • "We still are watching and waiting to see what the economics look like. We want to make sure that the customer base that we're serving finds it helpful, it's priced at the right point, it's beneficial to all."

Uber might leave California if Prop 22 fails, Dara Khosrowshahi said again:

  • "We will do our best to operate in California … Where in California we will operate is a question mark, and the size and scale of business will be a big question mark."

All these Facebook policy changes won't continue forever, Mark Zuckerberg said:

  • "Once we're past these events, and we've resolved them peacefully, I wouldn't expect that we continue to adopt a lot more policies that are restricting of a lot more content."

And Facebook's Stan Chudnovsky said bring on the political rancor:

  • "Facebook: criticism from the Democrats for not doing enough, criticism from the Republicans for doing too much. Seems to be the best indicator that we are doing just right."

A MESSAGE FROM PHILIPS

Philips

Strengthening healthcare interoperability and cybersecurity in the COVID era

A stronger healthcare system means connecting people, data and technology for a frictionless experience across care settings. At Philips, we're developing interoperable solutions that seamlessly transfer data so clinicians can stay focused on what matters most: the patient.

Learn more.

Making Moves

Tom Ryan is the new president and CEO of ViacomCBS's streaming organization. He was CEO of Pluto TV. Marc DeBevoise, ViacomCBS's chief digital officer, is leaving the company.

Salaam Coleman Smith is the newest member of Pinterest's board. She's the former head of programming at ABC Family, and a longtime media exec.

Microsoft's already looking for Satya Nadella's eventual replacement, and said it's "actively seeking highly qualified women and individuals from minority groups." (But don't expect to get the job anytime soon.)

José Morales is the new CRO at Freshworks. He joins from Atlassian, and is the latest in a bunch of new C-suite names at the company.

In Other News

  • Dustin Moskovitz donated $22 million to Future Forward, a super PAC spending more than $100 million on last minute pro-Biden ads. Jeff Lawson and his wife donated $6 million, while Eric Schmidt donated $2.5 million.
  • Quibi might shut down. The Information reports that after failed attempts to sell its shows to NBCUniversal and Facebook failed, Jeffrey Katzenberg has told people that he's considering calling it quits. Employees have informally scheduled goodbye drinks, apparently.
  • Facebook content moderators in India felt pressured to return to the office, Rest of World reports. The moderators, who work for third-party contractor Genpact, were reportedly told that if they didn't show up they could lose their jobs.
  • Burnout is worse thanks to WFH, a Blind survey found. 68% of tech employees said they feel more burned out than when they worked at an office, with the proportion as high as 81% for Facebook workers. Amazon, meanwhile, extended voluntary WFH until June 30, 2021.
  • Government officials are concerned that the White House wants to give Rivada a 5G spectrum contract, CNN reports. Chief of Staff Mark Meadows has reportedly pressured the DOD to effectively give Rivada a no-bid contract, raising questions over whether Rivada's Republican-backing investors, including Peter Thiel, are influencing the process.
  • Bob Swan said Intel could benefit from the China-U.S. decoupling, with Intel potentially picking up 5G infrastructure business from Huawei. Meanwhile, the U.S. said it would finance Brazil's purchases of non-Huawei equipment, and Huawei was reported to be lobbying the Chinese government to reject the Nvidia-Arm deal.
  • VC funding is soaring in Europe and Asia. Both regions had two of their best quarters ever in Q3, with $24 billion raised in Asia and $9 billion in Europe.
  • Did you watch AOC's Twitch stream last night? She had more than 400,000 concurrent viewers. It was fun! Maybe all of Congress should be run on Twitch. Oh, and it turns out Ilhan Omar has a truly sick gaming PC.

One More Thing

Back in a zeptosecond

File this under Things That Broke My Brain: Scientists measured the shortest time period ever, of 247 zeptoseconds.That's the time it takes for a photon to travel across a hydrogen molecule, and in case you're wondering, a zeptosecond is a trillionth of a billionth of a second. It's a big deal, surely, but the whole thing gives me Jeremy Bearimy vibes.

A MESSAGE FROM PHILIPS

Philips

Strengthening healthcare interoperability and cybersecurity in the COVID era

A stronger healthcare system means connecting people, data and technology for a frictionless experience across care settings. At Philips, we're developing interoperable solutions that seamlessly transfer data so clinicians can stay focused on what matters most: the patient.

Learn more.

Today's Source Code was written by David Pierce, with help from Shakeel Hashim. Thoughts, questions, tips? Send them to david@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.

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