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Google lawsuit: the opening salvo in a battle to restrain Big Tech

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After months of political grandstanding in Washington, the opening shot has finally been fired in the battle to restrain Big Tech.

In a complaint against Google this week, backed by the Republican attorneys-general of 11 US states, the Department of Justice ended years of inaction on the part of US antitrust authorities. 

The complaint received resounding support from the company’s opponents. It has landed at a time when there is rare bipartisan political support for action. And it reflects a careful legal strategy designed to maximise the odds of success, while also acting as the first part of a broader legal campaign against both Google and the rest of Big Tech.

The willingness of the authorities in Washington to really take on Big Tech will only become apparent after the election battle between Donald Trump and Joe Biden. But the broad political support in Washington for this week’s action helped to set the stage for other cases against large technology companies. The Federal Trade Commission has been investigating Facebook alongside several states, and people involved in that case expect it to be filed before the end of the year. Federal investigators have also opened probes into both Amazon and Apple.

“We are looking at a once in a century opportunity to realign what the political economy of the United States should look like,” says Barry Lynn, founder of the Washington-based Open Markets Institute.

The Google lawsuit is not quite the ambitious attempt to stretch the boundaries of antitrust law that some critics of the digital giants had hoped for. Instead, the DoJ has opted for a more limited and traditional antitrust action that many lawyers believe has a better chance of winning.

Senator Josh Hawley questions witnesses at a hearing into Google's online advertising. The Department of Justice complaint acts as the first part of a broader legal campaign against both Google and the rest of Big Tech
Senator Josh Hawley questions witnesses at a hearing into Google’s online advertising. The Department of Justice complaint acts as the first part of a broader legal campaign against both Google and the rest of Big Tech © Chip Somodevilla/Getty Images

Sridhar Ramaswamy, a former head of advertising at Google who is launching a new search engine, was among those to welcome the limited nature of the case. “One of the real fears I have is, how do we get the word out there is an option, so that people can ever consider us?” he says. The US action is “straight and narrow, and a really important case. It gives me heart.”

Network effects

Much of the criticism from politicians of both Google and for other big tech companies has centred on the way they wield their platform power. In a sweeping report from a House of Representatives subcommittee last month, the companies were accused of channelling users from their dominant search engines, app stores and ecommerce sites to their other services, deliberately cutting out competitors.

By contrast, the DoJ’s opening salvo is aimed at a far more limited issue: the contracts Google employs to ensure its search engine stays prominently in front of users. These include paying billions of dollars to Apple and others to make it the default search engine on most smartphones. It also stands accused of using a series of contractual arrangements to make sure it keeps pole position on phones running its own Android operating system.

Coming years after Google turned its search engine into the centrepiece of an array of widely used and self-reinforcing services, from Maps to Gmail, there are also serious questions about how any single legal case could loosen its grip. An official at one Google rival summed up the frustration: “It’s too damned late.” The case is unlikely to get to court before 2022. With possible appeals, relief could be years away, even if the US were to win.

Sridhar Ramaswamy, a former head of advertising at Google, says the US action against the group is 'straight and narrow, and a really important case'
Sridhar Ramaswamy, a former head of advertising at Google, says the US action against the group is ‘straight and narrow, and a really important case’ © Noam Galai/Getty

By limiting itself to the company’s contracts, it could be the closest thing to an open-and-shut case, says Gary Reback, a US antitrust lawyer who spent years representing American companies fighting Google in Brussels and Washington.

“If they had gone after other parts of Google’s business, they would have got caught up in questions like how they should define the market Google operates in,” says Gene Kimmelman, a former senior antitrust official at the Department of Justice. “For example, with advertising, there would have been questions on whether Facebook should be counted as a competitor, or whether the part of the business dealing with advertisers should be counted as separate from that dealing with publishers.”

Google, for its part, called the lawsuit “deeply flawed”. According to the DoJ, the case is modelled closely on the agency’s successful antitrust action against Microsoft two decades ago. But Google rejects the comparison.

