Google Dodges An Antitrust Bullet & Calls for RFK Jr to Resign

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1:33This is Bloomberg Law with June Grosso from Bloomberg Radio. In the biggest tech antitrust case in three decades, Google avoided a breakup after a D.C. federal judge ruled against the government's most severe proposals for remedies. including a forced sale of its Chrome browser. Judge Ahmet Mehta had already found in August of 2024 that Google illegally dominated the search market by paying more than$26 billion to Apple and other companies to make its search engine the default option on smartphones and web browsers. Tuesday's ruling was all about the fix, and Google will have to make some concessions, including sharing online search data with rivals and ending exclusive contracts for distribution.

2:29My guest is antitrust law expert Harry First, a professor at NYU Law School. So on its website, the Department of Justice says, Department of Justice wins significant remedies against Google. But this falls far short of the severe remedies that the government wanted. How much of a setback is it for the government in its attempt to curb the power of the biggest tech companies? Well, you know, people often talk about things as being a win-win and that that's a good thing. So I think that the judge's decision is a win-win, but not a good thing. So why is it a win-win? Because the Justice Department and the states get something and Google gets more by there not being more.

3:21So I view it as win in sort of eight-point type on the government side. and win in sort of 16-point type on Google's side. So here's what I mean. It's not a significant victory for the Justice Department. They did win some things, and maybe that will help bring some competition into search. But I think Google won a lot by not losing very much. They get to keep Chrome. A lot of the remedies that the department asked for and got even were cut down, circumscribed, diminished. And, you know, whether what the judge did will end up changing the search business, I doubt, but who knows. But we've now passed the point where the question will be, will we get competition?

4:15And the question will just be, is Google complying with the decree? Of course, all of that comes after a round of appeals. So there's much more to this. But in terms of, you know, the overall feeling about what we've done, I think it's, you know, from a public point of view, a disappointment. So the big headline was always, will Google be forced to sell Chrome? Will it have to divest? So Google doesn't have to do that. Why did Judge Mehta decide not to make Google divest Chrome? So this is the second point that pervades Judge Mehta's decision, rightly in a legal sense, but I think not so correct from a policy point of view and really where the law ought to be.

5:06So this is in many ways a very conservative opinion. It's the judge expressing what judges often express is that, you know, they understand the limits of who they are, what the institution can do, and what they want to do on an ongoing basis. So they're conservative about this. And here the government's plaintiffs are asking them to do some pretty strong restructuring of one of the superstar firms in the United States. So you got to be a little modest. Now, the judge backs up his modesty with a lot of quotations from the Court of Appeals and recently from the Supreme Court in a different antitrust case, opinion written by Justice Gorsuch, which counsels, let's be careful a little bit.

5:58So the ask that Crone be divested, structural relief is something that the D.C. Circuit itself, remember Judge Mehta is a district court judge overseen by a court of appeals from the D.C. Circuit, District of Columbia Circuit. So he is required to follow the law from that circuit. The law from that circuit on remedies is actually pretty conservative and cautious. And that stems from actually the Microsoft case, which is much the template for the complaint that the government filed and for the government's theories. So, you know, they said, well, when it comes to structural relief, restructuring, reorganizing a company, you really need some strong proof before you do that.

6:48You need to watch out. And so he took those admonitions to heart and just didn't find enough to overcome that sort of a presumption that, you know, you don't do this unless you really have to do it for effective relief. And this then goes to the second part that maybe the government didn't make an effective enough case for divesting Chrome and maybe made it seem too easy. So stuck with all of that, he backed away from it. How much did AI play into his decision? So that's maybe the real lead, which we're now burying. I think his decision is all about AI, frankly. And I think that he's betting, and many in the industry, and if you listen to some of the news shows, are just simply betting that AI is going to replace search as we know it with something else that's not search as we know it, or maybe as you and I know it, but just simply getting information.

7:53And that Google search, that product, no matter what he does in this opinion, is going to be eclipsed by some AI product. And I think that that permeates. I think that he views generative AI as coming to the rescue of competition. Yeah, some say it's already eroding Google's dominance. The data seem to show, he mentions this in his opinion, that searches on Safari have decreased. People seem to be going directly to chat GPT or perplexity or some of these other AI assistant things and just getting information that way. And this is the destructive force of innovation, as the economist Joseph Schumpeter talked about many years ago.

