Google's Rivals Are Foreclosed From Distribution: What This Means
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United States of America v. Google LLC., Court Filing, retrieved on April 30, 2024, is part of HackerNoon’s Legal PDF Series. You can jump to any part of this filing here. This part is 23 of 37.
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VII. GOOGLE’S RIVALS ARE FORECLOSED FROM DISTRIBUTION
944. The challenged contracts foreclose a substantial portion of each relevant market. And Google’s ownership of Chrome (which defaults to Google) magnifies that foreclosure.
A. Google’s Conduct Forecloses A Substantial Share Of General Search Queries Performed In The United States
945. Google’s exclusionary search distribution contracts with Apple, U.S. carriers, Android OEMs, and third-party browsers foreclose rivals from a substantial share of the general search services market. Tr. 5752:11–17 (Whinston (Pls. Expert)) (“[G]oogle’s search distribution contracts foreclose rivals from a substantial share of each relevant market.”).
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946. “[F]oreclosure is measured by looking at the percentage of the market that’s tied up by the contracts.” Tr. 5752:18–5753:1 (Whinston (Pls. Expert)); Tr. 10003:14–10004:10 (Murphy (Def. Expert)) (agreeing that foreclosure is “about the ability to compete” and that people should not “confuse the outcome in terms of shares with the ability to compete[,] which are two different things”).
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947. This definition makes economic sense because it is “identifying . . . the fundamental force that these contracts are having”; it is asking, “what do these contracts do if they’re in place.” Tr. 5753:2–9 (Whinston (Pls. Expert)); id. 10509:15–10510:9 (foreclosure measures queries accessible to rivals while the contracts are in place).
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948. Foreclosure is not the difference in market shares between this world and a butfor world. Tr. 5779:18–5780:3, 10508:3–10509:5 (Whinston (Pls. Expert)); Tr. 10003:14– 10004:10 (Murphy (Def. Expert)) (agreeing that foreclosure is “about the ability to compete” and that people should not “confuse the outcome in terms of shares with the ability to compete[,] which are two different things”).
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949. A but-for world is the world that would have existed in the absence of an event or course of conduct—in this case, the but-for world would be the world that would have existed in the absence of Google’s exclusionary contracting practices. Tr. 5774:19–25 (Whinston (Pls. Expert)); infra ¶¶ 971–1192 (§ VIII) (more detailed discussion of but-for worlds and competitive effects).
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950. How much foreclosure has occurred because of Google’s contracts is a different question from what the competitive effects of those contracts are or, even more broadly, what would have happened in the absence of the contracts over the past 10 years. Instead, foreclosure simply describes how much of the market Google’s exclusive contracts tie-up when they are in place. Tr. 5778:4–19, 10508:3–10509:5 (Whinston (Pls. Expert)); Tr. 10008:8–19 (Murphy (Def. Expert)) (Prof. Murphy used the counterfactual of choice screens to determine if the challenged conduct harms the competitive process, but not for measuring foreclosure.).
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951. Foreclosure is “an input in some sense to thinking about competitive effects.” Tr. 5778:4–19, 10508:3–10509:5 (Whinston (Pls. Expert)).
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952. Coverage is a reasonable measure of foreclosure because these queries are affected by the exclusionary provisions in Google’s contracts. For these queries, it is not just Google’s quality that matters, it is also the presence of Google’s contractual defaults. Tr. 5755:5–5756:25, 5763:23–5764:5 (Whinston (Pls. Expert)).
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953. Using coverage as a measure of foreclosure, even though users can technically get around defaults to reach a search rival, is not unique to this case—“[c]onsumers typically have some way of getting to rivals that isn’t the distributors that are subject to the exclusive provisions.” Tr. 5764:9–25 (Whinston (Pls. Expert)).
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954. The exclusive defaults secured by Google’s exclusionary contracts cover 50% of all general search queries performed in the United States. Tr. 5755:5–16 (Whinston (Pls. Expert)) (explaining that 50% is the “share of U.S. queries that are . . . covered by Google’s exclusive defaults. They’re the queries that are going through the defaults that are affected by exclusionary provisions”); id. 10506:12–10508:2 (explaining UPXD104 at 35, “50 percent was the share of U.S. queries covered by Google’s exclusive contracts. . . . That represents the share of U.S. queries where . . . the fact that Google is the default could affect people’s choices.”).
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This does not include queries from (1) the Google bookmark in Safari, (2) the Google Search App for iOS, or (3) Chrome on Windows or Apple devices. Id. 5761:16–18, 5762:22–5763:13 (explaining UPXD104 at 35).