Today’s users can switch between search engines far more easily than users of Microsoft’s Windows software could pick a web browser other than Internet Explorer, the company argues. It adds that, unlike Microsoft, it had not imposed exclusive contracts that forced distributors to shut out its rivals.

Kent Walker, Google’s senior vice-president of global affairs, compares the huge sums it pays to search distributors — amounting to $30bn globally last year — to the money that makers of breakfast cereals pay to get the best shelf space in a supermarket.

According to opponents, that fails to reflect the reality of how people use modern digital services, and switching a search engine is not like reaching for a different brand of cornflakes on a lower shelf. “The reality is that 99 per cent of people are not going to change their defaults,” says Mr Ramaswamy.

Google has turned its search engine into the centrepiece of an array of widely used and self-reinforcing services, from Maps to Gmail, raising serious questions about how any single legal case could loosen its grip
Google has turned its search engine into the centrepiece of an array of widely used and self-reinforcing services, from Maps to Gmail, raising serious questions about how any single legal case could loosen its grip © Olivier Douliery/AFP via Getty

Rather than occupying only a slice of prime shelf space, Google has guaranteed its search engine almost ubiquitous exposure. “It’s like they bought every store in the neighbourhood,” says Mr Reback. The combined effect of all its contracts is a textbook case of trying to block opponents, he says, adding that if consumers could switch so easily but chose to use Google anyway, then why would it pay such huge amounts for the best placement?

However, some antitrust experts say it is unlikely that a court would try to block what look like open commercial arrangements. Apple and other companies seem to have a perfect right to auction off the default positions in their devices to the highest bidder, says Randal Picker, a law professor at the University of Chicago, adding that it would not be “an easy case to win” for the DoJ.

Political moves

Further lawsuits against Google look almost certain to follow. A group of state AGs, who have had a parallel investigation and who did not join the DoJ’s case, said on Tuesday they were planning to file their own suit in the coming weeks, and that this would probably be appended to that of the federal government. 

Most observers expect the case to broaden out further as the pre-trial period continues. Advertising technology might yet come under scrutiny, as might Google’s practice of putting its own products — such as Google travel and shopping — at the top of search results.

“It would not be surprising to see additional suits filed by the state AGs or by the DoJ that are broader,” says Michael Kades, director for competition policy at the Washington Center for Equitable Growth.

Facebook's Mark Zuckerberg speaks via video to the House judiciary subcommittee hearing on antitrust. The Federal Trade Commission has been investigating the group alongside several states
Facebook’s Mark Zuckerberg speaks via video to the House judiciary subcommittee hearing on antitrust. The Federal Trade Commission has been investigating the group alongside several states © Graeme Jennings/AP

If Washington’s legal strategy for taking on Big Tech is starting to come into focus, the timing of the first legal action has confounded many. Coming only two weeks before a presidential election, it has left many questioning whether the case was rushed through for maximum political impact. By pre-empting the results of the separate investigation by the states, it has also robbed regulators of a chance to present a more united front.

Some involved in the state AGs’ case still felt they had work to do. “They were only weeks away from being ready,” said the person. “The only reason to push the button now was to get it out before the election.”

The progress of the case may now turn on the outcome of the election. Compared with other senior Democrats, Mr Biden has said relatively little about what he thinks about corporate power in the technology industry; and some on the left worry that he will continue Barack Obama’s friendly stance towards Silicon Valley.

Others, however, believe Mr Biden will not want to look weak in tackling corporate power in comparison with Republicans, and will push ahead with the case. 

“I would expect a new administration to want their own people to be in charge to tackle such a high-profile and important lawsuit,” says Mr Kimmelman. “That will take time, but there is no reason it shouldn’t continue.”

For Mr Reback, the most important question is whether future leaders push aggressively for serious sanctions against the tech companies, or if they settle in return for relatively minor behavioural changes, as the George W Bush White House did with Microsoft in 2001.