8:46So maybe he's right. And, you know, that may mean that sort of didn't matter what he did so long as AI lives. But of course, the worry is that we'll just replicate the current structure of the tech platform superstar firms. We'll just control AI and we won't have moved to new competition, but we'll have a different product. He's ordering Google to share data with rivals to open up competition in online search. Google has to share some of the data with competitors, but not some of its most important data, would you say? Well, here again, it's hard to say exactly what are important data. You could say all of the data are important, the more the more.

9:33But, you know, this particularly involves the search index, which is something that Google has done really well. And the government in some ways didn't ask for as much as it could, which would have been a license to the index itself. What they wanted is some help with the data so competitors could build an index. And even with that, the judge cut down the kinds of data that will be required to be disclosed. And to me, even more importantly, the timing of the disclosure. So for some of these data, it's a one-time snapshot, which strikes me as, you know, the judge calls it a kickstart for competition.

10:17Yeah, like a kick in the rear. I don't know. So, you know, a one-time thing for some very important parts of some basic information to help them put together a better index of the web. There's an awful lot of information out there, and indexing it is critical for an effective search engine. And, you know, when it comes to sort of this user side data, the click and query, you know, what we do when we get free search is create data that's worth a heck of a lot of money, for which we don't get paid, we being you and me and all the other users. But these data, here again, the judge cuts down the request, gives some amount of the request, and then sort of puts on some limits yet to be decided about how often this will be disclosed.

11:14More than once now, it's not just a snapshot, but the cap yet to be determined by this technical committee that the decree is going to set up. So, I don't know, it's hard for me to say exactly, will this enable competitors to really get an effective competing search engine, or will it not quite be enough? And in some ways, this goes to what I've always viewed as the underlying problem with these decrees is a judge trying to say what competitors need to succeed instead of a judge saying, don't ask me, just come back. You know, Google, just come back and let me know whether there's competition or not.

11:58And if there isn't, we're going to have to do something more about it. you know, trying for judges or even the Justice Department, which apparently at least is still made up of some lawyers, you know, trying to design these remedies is tough. And you can feel it with what the judge has written in this opinion. It's hard. And trying to figure out what the effect is going to be, I mean, he said at the beginning, you know, I don't have a crystal ball. Other judges have used that worry as well when being asked to predict effects in future markets. Coming up next on the Bloomberg Law Show, I'll continue this conversation with NYU law professor Harry First.

12:38Google has already said it's going to appeal. Will Judge Meta's decision stand up? I'm June Grosso, and you're listening to Bloomberg. Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same, the thrill of closing a deal. Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster. With revenue agents and automations working around the clock, you'll have everything you need to scale your go-to market efforts.

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14:47Visit BajaMar.com today. A federal judge ordered a shakeup of Google's search engine in an attempt to curb the power of an illegal monopoly, while rejecting the government's attempt to break up the company and impose other restraints. The 226-page decision made by D.C. federal judge Amit Mehta will likely ripple across the technological landscape at a time when the industry is being reshaped by artificial intelligence. as companies like ChatGPT and Perplexity try to upend Google's long-held position as the Internet's main gateway. Those innovations and competition reshaped the judge's approach to the remedies in the nearly five-year-old antitrust case.

15:37Judge Mehta wrote, Unlike the typical case where the court's job is to resolve a dispute based on historic facts, Here the judge is asked to gaze into a crystal ball and look to the future. Not exactly a judge's forte. I've been talking to antitrust law professor Harry First of NYU Law School. So Harry, the judge is directing both sides to come back by September 10th with a new remedy proposal consistent with his ruling or file a status report outlining any disagreements. Do you expect anything real from that? I think what he's looking for is he's got to write this down. He's got to enter a decree that has definitions, that has specific language, that's understandable.

16:22I mean, the first challenge is figuring out sort of what to accept in the party's proposals. But the second challenge is the drafting of that decree. I think that's what he's looking for next. You know, give me your actual proposed decrees. The parties have done that. They have proposed final judgments, but now they've got to take, here's what he's ordered, and I think he wants language now. He also hinted at some fallback potential remedies. One of the problems, I think, that he faced, and it surfaced in a question that he ended up posing on the record, which is pretty rare. You know, tell me why you asked for this particular thing, Google, please explain it.

