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- [00:01]
Tech God
This is Tech God and this is a word from our sponsors. Samba TV is a global leader in AI driven media intelligence. Powered by first party data from millions of opted in connected televisions and billions of web signals across the globe, its independent cross platform measurement provides advertisers and media companies with a unified view of the entire consumer journey. Leveraging real time insights and audience optimizations, Samba TV enables marketers to reach and engage audiences with efficiency and effectiveness across any platform and every screen. Visit samba.com to find out more. Again go to samba.com to find out MORE.
- [00:45]
Ari Paparo
Hey, this is Ari with Marketecture and unless you've been living under a rock, you've probably heard that Market Live is coming up October 27th in New York City. The last Marketecture Live was sold out and this one will surely be as well. With speakers like Mark Grether of PayPal, Eric Seufert of Mobile Dev Memo, and Jenny Wall from Videoamp Plus, I'll be recording my podcast live with the one and only Antonio Garcia Martinez, author of Chaos Monkeys and now part of the team building at Coinbase. It's a stacked agenda and we hope to see you there. Go to marketlive.com and grab your ticket while they're still available. That's marketexturelive.com.
- [01:34]
Alan Chappelle
Welcome to the Monopoly Report the Monopoly Report is dedicated to chronicling and analyzing the impact of antitrust and other regulations on the global advertising economy. If you are new to the Monopoly Report, you can subscribe to our weekly newsletter@monopoly-report.com and you can check out all of the Monopoly report podcasts@monopolyreportpod.com I'm Alan Chappelle. This week my guest is Daniel Hanley, Senior Legal Analyst at the Open Markets Institute. Daniel's research focuses on antitrust law, political economy, and how the law structures power in our society. I've been following Daniel's work on Twitter and LinkedIn for some time and know that he has some strong views on Judge Mehta's recent remedies decision in the Google Search antitrust case. Before we jump in, I wanted to highlight that I did an emergency pod with Ari Paparo on the market and that podcast went into more detail into the business implications of Judge Mehta's recent decision. So this discussion, the one with Daniel, is going to lean more heavily into the legal implications. So let's get to it.
- [02:45]
Host/Interviewer
Hey Daniel, thanks for coming on the pod. How are you doing?
- [02:48]
Daniel Hanley
Well. How about yourself?
- [02:49]
Host/Interviewer
I'm doing great. It has been an absolutely insane week, even by Regulatory, ad tech, lawyer standards. Because I know we're going to talk about the Google decision, but heck, we've got a definition of personal data coming from the EU Court of Justice. You've got a fine against Google, which has a whole bunch of underpinnings coming from the EU Commission. You've got a lawsuit that was just settled against Google. You know, I'm starting to get to think that there's a common connection to all this.
- [03:20]
Daniel Hanley
I wonder what it could be. Maybe a single company that has its tentacles and everything.
- [03:26]
Host/Interviewer
Yeah, you know, it turns out that that might just be a problem. Who knew?
- [03:30]
Daniel Hanley
Yes. Yeah, actually it's been a hell of a problem for a number of people.
- [03:36]
Host/Interviewer
Okay, so, so here we're talking about Judge Mehta's decision on September 2 in.
- [03:41]
Alan Chappelle
The Google search remedies case.
- [03:43]
Host/Interviewer
And so let me set the table. In August of 2024, Judge Mehta determined that Google had illegally maintained its search dominance through billions of dollars in exclusive default placement agreements. And each of the parties, the doj, the blue states, and as well as Google, had proposed remedies to address Google's monopoly. So Google proposed a set of remedies that struck many of us as milquetoast.
- [04:07]
Alan Chappelle
To put it very kindly.
- [04:09]
Host/Interviewer
And then Judge Mehta issued a decision that for the most part, seem to follow Google's lead. So here's my question. What in the world happened here?
