Google now fighting California AG on three fronts following latest antitrust suit

30 January 2023 22:48 by Mike Swift

Google California

Google, beset with antitrust lawsuits, stands alone among the biggest tech companies in its adversarial relationship with California’s attorney general.

A lawsuit filed last week by the US Department of Justice to challenge Google’s allegedly abusive monopoly in the display advertising industry is in part the result of years of work by the California Department of Justice over the terms of two successive attorneys general — Xavier Becerra and, now, Rob Bonta. The state has been investigating and prosecuting Google for years, and is currently involved in two other antitrust-related actions against the company.

In the excitement last week of US Attorney General Merrick Garland and DOJ antitrust chief Jonathan Kanter appearing on stage together in Washington to announce the suit slamming Google for building and abusing a monopoly in the display advertising industry, one could be forgiven for overlooking the significance of California’s involvement.

Google stands out among the five biggest tech companies because of the sheer number of enforcer-led antitrust lawsuits it has drawn in recent years. And California is now signed up to three of them, each targeting what arguably are the three most important and interlocking legs of Google’s business, all of which are built on the collection and monetization of data. Those are the world’s most frequently used search engine, a display ads stack that regulators say dominates the targeting and delivery of digital ads, and the app store that governs the world’s most widely used mobile operating system, Android.

California is one of a large group of states, led by Utah, suing the company over its policies for the Google Play Store, which distributes Android apps. That case is expected to go to trial in November.

And the Golden State in 2020 also became the first Democrat-led state to join twin antitrust lawsuits filed by states and the Trump administration DOJ accusing Google of monopolizing the search market, partnering with 11 Republican-led states in that complaint. Those twin cases could also go to trial later this year, although Google is seeking to have them dismissed on summary judgment.

Each case seeks to lop off the various tentacles of Google’s influence across the digital economy. In the latest case, the DOJ and the states accuse the company of cornering the backbone of the Internet — the advertising technology space, which they say generates some $20 billion in revenue yearly.

The DOJ and the states accuse Google of capturing each step of the matchmaking service that connects publishers to advertisers, and co-opting rivals Meta and Amazon into its scheme to block ways around its ad tech stack.

Why has California been so aggressive toward one of its most successful and glamorous companies? A senior antitrust official at the California AG's office recently gave some insight into that thinking, although she wasn't specifically discussing Google.

“My job is not to protect a leading name, no matter how many people they employ,” Paula Blizzard, supervising deputy attorney general under Bonta, said at an antitrust conference this month. “My job is to protect competition. And in fact to make sure that we have the next version of the next competitor, the next challenge to all of this market power. So my job is to make sure that Silicon Valley is not here just this year, next year, but to be here in five years, 10 years.”

Next steps

Google has long lobbied against DOJ antitrust chief Jonathan Kanter, seeking his recusal from cases involving it, based on his work for Google critics in his previous work as a private attorney. While the DOJ recently cleared Kanter to work on Google cases, expect this issue to rear its head again, as Google pulls out all the stops to kill the lawsuit.

Indeed, Google’s recusal efforts may explain in part why it has taken so long for the lawsuit to come to fruition. Other delays may have arisen due to the changes in administration at both the federal and state level in the last two years or so.

Bonta took office in April 2021, when his predecessor headed off to lead the US Department of Health and Human services in Biden’s cabinet. He told MLex in a 2021 interview that he planned to take an aggressive role in regulating both the privacy and competition of Californians tech giants.

“As the California attorney general, I see my role as being the people’s attorney, and that certainly includes protecting Californians from the abuse of power by big corporations, including Big Tech,” Bonta said in July 2021. “I intend to be very active in this space because it’s very consistent with my values.”

Bonta has held good to his word. And while Google has borne the brunt of his attention, other tech giants are also in his sights. Bonta’s office is pursuing online retail giant Amazon with a major lawsuit in state court filed last year. And a data privacy probe into Meta, launched by his predecessor, has yet to result in a lawsuit.

Meanwhile, Kanter’s appointment as antitrust chief was delayed for several months after President Joe Biden took office. Now the DOJ and the states appear keen to catch up. Their choice of venue — the US District Court for the Eastern District Virginia — is significant. It’s known as a "rocket docket," where cases proceed much faster than in other federal courts. A multi-state lawsuit led by Texas, accusing Google of similar violations in the ad tech market, had the same idea:  bringing its case against the company in the Eastern District of Texas. But Google succeeded in hauling that case into the Southern District of New York, where it faces slower progress.

Freshfields and Wilson Sonsini, the two law firms representing Google in its fight with Texas and other plaintiffs in New York, are representing Google in the new case.

But in the meantime, the legal situation has changed to the advantage of state enforcers. Late last year, Biden signed an omnibus bill into law that includes an act that allows state AGs to prevent their cases from being pulled into another court by the Judicial Panel on Multidistrict Litigation.

Judge with experience

The new Google case in Virginia has been assigned to US District Judge Leonie M. Brinkema, who was nominated to the federal bench by President Bill Clinton in 1993. While the judge’s procedural decisions will be significant, any ultimate trial will fall to a jury.

In her 30 years as a district court judge, Brinkema has overseen a few antitrust cases, though none of them were recent or approaching the significance of the DOJ’s new lawsuit. These included a 1997 case in which game developer Kesmai attempted to block a merger between AOL and CompuServe. That case ended in a settlement.

And in 2013, Brinkema declined to dismiss a lawsuit brought by Orbital Sciences against RD Amross and United Launch Alliance, a joint venture between Boeing and Lockheed Martin, accusing the companies of monopolizing the market for rocket launch systems and services.

There, Brinkema urged the two sides to settle, and Orbital Sciences ultimately dropped its lawsuit.

It’s hard to imagine a similar scenario in this case, given the stakes involved: With the federal government and state enforcers seeking to break up Google's entire ad tech business, one of Google's golden geese and a key source of revenue to companies across the Internet, a settlement that leaves all sides happy appears unlikely.

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