17:08And he had a final hearing, but as he sits down to start to write the opinion, he's thinking, hmm, I've got an interesting, different idea here that no one's proposed to me. Maybe you should think about it. So there's sort of some version of like conditionality, maybe on payments for, you know, not allowing certain kinds of payments for, you said you can make any kinds of payments, but maybe there's a fallback position. Maybe they had a fallback position for Chrome that they might want to articulate now, you know, just they said, let's get rid of it, but maybe there's some fallback. So this may be an opportunity also for the parties to propose, in addition to clarifying language, some modifications for what he's imposed.

17:55So maybe that will also go on as well. So who said this, Yogi Berra? It's not over till it's over. And it was Yogi Berra. Right. Well, allegedly. Apparently he never said anything that he's supposed to have said, which is another thing. Yeah, we'll discuss that next time. Now, as far as pay to play, the judge said that this exclusive deal that Google had with Apple, where it pays it something like$20 billion a year to be the search default on iPhones, etc. So they can still do that, but it just can't be exclusive. They can pay for default, but can't keep others from, you know, putting another search bar or who knows what.

18:35But they can still pay for default. So they can pay anyone for having the default. Defaults were never exclusive. I mean, they were exclusive. So, you know, you can only out of the box if you, you know, were an original equipment manufacturer, handset manufacturer, you know, an exclusive to put the Google search bar on if you wanted other programs or, you know, an exclusive. If you have an exclusive, you get revenue shares, things like that. So maybe not that, but he basically said you can pay for defaults, which the testimony from the behavioral economist was that's the factual equivalent of a near exclusive because people don't change from defaults very often.

19:21You know, it's an old behavioral habit with which we're very familiar and with which Google's familiar. So the judge did suggest he did this in a footnote. You read the footnotes too, Harry. I'm impressed. Hey, I'm a not quite reformed law professor. And we always know you put the good stuff in the footnotes. But anyway, at least that's our version. But there is a footnote. It's note 14. And he said he could revisit the idea of a ban on paying for default, but allowing to pay for distribution. So you could say, okay, if you distribute Google search, that's fine, we'll pay you. But we can't pay you to make it the default search engine.

20:09Now, he said, nobody sort of raised this. Hello? No one raised this, so I don't know the effect. Hello? So maybe we'll get something. You could wonder whether that makes any difference, frankly, because once you distribute it, given the strength of this default in most people's experience, it may not make a difference whether you label it a default or not. If you get, you know, the Google widget, you know, on your phone particularly where it's very strong because you want to use Google search and whether it was a default or not, or whether it's a fault in your Chrome browser, which it's going to be, You'll use it, and the payment won't be for requiring it to be a default, say, on the iPhone.

20:54But Apple may still make it a default unless they're offered a better alternative, which the testimony from Eddie Q, the Apple guy involved, was that he wouldn't buy Bing for any amount of money ever, apparently. So he needs something better. And is he going to take away Google search full from Apple users? I doubt it. So there might be some modifications. But at the moment, Google can still pay for default. And here again, this was the judge's concern for the impact, in being modest sort of, the impact on, you could say, the whole ecosystem of stopping those payments. and, you know, maybe wrecking Firefox, you know, DuckDuckGo, you know, even you seem to be concerned about wrecking Apple.

21:45I didn't know that Apple was in such bad shape, but there we are. Well, the government said it's considering its next steps. I mean, I don't know what next steps it can take besides appeal, but Google has previously said it's going to appeal. So we assume it'll go to the Supreme Court, right? It could be years then, years and years before this gets implemented. Yeah, it might not go to the Supreme Court. Court doesn't have to take it. You know, who knows? The court didn't take Microsoft, for example. So maybe yes, maybe no. But the years is right. This will be a while yet. And we haven't seen but could see political interference with this.

