Google’s monopoly delayed innovations like ChatGPT, US Justice Department says

Days after Microsoft Corp. announced that it would incorporate OpenAI’s AI-powered chat technology into its Bing search engine, Alphabet Inc.’s Google said it would release its own conversational AI product, said Kenneth Dintzer, the Justice Department’s lead lawyer in its antitrust case against the search giant.

That “shows what real competition will do,” Dintzer told Judge Amit Mehta. “What has been going on for the past 12 years is Google has been maintaining its monopoly. Would we have seen ChatGPT six years earlier? Would we see five other competitors competing for search? Those are questions none of us can answer.”

Google has asked Mehta to throw out two antitrust cases brought by the Justice Department and state attorneys general before a scheduled trial in September. The Justice Department and a group of states separately sued in 2020, alleging that Google’s deals to ensure its search engine is preloaded on web browsers and mobile devices violate antitrust laws. Mehta is overseeing both lawsuits.

Google’s attorney John Schmidtlein acknowledged that the agreements with Apple Inc. and smartphone manufacturers to be the default search engine give the company “an advantage,” but that doesn’t violate antitrust laws.

“There’s absolutely an advantage, but it’s not insurmountable,” he said.

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Schmidtlein’s comments responded to questions from Mehta about whether Google’s default status gives it an edge that competitors can’t match. “There is self-reinforcing quality to these agreements,” Mehta said. “What seems to me to be unique is the product gets better just by having the default. Google, by virtue of having the defaults year after year after year, gathers more data and has the ability to return more accurate, more efficient search results.”

Google first entered a contract with Apple to be the default search engine on its Safari browser in 2003, when Google was one of many search engines and Apple’s Mac computers were only a small sliver of the market, Schmidtlein said. The amount of money Google pays to Apple is confidential, but is in the billions of dollars each year.

Mehta also pressed Google on why it continues to pay for the default position today when it is the undisputed leader in search.

“They are paying to expose their product and make it available. Whether people switch is up to the user,” Schmidtlein said.

Yet Dintzer, the Justice Department lawyer, said Google’s insistence on exclusivity and the size of those payments are key.

“They are paying billions of dollars for these defaults. Google keeps saying, ‘It’s because people want us.’ If people wanted it, they wouldn’t be paying billions of dollars,” he said.

Mehta pushed back on some of the Justice Department’s arguments, asking the Justice Department to specify what Google should have done differently.

The company should have eliminated the exclusivity provision in its contracts once it gained a monopoly, Dintzer said. That would have allowed potential rivals to bid for access points on smartphones and browsers, he said, and would have let companies like Apple or Mozilla — the maker of the Firefox browser — design their products differently to offer consumers more choices.

Mehta is expected to rule this summer. He could narrow the cases or throw them out altogether, although that outcome is unlikely given he identified several issues at Thursday’s hearing that he said would be better resolved at a trial.