- [04:20]
Daniel Hanley
Yeah, that's, that's probably the, you know, the million dollar question here. I, but I think it's, it might be important to take a, a step back a minute just because I feel like what really frames the discussion is, or I guess with any, you know, sort of analytical analysis, right, is there's a timeless saying compared to what? So, like, where are we coming from? So, like, you come out of the gate in 2024 with an opinion that, that line that was literally plaster all over every news outlet. Google is a monopolist, right? Like, it was just, it was short, succinct, punchy. It had all the elements of like, wow, like we're going to hold one of the world's largest companies accountable and they violated democratically determined law. And you know, then the, the liability opinion again, as you described, was, you know, released last year, just goes into a whole slew of descriptions about the financial firepower that Google used. Google used its treasure trove of capital reserves to basically bribe its way into shutting out competition, whether it's on Apple's iOS ecosystem, to be the default, through Mozilla's browser, through Android manufacturers and it's basically Google pushing the competition out of its way and basically controlling one of the most essential channels of how people get information, how people get to that. They basically created a one way tunnel from consumer platform to Google search. And again the opinion, the liability opinion read very strong and as is typical case, you know, we get to the remedy's opinion and it's as you described, like, you know, you know what happened. Like yeah, I think that it was shocking even for me and I think even based on some of the news I've read, even for more mainstream people, they were kind of taken aback be like wow, not only are there some inconsistencies here, there's misstatements of the law, there's also again, even by more moderate scholars they were like wow, this seems much more reserved than what one might expect.
- [06:23]
Host/Interviewer
So I want to get into the characterization of misstatement of law but before we do that, with your permission, I'm curious if you have a sense for why the judge ultimately went in this direction.
- [06:38]
Daniel Hanley
I think judges are often wary of like wow, we don't want to really mess up. There's often this implicit, deeply held assumption that the market is going to work, that it's going to figure things out and we us judges need to be constantly and persistently mindful of that. I also think that like Google very much played the AI card, you know, that's really sort of changed people's perceptions of what is search, how do people access search, find information, et cetera. And I think Google leans into that really hard. It's very obvious as well that sort of the industrial policy of what the United States is doing or what, you know, whether it's with the Trump administration seeking investments in AI like AI is be like the thing. And so it seems reasonable to say that judgement may have been aware of that or really adopted Google's assumptions like this throughout the opinion judgementa seems like Google will do this or Google has said they're going to do this but.
- [07:35]
Host/Interviewer
But that's sort of what's baffling to me because throughout most of the liability decision there were discussions around evidence spoliation and creating some pretty significant trust and accountability issues for Google. I just wonder if the DOJ had this to do over again. Might they have reminded the judge in their proposal for remedies that Google's credibility was seriously questioned. And by the way, not just the evidence spoliation but there were examples, you know, people within Google said hey, we need to meet the next quarter's numbers let's tweak the algorithm and get advertisers to pay more and see if anybody notices. Like, there were clear examples what was abusive behavior. And it doesn't seem like any of that from the liability phase made it into the remedies phase. Am I missing something?
- [08:33]
Daniel Hanley
I don't want to say he wanted to tone down his liability decision, but it definitely seems like he. It's almost like implicit regret. At least that's what I get from, from reading it and. But again, but it's also hard for me to like, again, I don't know. I don't know. Judgment. I can't read his mind. But what comes out as you read the opinion is that if you're, if you're not understanding what the law is and what it requires you to do, that also has downstream effects. And for me, that, as I read the opinion, he's not living up to the moment of what the law requires. But also it's. He misstates the law. And again, that feeds into how the opinion goes, or he outright. In one instance, especially in a footnote, he almost says, in basically no unclear terms, I'm just going to not follow what the law says.
- [09:25]
Host/Interviewer
I wondered, I remember back in law school, one of the things that they would say is sort of like a little dirty little secret of how judges work through things is oftentimes they kind of have a gut feel of where something needs to land, and then they try to dot the eyes and draw the path through the law to get to that decision. And it feels to me like that's what Judge Mehta may have done here and that, you know, look, I'm steeped in the digital media world. I've been doing it for 25 years. I've reached the point where the status quo is bad enough that it's better to just blow the whole darn thing up into smithereens and hope for the best. But I can understand how a judge who might be less steeped in how this stuff works and really how bad it is, might be reluctant to do something that he interprets as blowing the whole thing up into smithereens.
- [10:18]
Daniel Hanley
I don't think judges want to be seen as destructors. They don't want to be seen as pulling the levers of power, pulling the levers of, you know, quote unquote, the market. But it's a very flawed way of thinking because they are, in a sense, the antitrust laws fundamentally decide the coordination rights of businesses, the acceptable business practice of the market. So by ruling, however which way? No matter what you're setting the guardrails, it just depends on what direction they're bending toward judgment. I just feel, again, as throughout the opinion he just expresses, there was that phrase humility and caution.
- [10:58]
Alan Chappelle
Yeah.