Amazon employees work at a distribution station in New York. Federal investigators have also opened probes into both Amazon and Apple
Amazon employees work at a distribution station in New York. Federal investigators have also opened probes into both Amazon and Apple © Johannes Eisele/AFP via Getty

Ryan Shores, associate deputy attorney-general, would not say what outcome he wanted, but this week insisted: “Nothing is off the table.” 

The betting on Wall Street was that any action would be limited, and shares in Google’s parent, Alphabet, did not lose value. A similar case in Europe, launched in 2016, led to relatively minor contract changes, along with a move to give users a choice of search engines. Neither measure has done anything to weaken Google’s grip on search. 

A more draconian step would be to bar Google from buying up the best shelf space. But given the huge payments it currently makes, that could provoke widespread opposition. As a Google official says, it would not go down well with the many companies that benefit from the current arrangements — starting with Apple, but including other handset makers, browser companies and mobile network operators that share in Google’s advertising revenues in return for promoting its service.

According to some of Google’s foes, that leaves a break-up as the surest way to create a more open search market. Europe’s failure to rein in Google after fighting the same battle shows that this is the only sanction that will work, says Thomas Vinje, the lawyer whose complaint prodded Brussels to take on Android’s arrangements.

“The only really effective remedy would be forcing Google to divest Android,” he says. “The separate company wouldn’t have the incentive to leverage Android to benefit search.”

For now, it is simply “too early to know” whether there will be political backing in Washington for breaking up Google or other tech companies, says Roger McNamee, a Silicon Valley investor and former ally of Facebook who has since become one of Big Tech’s harshest critics.

But while the endgame may still be years away, this week’s lawsuit shows that something profound has changed in US antitrust. “The laissez-faire, low-touch policy that has existed for the last 40 years is giving way,” Mr McNamee says. “The question is, how far will they go?”



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'It’s more than sport – every day we are fighting for our rights to be equal’

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French pro basketball player and podcaster Diandra Tchatchouang on her role beyond the court



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Emily Dean on how allyship amplifies the female experience on film

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When I was six years old, I decided to be an artist. When I was 12, I decided to be a filmmaker. And instead of saying no, you can’t do that, or it’s not possible, my mum bought me a video camera.

After several years of working in the industry, I’m working with a female director for the first time. And it’s been such a gratifying experience. Women express leadership in different ways. Maybe you don’t have to be the loudest person in the room. But you can have great ideas.

And the best thing about being mentored by women and being a mentor to women is that make friends with women.

There’s something so powerful the women coming alongside other women, especially in a group setting. Because it means that you can and back each other up. You can support each other’s decisions, and you can amplify each other’s voices.

It’s about seeing yourself in your work. Seeing some part of yourself reflected is really gratifying. It’s also important that we speak up for female characters. I want to see girls and women on screen who have the whole cacophony of experience of what it’s like to be female.

I want to see their flaws. I want to feel their struggles. I want to see their joy. That is so important to making a character feel real. And it took me a little while to settle into myself and realise, if the characters I like to come up with are not your everyday run of the mill characters you see in animation, that’s fine. Because this is who I am.

When you walk into a story room, when you’re working on a film, you have to leave your ego at the door. I think that can be interpreted like keep your ego out of the work. But I’d also say for women who are maybe more shy that leaving your ego at the door means you walk in. And your job is to focus on what’s best for the story and for the film.

The story needs you. The film needs you, and it needs your best ideas. It won’t thrive unless you speak up.



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Crimea ‘water war’ opens new front in Russia-Ukraine conflict

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When a cyclone drenched Crimea in rainfall last month, rivers burst their banks and thousands of people in the Russia-annexed peninsula had to be evacuated from the floods.

The silver lining to the deluge was that the rains also filled Crimea’s depleted reservoirs, temporarily alleviating a crisis brought on by an extended drought and a Ukrainian blockade of the Soviet-built canal that previously provided up to 85 per cent of the peninsula’s water supplies.

