| Welcome to Big Tech on Trial. This free newsletter providing daily coverage on the Google antitrust trial is reported by Yosef Weitzman and brought to you by BIG.The Power of Defaults On Day 3, DOJ continued to develop its argument that defaults made all the difference for Google.YOSEF WEITZMANSEP 15 READ IN APP Google’s lead trial lawyer John Schmidtlein challenged expert witness Antonio Rangel on his claims about the effectiveness of default placements.How much do defaults matter? That is one of the most important questions that divides the government and Google in this case, because the answer goes a long way in explaining why Google search has been able to amass such dominance over other search engines. If defaults matter a lot, that suggests that consumers aren’t necessarily using Google because of its quality. But if defaults don’t matter that much, that strengthens Google’s claim that people use Google because it’s the best. (Of course, Google can’t claim that defaults don’t matter at all, because otherwise there would be no reason for Google to be paying billions of dollars to Apple and other companies for default search engine status.)DOJ obviously thinks that defaults matter a lot, which is likely why they have called Caltech Professor Antonio Rangel so early in their case. Among other related areas, Rangel specializes in behavioral economics — and between Day 2 and Day 3 of the trial, the DOJ spent several hours developing Rangel’s expert witness testimony that “search engine defaults generate a sizeable and robust bias towards the default.”Google used its cross-examination of Rangel to try to challenge several aspects of Rangel’s testimony. Perhaps most notably, Google’s lead lawyer John Schmidtlein presented Rangel with documents that showed Bing default placements having a limited effect on consumer search queries. Schmidtlein threw Rangel’s own words back at him, asking whether the effect of Bing’s default looked “sizeable and robust.” I believe I heard Rangel agree that the effect of the Bing default looked small. (I didn’t catch the full exchange and haven’t gotten a transcript from this morning yet — but I’ll confirm exactly what was said here once I see the transcript.)Below are some additional observations from the action on Day 3. And if you’re interested in reading more about Rangel’s testimony, this article from Bloomberg reporters Davey Alba and Leah Nylen gives a good breakdown.Judge Mehta’s questionsJudge Mehta doesn’t seem likely to tip his hand too much on his view of the case as the trial unfolds, but the questions he personally asks the witnesses are probably the best window the lawyers and the public have into how he is thinking. I haven’t been able to take away too much from Judge Mehta’s questions so far, but one of his questions to Professor Rangel did catch my attention today.Judge Mehta asked Rangel something to the effect of how Rangel would analyze consumer harm with respect to a product that doesn’t charge. This is at least the second time Judge Mehta has asked a question relating to the fact that Google search is free to users; as I noted in my recap of Day 1, Judge Mehta asked Schmidtlein during Google’s opening statement how he should define a market when there is no price for the product.It makes sense that Judge Mehta is curious about this as the applicability of US antitrust law is largely determined based on application of the consumer-welfare standard and the most classic form of consumer harm is higher prices. The fact that Google is free doesn’t necessarily mean there can’t be any harm to consumers — and the DOJ’s opening statement¹ previewed ways in which it would argue Google’s defaults harmed the public. But it does mean that this case looks different from most other antitrust cases. Judge Mehta’s questions suggest he is actively grappling with how to handle this difference.Google’s VP of Android Platform Partnerships testifies about Google’s Android deals After Professor Rangel finished his testimony, the DOJ called Google’s Vice President of Android Platform Partnerships Jim Kolotouros to the stand. The DOJ’s direct examination of Kolotouros so far has been fairly dense and technical — mostly about his role in negotiating Mobile Application Distribution Agreements (MADAs) and Revenue Share Agreements (RSAs) with Samsung and other Android device-makers. We did see one set of numbers, though: an email detailing negotiations between Google and Samsung indicated that Samsung was pushing to increase the revenue share it received from Google from 25% to 30%.Most of the specifics of Google’s agreements with different Android device-makers have been designated as confidential, so some of Kolotouros’s direct- and cross-examination tomorrow will be sealed to the public. However, the DOJ said it still had about 20 minutes of direct examination that would take place in open court. One thing I will be paying attention to during those final 20 minutes: will the DOJ ask Kolotouros about his use of history-off chats? Kolotouros was mentioned several times in the DOJ’s motion for sanctions against Google for its use of history-off chats, but the government hasn’t brought the issue up yet in its questioning.I’ll be in court again tomorrow to follow the action, but you might not get an email update from me. Judge Mehta is using Friday afternoons to deal with matters in his other cases, so the trial will be stopping at lunchtime — and part of tomorrow’s testimony will be sealed as well. I’ll make sure to send some updates on my X/Twitter either way, though.1See slide 4 of DOJ’s opening statement presentation.Big Tech on Trial is a free newsletter reported by Yosef Weitzman and brought to you by BIG providing daily coverage of the Google antitrust trial.Thanks for reading Big Tech on Trial! Subscribe for free to receive daily coverage of the Google antitrust trial and support the work of BIG.SubscribeFor more general coverage and analysis of monopolies from Matt Stoller, subscribe to BIG: |
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