22:26We really don't know. So there's a lot between now and then, I guess. But The liability decision, which he made more than a year ago, I guess, is that the whole bundle is subject to appeal once a final judgment is entered, which he has not done yet. So once that's done, then the parties have, you know, I think 60 days to file their notices of appeal. And then the process starts to play out in the Court of Appeals, you know, unless they start some sort of settlement negotiations or something. I mean, do you think that his opinion is conservative enough to survive the D.C. Court of Appeals? So he did a lot to try to survive review by the Court of Appeals.

23:19I mean, he relied quite heavily on key decisions, particularly the Microsoft Remedy decisions. And he also, oh, by the way, bolstered one of the potential weaknesses in the liability decision while he was at it. So I think it's not perfectly bulletproof, the aspect of letting AI companies share in some of these data. If I were Google, I would be hitting on that, whether that was, you know, not warranted, given as he started out by saying, there was nothing at the trial about AI. And there are ways of casting what he did as maybe not within the bounds of what the goal was in the trial. So there's some potential issue there.

24:07And I think it is certainly possible. I mean, I assume Google will pursue that. So I think it's a pretty, you know, I mean, it could be more conservative, I guess. It could have just giving Google what Google wanted. But it's a carefully drawn opinion. And, you know, time after time, he sort of knocks the government plaintiffs back a bit by saying, you know, you've overreached, you're asking for too much, you know, we need to be modest, etc, etc. Harry, the trial later this month, to determine remedies in a different case brought by the Justice Department, where a judge found that Google holds illegal monopolies in online advertising technology.

24:50How does that threaten Google? Is it more of the same? Well, it is a little different. There's a bit of remedy on advertising, but not very much because it's so much directed at effect on the search engine market. So directly, not so much. Indirectly, I think we have to see it because from the beginning, the Justice Department has asked for structural relief to break apart the way Google does advertising, you know, to break it up, in fact, and have them divest certain parts of its advertising stack, as they call it. So this opinion is very skeptical about this structural relief that, you know, if nothing else works, then that may be possible.

25:43But the ad tech case may be a case where, you know, it's been directed at structural relief. So that may be okay. Another aspect is how much money Google has made from advertising. So it reinforces the notion that this has been a monopolized market. So that may have some effect. It's important to note that that case is in a different federal circuit. It's not in the D.C. circuit. And it may be that the Justice Department chose to file there for a number of reasons, but one of it may be that on remedy, wanting a structural remedy, the D.C. circuit is a bad place to bring a case like that, given Microsoft.

26:24So maybe they were trying to avoid that by being in a different circuit, the Fourth Circuit. So we've yet to see, I think she's been holding up on this pending Judge Mehta's opinion on remedy. But, you know, they are fencing along on the remedies hearing in that case. So that should happen relatively soon. Yes, I googled it. And the trial is scheduled to begin on September 22nd. Thanks so much, Harry, as always. That's Professor Harry First of NYU Law School. Coming up next on the Bloomberg Law Show, more than a thousand HHS employees are calling on RFK Jr. to step down. I'm June Grosso, and you're listening to Bloomberg.

27:11Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same, the thrill of closing a deal. Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster with revenue agents and automations working around the clock. You'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. Innovation is what gets your business to market, and Wasabi is designed to give every business a shot at competition.

27:49How? Break free from skyrocketing storage costs and unpredictable egress fees from old and top-heavy legacy providers. You know, the big guys. Wasabi is the world's hottest cloud storage company and the go-to provider for professional and collegiate sports teams and leagues around the world. And here's why. Innovation. From Wasabi's AI-enabled intelligent media storage, Wasabi Air, to the industry's only cloud storage service with triple protection against cyber criminals, data deletion, and ransomware, the world's top companies trust Wasabi. Remember, Wasabi is up to 80 % less than market competition and doesn't charge a cent for businesses to access their own data.

28:31Wasabi, another championship story. Check them out for free at wasabi.com. Wasabi Hot Cloud Storage, proud partner of iHeart Podcast Network. Discover a spectacular island destination with crystal blue seas, endless sunshine, and the cool Bahamian breeze. Bahamar, located in Nassau, Bahamas, offers your choice of three luxury hotels, over 45 fine dining and nightlife venues, John Batiste's all-new jazz club, the Caribbean's most luxurious casino, and one-of-a-kind experiences for the entire family, like our 15-acre tropical water park, wildlife sanctuary, world-class golf course, and so much more.