- [10:58]
Daniel Hanley
Which he interprets as overriding all of the other requirements per Supreme Court controlling precedent that he's supposed to do. And again, I want to emphasize this. You know, people seldom read, you know, Supreme Court opinions. They're often wonky and use plenty of jargon and, you know, concepts completely unfamiliar to the layperson. But the court actually speaks in very clear terms. There's a duty in one or an obligation. And one opinion says that judges have an inescapable responsibility to impose strong remedies. There's many cases where there's this one from, this case, American Tobacco, which was basically decided at nearly the same time as the infamous Standard oil opinion in 1911. And there the court uses, admittedly, a little floral language, but it really gets to the heart of what judges are supposed to do, which they say to remove the ingredients or to destroy the ingredients of a combination and not just merely, you know, stop the conduct, but actually engage in a restructuring to ensure that the conduct is stopped and can't happen again. That. That is. That is the obligation of a judge to do that.
- [12:11]
Host/Interviewer
Well, okay, but with that in mind, well, can you walk through some of the, what you said, legal inconsistencies? Because that's something I'd really like to be able to dig down into. Like, can you give a couple of examples?
- [12:24]
Daniel Hanley
Yeah. So I guess it's a better opinion. But one of the strongest remedies that he didn't impose was that he barred Google from entering in purely exclusive agreements. Right. And that's. This is like the bare minimum, right? This is the heart, the essence of the entire case. Like, if. If the government couldn't get this, like, what was the point of liability to begin with? So, okay, great. But then Judge Mehta goes on to say, we're gonna still allow Google to make payments and, or quote, unquote, offering other consideration to distribution partners for preloading or for the placement of Google Search Chrome gen AI products. And why does he allow this? Again, what's odd is that he says it will. It'll be, quote, unquote, crippling to the downstream distribution partners. And he's mainly talking about. One of the partners he's talking about is clearly Apple. So, like, number one, Apple doesn't need billions from Google. You know, they just said they're going to give 100 billion in stock buyback. So it's not like they even need this. But it also, where the contradiction comes in is this really seems like a back door to Google's conduct in the first place. Right. So they can't be exclusive, but Google has so much money to throw at it. You're basically creating a situation where Google just needs to write a bigger, a bigger check. So it's not exclusive in explicitly but when you're making something as lucrative as Google can, again because of their dominant position, you're really saying just Google needs to get to their position in a, in a, in a different way, which they're of course they're optimally positioned to get.
- [14:03]
Host/Interviewer
Well, exactly the idea that of a non exclusive distribution agreement where the default setting is going to be Google is a distinction without a difference. Once you've set the defaults, 99.9% of people are going to keep the defaults. So the distinction between saying well it's not exclusive because you can in theory move to somebody else is just not born in common sense. So we're really, we're outside of a law here.
- [14:34]
Daniel Hanley
Like, like, let's just forget like he admits this, he, he, he, he repeatedly says that Google, that one of the effects of these agreements, he says this both in the remedy's opinion and in the liability opinion that the purpose of these agreements is not just to shut out competition and not just to, you know, or entrench Google's position. It is also for the data for all of the, and, and to, to get, and to get the access which actually makes the product. So if you are by not actually affecting the, the method for this specific method, you're actually not doing anything to help the competitors from being shut out. Because this is something, and this is one thing I think judgement just doesn't appreciate enough is that the agreements didn't just entrench Google's position. Right. That's, that's one effect. But what they actually did in the, the other side of that same coin is they fundamentally blocked other competitors from being viable competitors from actually getting there. So if you don't actually shut off that mechanism, you're really not aiding the marketplace for helping competition actually thrive because you're not giving the kind of aid that's required for other competitors to actually be positioned to have a chance to fight against Google.
- [15:53]
Host/Interviewer
Yep. What's your take around? I think one of the justifications was well, 80% of your audience for Chrome or the user base for Chrome is outside of the U.S. i was a Little baffled by that as well, because I know for a fact that the EU Commission and to a certain extent the UK Competition and Markets Authority were literally waiting. And I'm sorry, I should. Canada and to an extent, Australia, all these places were waiting on this decision.
- [16:20]
Alan Chappelle
To build from it.
- [16:21]
Host/Interviewer
They weren't waiting on the decision, thinking, okay, yeah, then we'll just do what we need to do in our own little market. And so I was really surprised by that. Is there a. Is there some precedent there that I'm missing, that it can only cover the U.S. yeah.
