Antitrust

A federal appeals court granted the Trump administration an emergency stay blocking Federal Trade Commissioner Rebecca Kelly Slaughter from returning to work. The lower court had called President Donald Trump’s decision to fire her “unlawful,” and reinstated her. Slaughter says the public will remain in the dark on FTC decisions in her absence. “Right now, the FTC isn’t doing the job it should be to protect consumers and competition, and Americans deserve to know why.”

The Justice Department released an unsealed indictment against Oak View Group CEO Timothy Leiweke, alleging he conspired with competitor Legends Hospitality to rig the bids for an arena project. Leiweke allegedly convinced Legends not to bid on the project in exchange for subcontracts he later reneged on. The DOJ says Oak View and Legends cooperated and entered non-prosecution agreements, including penalties of $15 million and $1.5 million, respectively.

Democrat Alvaro Bedoya will formally step down, while continuing the legal battle against President Donald Trump’s attempted firings of him and fellow Democratic Commissioner Rebecca Kelly Slaughter. Trump’s dismissals broke with Supreme Court precedent saying presidents can’t fire independent agency members without cause. Bedoya says while serving as a commissioner has been his “dream job,” he has to take care of his family by seeking a source of income, without breaking federal ethics rules.

We’re at the end of a day-long set of closing arguments, concluding with one final request to the judge from DOJ attorney David Dahlquist to “please seize this moment in time” and order Google to change how it runs search. Judge Mehta thanks everyone for dealing with a “challenging schedule” for the trial and says, “we’ll get back to you as soon as we can,” and with that, the remedies trial portion of US v. Google is officially done.

Its attorney notes that an appeal in the liability case is ongoing, and Google wants that to be able to proceed. The DOJ, in a response, asks Judge Mehta to disregard the request, saying the appeal and remedies can proceed in parallel.

Mehta briefly asks how Google would recommend forming a committee that could handle all the specifics of whatever remedy is proposed, as suggested by the DOJ. Google’s attorney complains any committee could end up simply letting the DOJ — and the executive branch in general — control how the deal gets interpreted. “That delegation of authority, I submit, is a violation of due process.” Schmidtlein also brings up how broad the remit of the committee would be, covering everything from privacy to identifying competitors.

We’re wrapping up final discussions about some of the more obscure remedies, and Google briefly references the issue of advertisers gaming the system if they’re provided search data. “There’s lots of problems with this,” Google’s attorney says, including significant privacy problems.

Judge Mehta has been triaging some non-Google cases to continue past 5, and we’re now back, with Mehta questioning Google’s attorney.

Mehta’s going through a final round of remedies and asking for explanations. First up: a proposed ban on self-preferencing. Government attorney explains it’s focused on search in relation to the Play Store, on-device AI, and a few other products. “Does this mean that, say, let’s say tomorrow Google launches a new product that is... Gemini... Super-Gemini. Do you mean to say if Google launched Super-Gemini, they couldn’t use Google Search to ground it?” Attorney seems to suggest banning something like that might be reasonable, though he equivocates. He says if there’s “a better way to draft” the statute, “we’re all ears.”

Mehta is, again, asking for specifics about a plan to offer incentives to try alternatives to Google. “How does Google deliver that option?” he asks. The attorney’s answer, again: a committee will decide.

Moving on from Chrome acquisitions, we’re in the final section, starting with the state attorney. Michael Schwartz is arguing for an education campaign fund that would address “habit, inertia, and brand recognition” barriers that prevent rivals from attracting users and competing with Google. Mehta asks some practical questions: how much money should be put into the fund, and who decides what the campaign to make people aware of alternatives looks like? The attorney says at a high level, it would be Mehta — who doesn’t seem thrilled about that. “I assure you, I am not qualified to tell you what is a good marketing campaign and what is not,” he says.

We’re back to the DOJ, whose attorney is saying Google’s claim only it can steward Chrome is wrong — and that separating Google from Chrome will, conversely, let it evolve. He struggles to cite a specific legal case that would explicitly justify an order like a Chrome divestiture, but he says looking to the body of law on mergers could be useful, and while the judge can’t require Chromium employees to stick around, he could order financial incentives or other measures that would make Google fill any empty roles.

Google’s lawyer is making a long case against the Chrome sale — essentially arguing that nobody else has the pragmatic incentives to keep developing Chromium or the ability to maintain Chrome as competently. Any divested version of Chrome will be “a shadow of the current Chrome,” he says. “I don’t see how anybody would be better off.” Also, he says, 80 percent of Chrome users are outside the US, and they’d be affected by the divestiture as well.

Schmidtlein says not only is it not justified by the law, the tangible harms outweigh “speculative benefits” to the competitive landscape. There’s “voluminous evidence” Chrome succeeded through innovation.

