Google, US Justice Dept clash over search advertising

Google and the U.S. Justice Department clashed in court on Friday over claims that the Alphabet unit unlawfully schemed to dominate search advertising, during closing arguments in a case the government contends could shape the "future of the internet."

U.S. District Judge Amit Mehta in Washington grilled both sides with questions, probing whether competitive platforms such as ByteDance's TikTok and Meta's Facebook and Instagram are competitive substitutes for search advertising dollars.

Mehta called platform "substitutability" for advertisers a central issue the court must resolve, as he prepares to render a major decision in coming months on whether Google's conduct broke antitrust law.

The judge also questioned whether Google assesses competitors' pricing before making its own adjustments. Google's advertising business is responsible for about three quarters of its revenue.

U.S. government lawyer David Dahlquist argued that "advertising revenue is what drives Google's monopoly power today."

Google boasted it has no real market pressure, Dahlquist said, arguing that the company does not fear increasing its pricing or not improving its products. "Only a monopolist can make a product worse and still make more money," Dahlquist argued.

Google's lawyer John Schmidtlein on Friday countered that Google's share of U.S. digital advertising revenue has steadily decreased. He touted the advertising power of rival platforms ByteDance's TikTok, Meta's Facebook and Instagram, and Amazon.

Schmidtlein argued that Google is "constrained" by rival platforms "where the eyeballs are," because advertisers know there are overlapping audiences and can spend dollars away from Google.

He also asserted that Google was continually moving to innovate its search advertising products. "If Google is a monopolist, why improve anything? Why not just jack the price up?" he told the court.

The Justice Department has hammered away at Google in a trial that started on Sept. 12, contending the search engine giant is a monopolist that illegally abused its power to boost profits.

Witnesses from Verizon, Android maker Samsung Electronics and Google itself testified about the company's annual payments - $26.3 billion in 2021 - to ensure that its search is the default on smartphones and browsers, and to keep its dominant market share.

Mehta is expected on Friday to take up the government's claim that Google intentionally destroyed internal documents that were relevant to the issues in the lawsuit. The government wants Mehta to presume that Google deleted chats that were unfavorable to the company.

Google has defended its data preservation practices, calling them reasonable, and urged the court not to sanction the company.

The court is not expected to issue an oral ruling at the conclusion of the argument.

This case, filed by former President Donald Trump's administration, was the first of five aimed at reining in the market power of tech leaders.

The second, against Facebook parent Meta, was also filed during the Trump administration. President Joe Biden's antitrust enforcers have followed with a second case against Google and cases against Amazon.com and Apple Inc. (Reporting by Mike Scarcella and Chris Sanders; Editing by David Gregorio)