- [16:36]
Daniel Hanley
Well, what's interesting is that you're so in, in antitrust law, there's this thing of, like, when you define a relevant market, that the hope, which is, again, if you're a monopoly, the question is monopoly of what? Right. Judy, you need some reference point of actually saying so. So that, and we know that the market was the United States. But so in that part of the opinion, what was baffling, I think what you just said, we're now moving away from considering the effects in the US Market, saying, oh, but we have to consider everything else, even though that's not what we're talking about. And again, it's just when you engage in that kind of analysis, I think it's. You could almost say it's like a Hail Mary from Google. But what about all of our other operations? Forget that we violated the law, but think about all these other considerations for all these other parties. It seems in a sense that Google wanted to, I don't want to say obfuscate, but at least I would say minimize the actual harms they did in the US Relevant market and say, but consider all these other factors. And so that's supposed to mitigate. And never mind the fact that Chrome, even though Judge Meadow laments about all the difficulties of separating Chrome and it's its own product, that it's, you know, there was the night. George, was it night. Georgetown Institute, they came out.
- [17:55]
Host/Interviewer
Yeah. Alyssa Cooper and her friends, right?
- [17:58]
Daniel Hanley
Yes, yes, that's right. Yeah, that's a. Yeah. You know. Oh, you already know the report I'm talking about. They came out and just said, oh, this is totally technically feasible. Like, it just seems like in this lawsuit that his role, I would almost say it's. He doesn't see his role of enacting change, maybe in the sense of that's not his job, or that he may not think that the harm that he found was unlawful is even that big of a deal, which again, makes very, very little sense, especially when you put it in the context of the wording he used in his liability opinion.
- [18:30]
Host/Interviewer
So there was a very specific issue surrounded by a previous case called United Shu that directly addressed the question around structural relief. Because judge clearly took the presumption that structural relief was a only if emergency break glass for structural relief. I thought I read somewhere that you were, you were kind of picking that apart a bit, and I would love it if you would do so here.
- [18:56]
Daniel Hanley
So. Yes, so that, that what a great question. Because this is definitely one of the most important points is, you know, the, the rules of, of structural remedies or just revis in general. So let's, let's set back a very important point. The antitrust laws. You know, there's, there's section one of the Sherman Act. It bans restraints of trade, which is. And it mostly. And it basically target firms more than one firm. Then you have Section two of the Sherman act. It targets dominant firms against single firm conduct. You have Section 7 of the Clayton act, which targets mergers. So we have all these different pathways to liability. And then each of those statutes has different standards of liability. What does a plaintiff need to show to actually get liable? What defenses are available? But here's the trick with antitrust law is that they all lead to the same remedies provisions. There's 15 USC 25 for government enforcers and 15 USC 26 for private plaintiffs. And even though the language is slightly different, they've basically been interpreted that the courts have their full equitable authority behind to actually resolve the issue here. So now when you know that, okay, once you're liable, all of the remedies are available to you, right? Then you say, what is the case? I'll say about how I'm supposed to think about remedies. And here the court has been clear into the case you cited, which is United Chu. The court has been very clear, but not just in United Shu. It's been clear repeatedly that structural relief needs to be at the forefront, needs to be considered first. And how we think about remedies. And why. Because it's simple. It actually gets the courts out of involvement. Because if you think about a behavioral remedy, if you just say, don't do that, come back and check with us, you're leaving most of the. Again, the court uses this word ingredients. I'll just use it here because I'll stick with the language that the court uses. You're basically leaving the ingredients that led to the unlawful conduct untouched. And then you have to come back to the court and waste the court's time. So when we think of structural relief, it's actually the court's preference doesn't just come from its ease of administratability is a requirement. It's sure it's administrable. And again with Judge Mehta's discussions, he almost seems like again the cautiousness that I have to look at it I need. Or then he does this whole discussion again. It's a little technical, but it's one of the most revealing aspects of his thinking is that in antitrust parlance it's this causal connection idea is the relationship between the liability and what kind of remedy is imposed. And in his mind that structural remedies are the most extreme and sort of behavioral remedies are sort of the easiest and the more structure you go, the more connection that you need. And he uses what he calls a sliding scale approach that the stronger the remedy, the more, the more rigorous the relationship has to be. And again, this is contrary to what the Supreme Court has said. This is this case national society, professional engineers. And it says that all the things are reasonable. It needs to be reasonable. He makes, he basically takes a made up standard, has a distaste for structural remedies even though the law requires, requires him to actually use structural remedies. It's just not following not being fidelity to the showing fidelity to the law.
- [22:06]
Host/Interviewer
So you've identified a couple of places where you think and you've made a good argument for Judge Mehta being wrong on the law. And so my next question then is going to be how do those types of inconsistencies play into any potential appeals process?
