Google fears disclosure ruling risks 'crown jewels' falling into rival hands

22 November 2019 8:35am

18 November 2019, by Simon Zekaria

Google risks losing its secret “crown jewels." That was its stark message as it waits for a UK court ruling on whether it must hand over confidential information on key technology underpinning its search engine.

A lawyer for Google chose the phrase in a High Court hearing in London last week in which the US technology giant sought to block a disclosure demand from Foundem, a UK website suing it for alleged abuse of dominance in Internet search.

Infederation, which runs the Foundem site, wants its appointed expert to have access to Google documents on the functionality of the algorithms and codes used for ranking websites in search results, in order to help it fend off Google's bid to dismiss part of its long running antitrust lawsuit before trial.

At a basic level, the outcome threatens to pierce the well-guarded shield around the technical brains and operational power behind Google's lucrative search tool. That opens up the risk that confidential commercial and strategic information could seep out more widely, reaching rivals such as Microsoft, Yahoo and Amazon as well as other tech companies.

But the ruling has wider and more general significance for companies of all stripes involved in litigation: The High Court's approach could influence how judges treat the protection of business secrets and commercially-sensitive information.

'Grave' threat

That wider topic is live for Google, and its immediate jeopardy is high: The information being argued over in the litigation is ultra-sensitive: the algorithms, or automatic computer processes, and related "signals," or analytical codes, behind its search function.

Granting immediate, general and unrestricted access to that information to an “individual of the industry” such as Foundem's appointed online-search expert — Philip Klockner, who advises venture-capital firms and others on search-engine optimization — was a “matter for concern,” Google said in written arguments. Klockner’s professional position and interests make it unacceptably risky for him to be shown detailed technical data on a key part of Google's business operations. Blocking this was "essential."

While Foundem hasn't asked for access to Google's programing data, it does argue it needs to see and understand the algorithms in question, as they had an impact on the UK company's now-suspended shopping price-comparison website. It claims that Google's search algorithms favored the US company's own shopping-search services and demoted Foundem from search listings.

For Google, Foundem's demand could lead to commercial and strategic harm. Allowing analytical signals out of their hands will allow search-engine optimization operators, riding on the back of Google’s technical know-how, to “game the mechanisms” detailed in the algorithms, Google said, resulting in "grave" risk.

It argued, too, that its internal and proprietary innovation will also be harmed by the disclosure. The revelations of confidential data, it said, will degrade its search functions and necessitate the “very difficult” development of new algorithmic techniques.

That argument flows into another legally-focused point that will be stress-tested by Foundem’s suit. Google said the technical design at the heart of its search business reflects innovation to improve customer experience. As such, it cannot face a challenge under competition rules before regulators or courts.

'Legal Eyes Only'

Disclosure wrangles across antitrust litigation, as a prelude to legal substance heard in trial, are seen as administrative and humdrum  — but the underlying matters are of deep significance. The faceoff between Google and Foundem was a case in point.

The parties, it emerged, released 400 documents into confidentiality rings — groups of lawyers, companies and individuals authorized to access specified material via disclosure agreements. The allocation of these disclosure files formed the core of the dispute.

Google argued that of 150 documents in its cache, 120 focused on confidential search matters that have no connection to its bid to strike out part of Foundem’s claim.

For the US search giant, the strikeout application is concerned only with the parts of Foundem’s case that weren’t taken forward by EU investigators in their probe over abusive search practices. That resulted in a fine of 2.4 billion euros ($2.7 billion) against Google in 2017.

That leaves Foundem with the right, Google argued, to access only 30 documents, which relate to the use of a single, specific algorithm.

Without that restriction, Google says, Foundem's disclosure request becomes a "fishing expedition," giving it the ability to search for information without knowing at the outset what it is looking for. Foundem would enjoy a "Micawber-esque trawl of documents" on "vague" legal grounds, as Google put it..

The court's approach to this case will be instructive on factors to consider around disclosure, such as what information should be shared; between whom and in what circumstances; and how proportionate the demands are. The Google-Foundem lawsuit should be fertile learning ground for other companies.

It is not uncommon for courts to make provision for the confidentiality of business information. But judges also have to protect national justice, or the availability of evidence to allow claimants a rightful legal challenge.

In the digital industry, specifically, issues of data access during live litigation are a burning matter for debate. Alongside its overarching message — that judicial protection of Google's information must be proportional  —  Foundem argued that sensitivity of commercial information diminishes exponentially over time.

This raises questions about the protection of information in fast-paced digital markets. In particular, it zooms in on how the confidentiality of information, potentially tied to technical development, is treated, and the resulting burden on litigating parties to persuade judges that digital data of a certain age merits confidential treatment.

These questions will get ever louder as regulators and courts accentuate their focus on the consumer effects of potential digital-market antitrust infringements.

Google’s prized jewels are in play in this case, and Foundem wants to be first in line to see them. But many others, too, will be following closely.