We’re currently hearing from a lawyer for the state lawsuit against Google, and Mehta is drilling down on a fairly salient issue: will Chromium employees actually move from Google to whoever buys it? The attorney says it’s common industry practice for workers to come with a company. That might be a reasonable claim, but it’s not a hard rule — and if it turns out not to apply here, that’s a potentially big temporary hit to Chromium’s maintenance and all the browser makers that rely on it.

Mehta asks whether a Chrome buyer would need to demonstrate it was capable of maintaining the open source Chromium project that powers numerous other browsers. “There are very few that could actually demonstrate it today,” he says. The DOJ’s attorney says there could be a negotiation with the future buyer to ensure a commitment, and people who are currently working on Chromium at Google would come over to the new owner.

Back after a short break, Dahlquist is arguing for why Google should have to sell its web browser. “Browsers are the way users get into the internet,” he says, and a huge part of that is search. He recaps the basics about Chrome’s popularity, including that 35 percent of Google queries come through Chrome.

We’re nearing the end of the day and currently on break. A few broad highlights:

Mehta asks the DOJ’s attorney why Microsoft would bother paying for placement if Google weren’t able to bid, echoing the claim from Google’s lawyer.

Ban Google from bidding for default search engine placement, says Schmidtlein, and Microsoft will just roll up with its own wheelbarrow of cash for a similar exclusive deal with Bing. “This would be one of the most invasive remedies I can imagine, and it would also harm all of these adjacent markets,” he says. He adds that companies are “competing just fine with Gemini” as well.

That’s Google’s attorney’s description of how OpenAI launched ChatGPT as a “lark.” The underlying argument is that the judge doesn’t need to impose long-term restrictions, since the market moves so fast — and now, of course, OpenAI is raising billions in funding.

Mehta seems dubious that any conventional search engine will ever come to rival Google. If a competitor emerges, “it’s not going to be DuckDuckGo,” he says. It won’t even be Microsoft. It will be, he says, likely an AI service that includes search.

Mehta brings up an issue Apple’s Eddy Cue raised during his testimony. Cue said that if Google was banned from cutting exclusive deals, Apple would still be forced to use it as the default because it’s the only viable option, while Google would simply stop needing to pay it for that placement. Is that a valid problem?

Mehta poses a weighty question to the DOJ: how seriously should he take the dire warnings that companies Google pays for default placement, including Mozilla, have made during testimony? “Every single distribution partner ... has said, this would harm us. This would harm us. Some have gone so far as to suggest this would put them out of business,” Mehta says. “Is that an acceptable outcome to fix one market at the risk of harming others? Because that’s what these other folks are telling us.” Mozilla, for instance, has said its Google deal provides the vast majority of its revenue.

Dahlquist makes the case for banning Google from offering payments for default placement on platforms, singling out its “astronomical” revenue-sharing deal with Apple. “If we continue to let Google pay for distribution, it will continue to win every contract,” he said. “Nobody can pay as much as Google.” He extends this to how Google is handling Gemini default placement.

Lunch now concluded, the DOJ’s Dahlquist is discussing the “monopoly flywheel” that keeps Google dominant, particularly the deals that have given Google default placement on places like Safari. Google has, as Mehta pointed out, offered some concessions here. “Their remedy as I understand it is, drop the word ‘exclusivity” in these deals,” Dahlquist says, and the DOJ agrees with that. But he says Google “doesn’t go nearly far enough” in including Gemini in its proposals.

We’ll be back in 45 minutes for more.

Or more specifically, the lack of a detailed plan from the government about how to preserve it. “How much detail do I need to put on paper?” Mehta asks DOJ attorney Adam Severt. Right now, he says, he’s got “zero.” The DOJ is aiming for a committee that could decide, which Google strenuously objects to. Mehta runs through a series of steps the committee might have to take and asks how long it would require. A “couple of weeks to month to set up the experiment,” and then “a day or two to run the experiment,” Severt says.

Schmidtlein is tearing into the government for not hammering out how to handle sensitive data before and during this hearing, and instead trying to kick it down the road for a decision later. “There’s an extraordinary amount of user data here,” and everyone “admits that it implicates privacy,” he says. Google previously argued that revealing search query data would undermine user trust, and he reiterates that search queries can reveal detail about individual people even if you try to remove personal identifying information. “We have a rough idea of a standard of privacy, but no idea about how to solve it,” he says. “It’s not even begun to be resolved.”

Schmidtlein is coming back, starting where the government left off, with search data syndication and who might get access to it — which he emphatically says shouldn’t include AI companies. “It could not be more clear, they are not trying to out-Google Google. They’re going about it in a different way. They are not a search engine,” he says. “The only person who would qualify right now under their definition is Microsoft” with Bing.

Judge Mehta is zeroing in on the possibility Google could only share those long-tail queries. The plaintiffs say the approach might make sense, but that it’s not always obvious how to define a long-tail query. Mehta objects to that, saying it seems like something competitors should figure out. “They don’t have access to the same data ... that’s the problem,” he says — not that they can’t figure out what they are.