- [22:22]
Daniel Hanley
That's a great question. So there's a couple of things that I think are important here. So number one, so what would Google appeal? Let's, let's just take each of the, each of the parties would Google appeal. There's actually a chance that they, they might because they have an interest. So no one there's many of our nation's remedy scholars when they, when they describe remedies, they really describe remedies as the meat of substantive law. That it without good remedies, the substance of your claims really doesn't mean much.
- [22:53]
Host/Interviewer
So well we've seen that in spades over the last week.
- [22:57]
Daniel Hanley
Yes. Right. So Google, even though, you know got a weak remedy, they actually my appeal maybe they feel emboldened one to attack the liability decision. Right? That's always, that's always a chance. And again when you go, when you go to appeal now you're making law right now you don't get. When you're at a circuit, for now you're making law. But the other thing is, is maybe just to, if they want, on basically almost every other remedy. Right. They only have to basically not do one little thing which by the way has a back door. They may feel emboldened enough being like, yeah, we're going to take this up to get this codified because we have, we're under attack and all these different lawsuits that are going at us and we know that the D.C. circuit, you know, is for a variety of reasons is, you know, the, one of the most important circuit courts in the, in the business. You know, the Microsoft cases was cited at ad nauseam. Like this is another chance to reinforce the importance of that decision and make new precedent that says leave Google alone. Like so they had a lot of incentives here to do that and get things hard because they know they're under attack from different sides. You know, the, I guess the most, one of the most famous in the United States is that the Epic Games case.
- [24:01]
Host/Interviewer
I would imagine they want as little oxygen pointing in their direction as a confirmed monopolist as they can because that's just going to encourage more versions of Epic Games. And we've seen just in the last couple of weeks slightly different things. I think these were a little bit more ad tech related and that's a separate trial, but there's been a couple of suits launched over the last couple of weeks alleging that Google is a monopolist. So if Google can get rid of that moniker here, I think that would be helpful. Now whether that's a realistic goal is certainly debatable. But then that gets you to the second area, which is like, what is the current DOJ's appetite for pursuing this given that A, they've already sort of declared victory and B, you now have the current administration seemingly backpedaling and walking away from, from this directly with, with Google CEO.
- [24:59]
Daniel Hanley
Yeah. So again, there's so much going on with the doj, it just seems to be, there's a lot of lack of clarity. You know, you have Assistant Attorney General Gil Slater who desires to enforce the law, who desires to it have a fidelity to what the law requires. You know, she's given a number of speeches on that.
- [25:19]
Host/Interviewer
I thought she was a great pick.
- [25:21]
Daniel Hanley
Yeah, yeah, she, I mean she's, if I recall correctly, she's President Trump's, has the most bipartisan, one of the most bipartisan support. Like if you look at her Senate votes, it's like, I think it was 73, which is definitely one of the highest, I think only, only second to Secretary of State Marco Rubio. She clearly has an appetite for wanting to. But yeah, the administration, it's unclear what like, you know, there was the, there was the tech dinner yesterday. I don't know if you saw that it was making the rounds on online. And President Trump said to Sundar Pichai, so you had a big day yesterday. And you know, the Biden administration litigated that case. And I don't know what that means. It's like actually, President Trump, you, you brought that case under your first administration and your, and your own department. Yeah, they didn't get the liability decision, but your DOJ litigated the remedies parsion. Right. So it's like this is, you have a, you have a lot to claim here and it just seems like you don't want it. So I don't know. So that, that to me leads to. They may not appeal, but might use it as a bargaining chip of some kind. Say, hey, we know you won here. We could clearly see that you probably don't want to litigate this or appeal this particular case. Let's settle. And that could happen. Now, again, the other thing is the DOJ might litigate because they might want to avoid a Tonia act review. Because if the DOJ settles now, that opens up to Tonia review and public.
- [26:53]
Host/Interviewer
Comment, which walk my audience through that a bit.
- [26:56]
Daniel Hanley
It's basically a judicial check on antitrust settlements from the doj. And it was enacted in the wake of the Nixon administration because then there was some shady antitrust elements, most famously involving itt. I think it's International Telegraph and telephone is the pulled apart acronym. It was obvious then that the International Settlements could be used as a sort of corruptive bargaining chip, as a cudgel. You know, you have the weight of this law that can break up your company. And it's easy to use that as a means of corruption. There was, there's been many documents throughout instances throughout history of presidents using the threat of antitrust enforcement as a sort of cudgel. So the Tunney act basically says that if the DOJ is going to enter into a settlement, there is an opportunity for public comment. There's this thing called a competitive impact statement, which at the, analyzes the settlement and sees its, its actual effect on the marketplace. And then a judge has to ensure that the settlement is, quote, unquote, in the public interest. So a judge could if they want, but, ah, okay.