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955. In addition to coverage, Prof. Whinston provided a separate calculation to measure the strength of Google’s defaults even in the face of implausibly large improvements in rival quality. He did this by estimating the share of U.S. search queries that Google’s contracts “make unavailable even to a much stronger rival.” Tr. 5755:5–16 (Whinston (Pls. Expert)).
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Because “consumers have some variation in how affected they are by defaults,” the amount of the market the contracts make conceivably available “depends on the strength of rivals.” Id. 5753:10–5754:5. By estimating the number of queries that would stay with Google even if a rival became much stronger than Google, Prof. Whinston calculated a conservative estimate of the power of Google’s search defaults.
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956. Prof. Whinston found that the set of queries covered by Google’s contracts that are performed by users who will rely on the default GSE, even when much better alternatives exist, account for 33% of all general search queries performed in the United States (or two-thirds of all covered queries). Tr. 5755:17–5756:25, 5764:9–25, (Whinston (Pls. Expert)) (explaining the 33% is “the share of U.S. queries that Google’s exclusive defaults make unavailable even to a much stronger rival,” i.e., a rival as much better than Google as Google is better than rivals today (Super Duck)); id. 10506:12–10508:2 (explaining the 33% of all U.S. queries represents a “lower bound on the proportion of people who won’t change their default”—there are no “plausible investments . . . rivals can make to try to win these people” when Google is the default). Thus, Prof. Whinston’s 33% figure bolsters the significance of Plaintiffs’ foreclosure estimate for general search services. Id. 5755:5–16, 10506:12–10508:2.
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957. The 33% comes from the default share-shift that Prof. Whinston calculated using the estimates Google, Microsoft, and Apple calculated and the Mozilla Firefox default-switching event that Google relies upon. Supra ¶ 931.
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958. When Google and Microsoft worked up their own default share-shift estimates they were looking at what would happen if Google lost the Safari default to a rival at current quality levels, i.e., a much weaker rival. Tr. 5765:16–5768:1 (Whinston (Pls. Expert)).
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959. By the same logic, these share shift estimates also describe what share of U.S. queries Google would be able to retain due to its default contracts if a rival became much stronger than Google (i.e., Google became the much weaker rival). Id. (“[I]magine that a rival-- you know, DuckDuckGo or some other rival invested so much and was so successful at raising its quality that it was as much better as Google as Google now is to the rivals, okay. Well, this same [33%] number is telling me the answer, because this number is telling me what the much . . . stronger rival would get and what the much weaker rival would get.”).
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960. With Google’s exclusionary contracts in place, even a much stronger rival would be able to attract at most one-third of the covered queries. Tr. 5768:19–5770:13 (Whinston (Pls. Expert)). How much of those queries a rival would be able to attract would depend on how much stronger they were than Google. Id. 5765:16–5768:25 (a much stronger rival may be able to attract some of the covered queries).
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961. There are no plausible investments a rival could make to attract the remaining two-thirds of covered queries. Tr. 10506:12–10508:2 (Whinston (Pls. Expert)).
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962. Both coverage and the default share-shift would be higher on mobile only. Tr. 5757:1–9 (Whinston (Pls. Expert)).
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963. In contrast, when calculating foreclosure, Google’s expert Prof. Murphy did not rely on the ordinary course estimates performed by Google, Microsoft, or Apple. Tr. 10056:6– 10057:1 (Murphy (Def. Expert)) (rejecting Google estimate); id. 10059:14–10060:7 (rejecting Microsoft estimate); id. 10061:6–10062:3 (rejecting Apple estimate); id. 10063:22–10066:20 (rejecting additional Google estimates regarding Android devices); id. 10006:2–8 (“[M]y view of the world is the actual world is the but-for world because they’re not anticompetitive.”).
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964. Prof. Murphy acknowledges that there is a segment of users who are inclined to use whatever search engine is set as the default, but he did not estimate how many users fall into this segment. Tr. 9943:23–9944:7, 9945:3–11 (Murphy (Def. Expert)). Instead, Prof. Murphy testified that “foreclosure is zero in this case.” Id. 10006:17–25. Prof. Murphy reached this conclusion based on his belief that the general search market is fully competitive, even with Google’s contracts in place. Id. 10006:2–8. It was his position that search rivals are “not denied the ability to compete” for any queries due to Google’s contracts. Id. 10006:17–25.
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This court case retrieved on April 30, 2024, storage.courtlistener is part of the public domain. The court-created documents are works of the federal government, and under copyright law, are automatically placed in the public domain and may be shared without legal restriction.
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