- [28:06]
Host/Interviewer
And so you're positing that the, the likelihood of a settlement is a little less likely because of fear of a required review of that settlement under the.
- [28:18]
Daniel Hanley
Tanya yeah, especially in the wake of the Juniper, the HPE Hewitt Packet Enterprises juniper deal with the whole with Roger Alford's firing departure, his whole speech that he gave rule of law versus rule of lobbyists. So especially in the wake of that, the DOJ might want to avoid a tunny attribute so they may be required to appeal.
- [28:45]
Host/Interviewer
It's funny the forgotten actors in this dance are the blue states led by Colorado. And I'm curious if you have some thoughts regarding what the states may do. What is AG Weiser and his colleagues going to do? Because they've been pretty quiet. I've seen Gail Slater up speaking about this on a couple of pods, but I don't think I've seen anything from the states. And just curious if you have any thoughts there.
- [29:15]
Daniel Hanley
I agree with you. I think everybody's trying to play a little quiet here. I think everyone's sort of holding with bated breath. And it also makes sense. The federal government is seen regardless of who's in power they're often seen as the leaders on these types of things. But the states can if they want they can go solo. They did with the Microsoft case. Google really because this is the first big monopolization case in a long time from the doj especially one is enforced with as much vigor as it has as much public interest behind it. You and this is like you could almost think of it like this is the first domino in all of the other cases. So if you get this one right this could help, you know, spur confidence to litigate harder to be more creative to be to infuse some much needed confidence boosting. But if you lose and because this case is so big. Right. Even Judge Mehta in his opinion talks about how many how many documents how just how long this process has been. They did that and also states the states clearly have a hunger for antitrust enforcement. They've shown you know whether it's at using their state law with the Kroger Albertsons merger, even with one even before that was what was the it was the T mobile ops Friday again I think the next couple of weeks because I forget when Judge Boseberg's opinion is supposed to come out definitely very soon that's really when we're going to see I think there's going to be a lot more activity in terms of decisions being made.
- [30:47]
Host/Interviewer
Do you have any sense at this point or is it too early to even think about how this ultimately is going to play out not just the Chrome divestment, but the search index and AI index. Enabling that to be combined is just a huge problem. And I've seen the quote like, you know, it's like, die a quick death by giving up the traffic or die a slow death by having them turn all of your good content into AI slop and, and not being able to monetize it. And so I'm really looking at that constituency, the, the ad tech, the, you know, ad tech companies, digital publishers, to a certain extent, advertisers, like, how does this play out?
- [31:26]
Daniel Hanley
So in that sense, they're complimentary. So it almost seems prudent to wait. And once you say, okay, how, how best can we take this decision? And now that we're attacking, we got decisions addressing both sides of Google's business as they are as a company, you know, then they can move forward for that. That, to me seems like the most prudent way to go forward.
- [31:45]
Host/Interviewer
Well, that certainly makes sense. I've got one other set of questions for you. This is really within the ad space. This is something that's already starting to be debated and mostly debated by business types who are probably less versed in.
- [31:59]
Alan Chappelle
This kinds of stuff.
- [32:00]
Host/Interviewer
But you know, there's a technical committee who is going to oversee a number of things, including the potential sharing of search data with qualified competitors, whatever in.
- [32:13]
Alan Chappelle
The world that ultimately means.
- [32:15]
Host/Interviewer
But walk my audience through, what is a technical committee, how does it work? And then maybe you can help me understand how does Google not game this and run the whole thing around in.
- [32:28]
Alan Chappelle
Circles for the next several years?
- [32:30]
Daniel Hanley
Right, so this is, this is a great question. So a technical, the technical committee is basically going to be a group, group of people that administer, you know, as a, as agents of the court, to determine how to actually hold Google accountable to adhering to the actual remedies provision. So I'll, I'll give a good example of that. So in, in the opinion, Judge Mehta says even though he struck down the anti circumvention and anti retaliation provisions, he has a line in there about saying, well, we could be all be open to modify this order as circumstances depend. Well, how do you know what circumstances the technical committee will inform the court that Google's either not complying or whether they're not adhering themselves to what, what was actually ordered. Now I think the technical committee can be gamed in a sense. You know, they could also be running in circles. But I don't want to undermine the importance of, of a technical mail I think the most relevant example here, the United States v. Apple decision from 2015 out of the 2nd Circuit in New York City. And for those unfamiliar with that case, it's more colloquially known as the ebooks price fixing case. And there Apple was found liable for organizing what's called a hub and spoke price fixing conspiracy where Apple fixed the prices of ebooks by convincing all of the publishers to adhere to their terms only if other book publishers would join in. And there, there was a technical committee and Christopher Sagos has a, a great book giving all the details. It's literally called the United States, the Apple. And that gives all the details about that, about the opinion about the, what happened after the lawsuit. And there he describes in detail just how much of a headache they call it the term a special master. Again, very similar roles, agent of the court overseeing the what, you know, the adherence to the court orders. And in there, there are internal emails, there's communications from Apple executives just complaining constantly about the, the special master's interference, the number of document requests, the threat of telling the court that they're not listening. So I don't want to say a technical committee is like seen as a weak thing because you are quite literally putting the court or, or an agent of the court into the business. Right? You are saying that now you have oversight over what you are doing. So yeah, that's, that's what I think will happen. Now again, Google could flood them with data, but I think the order, Google has an incentive to comply here. I, they, they know they've won on so many grounds and they know they're also in the background. Even though Judge Mehta doesn't express it in his opinion, he does know that, you know, with the whole suppression of evidence, they already end up looking at it a bad light. You know, that's, that's, that's not good. This is like, you know, practically grounds for, you know, disparate for the attorneys, you know, sanctions on Google. Like they already know they are under a light and they know that since they mostly won, they avoided a divestiture. They actually may not want to yank the chain, so to speak, of the technical committee. To the extent that they do, they may just say, you know, what, if anything, it's in their best interest to comply or at least like be generally pretty nice because they don't want to have to go back to the court and say, you know, it's almost like a three strikes are out. So reveal, you know, you messed with us on the evidence. You're now you're not, you know, now you're not listening to the technical committee. Now we're going to put the hammer really down this time. Like, they don't, they don't, they don't want to do that.
- [36:00]
Host/Interviewer
So I just want to jump in real quick because I, I feel like a technical committee works significantly better with an Apple. Apple is to build Belichick as Google is to Ted Lasso. So, no, no, like, so with, with Bill Belichick, when he does something and sticks his middle finger up at you, the technical committee goes, hey, look, here's a picture of him sticking his middle finger up at us. Like the judge goes, okay, man, listen, you got what? You got two more chances with Google. They're so good at this. And they're going to come back and say, well, there's privacy reasons that we can't turn over data, and, boy, you know, we're not going to give it over to our best competitors. And so. And they'll continue to refine the process and invent reasons why that's beneficial to everybody in ways that are very difficult. Even if you understand in a lot of detail, it's difficult to disprove that. And that's sort of where I have a problem with, with the concept of relying too much on the technical committee. And one of the reasons I was much, much more hopeful that divestment would be an option.
- [37:10]
Daniel Hanley
Yeah, Again, I agree. Listen, I'm, I'm trying to be an optimist, right? Maybe, maybe that's why I'm in. The advocacy role that I'm in is right, because I, I'm going to be a perpetual optimist. If I, if I was a doom and gloom, I'd probably be. I have to, I have to get out of my. I have to find something else to do with my life. You're completely right. That detective committee is not sufficient at all. Like, I would have loved the structural remedy. My interpretation of the laws. He was required to put a structural remedy there. But still, I'm going to take any victory I can and say that this can do something. And again, if, I mean, this is really the lesson of Microsoft. Right? Like, this is why I think a structural remedy was so important here, is that the lesson of Microsoft was if you don't do a structural remedy, nothing is going to change. And during the Microsoft litigation, there was a state report, it was led by California, and it was submitted to the court, and they basically just slammed the court saying this consent decree is not working. Microsoft is still dominant today, as they were when the lawsuit started because the Microsoft consent decree there only did behavioral remedies slap on the wrist, some sharing of code judgement clearly didn't rise to the moment and didn't adhere to the law here and it could cause the government to come back. But again, this is why I think to say it again, it's so important. It's going to be very important to wait for the ad tech rolling and then we can actually see all of the cards. Like again, because so many different aspects of Google's business model is under scrutiny at the same time. Right. It's important to get the whole picture before I can fully say, oh wow, like this, this, you know, this really just is a bad situation. Yeah. Again, the opinion is embarrassing for a lot of reasons as I described. But I'm hopeful that the ad tech decision will also bring more light and be a little bit better and then we'll have really all the cards to see on what can happen next.
- [39:06]
Host/Interviewer
Okay, well, this has been a fantastic discussion. Daniel, I got one more question for you. This should be a real easy one. You're from Connecticut, I'm from Connecticut. We both went to the University of Connecticut. What is the combined record of the women's and men's basketball team going to be in this upcoming year?
- [39:24]
Daniel Hanley
Oh my goodness. Oh, Oh, I have no, I have. Oh goodness. I have no idea. That's. That's a tough one.
- [39:31]
Host/Interviewer
Oh, you disappoint me, my friend.
- [39:34]
Daniel Hanley
Here's the thing. I, when I was. My tenure at UConn extended from 2008 to 2012 as an undergrad and then from 2016 to 2019 in law school. And that's really like the height of the Yukon dynasty. Right? Of like complete, you know, especially for the women, you know, complete shout out years, you know, breaking records and consecutive victory. So like I am like permanently scarred from all the, the emotional highs of that time period. So my, my frame of reference is that's how they're always going to be forever to me as just pure dominance. I don't know, it's. It's a good question. I wish I had a crystal ball.
- [40:17]
Host/Interviewer
You kids got spoiled when I was there, man, when I was there, I think we won nine games one year we did win the nit. And like that was like the top of the mountain for us. But, but the right answer, and I'm a little disappointed in you, I got to be honest with you, the right answer is undefeated right on the fear.
- [40:35]
Daniel Hanley
I hope every year to see the undefeatedness. I do. I. Every time I hear about it. It's, I've actually checked like Internet search trends on UConn University Connecticut, always around basketball season and you just see it, it just literally every time, it's like, it's literally like clockwork, which I love to see because I take an immense amount of pride going to the University of Connecticut, both as an undergrad and as a, as a law student.
- [40:58]
Host/Interviewer
Me too. Well, we're going to leave it there, but this has been a fantastic discussion. Daniel. Daniel Hanley, I really appreciate you coming on. Hopefully we have you back on.
- [41:06]
Daniel Hanley
Thank you so much. Appreciate it.
- [41:09]
Host/Interviewer
That was a great discussion.
- [41:11]
Alan Chappelle
I really appreciated Daniel's perspective on all this, and I understand that there's still a lot of dust that needs to settle around this decision, but as of right now, I just don't believe there's much to be optimistic about here. First, and I think this born itself out in our discussion. I think that Judge Mehta's remedies decision here is too weak to enact meaningful change. Second, it doesn't seem like the DOJ is going to continue pushing up this hill. They seem poised to declare victory and move on. Third, the European Union appears to have blinked once the Trump administration started showing its teeth, and it seems like their talk of requiring or at least requesting a breakup of Google has gone by the wayside. Similarly, the UK Competition and Markets Authority has all but announced that it's dropping its case against Chrome and the privacy sandbox. Finally, I don't think the remedies and the DOJ is even looking for in the separate Google Ad tech case is likely to have a material impact on the digital media marketplace. So with all that, I'm struggling to find a silver lining in all this or even a bit of light. As of today, the only additional potential avenues that seem to be private antitrust litigation or the US Congress reforming antitrust law significantly for the short term, I think the best we're going to get here are congressional hearings.
- [42:38]
Host/Interviewer
So I really try to be an.
- [42:41]
Alan Chappelle
Optimist, but I just don't see much out there right now to support an optimistic view. Meanwhile, I'll continue to bring on really smart people on this podcast to discuss thorny issues here in the ad space, hoping that together we can come up with some solutions to that end. We've got a bunch of other fantastic guests coming up on the Monopoly Report podcast. In a few weeks, I'll have the author, Patrick McGee, and he'll be on to talk about his book Apple in China. And soon I'll also be speaking with the former FTC Chairman John Leibowitz, where we'll be talking about some of the antitrust decisions made regarding Google back in 2012 and 2013. We'll also be talking about the Do Not Track standards. So that should be a really fun discussion for all the policy nerds out there. Both of those are going to be great discussions. So please subscribe to the show@monopolyreportpod.com or on Spotify, Apple, YouTube, or wherever you listen to your podcasts. And thanks for listening.
- [43:49]
Ari Paparo
Thank you for listening to the Market Podcast. New episodes come out every Friday and an insightful vendor interview is is published each Monday. You can subscribe to our library of hundreds of executive interviews at marketecture tv. You can also sign up for free for our weekly newsletter with my original strategic insights on the week's news at News Market tv. And if you're feeling social, we operate a vibrant Slack community that you can apply to join@adtechgod.com.