Moscow’s struggle to supply Crimea’s 2.4m residents with fresh water has become a flashpoint in an undeclared war, seven years after Russian troops seized Crimea from Ukraine. An even longer conflict between Kyiv and Russian-backed separatists in eastern Ukraine has claimed more than 14,000 lives.

Russia has accused Ukraine of “genocide” over the building of a concrete dam across the North Crimean Canal, in addition to the existing sandbag and earth dam that was built in 2014. Kyiv fears that Moscow is plotting a military incursion to secure water flows from the nearby Dnipro river.

Coupled with surging food prices and international isolation because of western sanctions, the water shortages threaten to undermine President Vladimir Putin’s promise of a better life for Crimeans under Russian rule.

Though state-run pollsters claim Putin remains more popular in Crimea than on average across Russia, the patriotic fervour that sent his approval ratings to record levels after the 2014 annexation has long since subsided.

Map showing Ukraine and the North Crimean Canal, Crimea

“The water reserves and fields have dried up,” said Viktor, 47, a Crimean who regularly travels to Ukraine for work. “Each year it’s getting worse and worse. We didn’t have this problem before annexation,” he said, adding that most Crimeans blamed Ukraine for the crisis.

A $3.7bn bridge across the Kerch Strait linking Crimea with mainland Russia has become a conduit for trucks ferrying water for locals to take away in plastic containers. Popular Black Sea tourist resorts can turn on their taps for just a few hours a day during peak droughts, while the canal has filled with grass and weeds.

Crimea’s agricultural output has fallen owing to a lack of irrigation, making it all but impossible to grow water-intensive crops such as rice.

Construction of the canal began in 1957 after the Soviet Union transferred the arid peninsula to the Ukrainian Soviet Socialist Republic to manage rebuilding after the second world war. The waterway allowed for the cultivation of arable land and helped transform Crimea into a haven for tourists.

“The canal symbolises the stupidity of the Kremlin in occupying Crimea. They didn’t weigh the consequences at a moment of electoral euphoria that was fed by their own propaganda,” said Oleksiy Reznikov, Ukraine’s deputy prime minister in charge of reintegration policies for the occupied territories.

“Why didn’t you think about water?” he asked.

The North Crimean Canal is seen with a low level of water
The severely depleted North Crimean Canal previously provided up to 85% of the peninsula’s water supplies © Pierre Crom/Getty

Workers collect potatoes on the North Crimean Canal
Workers collect potatoes on the North Crimean Canal. Ukraine blocked the irrigation channel after Russia’s 2014 annexation of Crimea © Pierre Crom/Getty

Russia, while pressing Ukraine to reopen the waterway, has launched a Rbs50bn ($680m) programme to bolster Crimea’s supplies, repairing crumbling infrastructure, drilling wells, adding storage and desalination capacity.

Russian prosecutors last week filed a lawsuit in the European Court of Human Rights accusing Ukraine of “flagrant violations” over the issue. Crimea’s governor plans to file a separate complaint demanding up to Rbs1.5tn in compensation.

“Kyiv has essentially used Crimea’s infrastructure dependence on Ukraine, which came about in the Soviet era, as a weapon of mass destruction against all Crimeans. The water blockade is an act of state terrorism and ecocide, but the international community is failing to notice the Kyiv regime’s crimes,” Sergei Aksyonov, the peninsula’s governor, said in written comments to the Financial Times.

Reznikov said Russia, as the occupation force, was responsible under the Geneva Conventions for securing water and other basic needs for local the population. Ukraine has filed its own multi-billion-dollar claims against Russia, citing losses caused by what it describes as an illegal land grab.

With tensions rising, Russia deployed tens of thousands of troops and advanced weapons to Crimea this spring, as well as to the border of the two breakaway eastern regions where Moscow-backed separatists have battled government troops into an eighth year.

Col Kyrylo Budanov, chief of Ukraine’s army intelligence unit, said Russia was looking to seize the canal as well as adjacent territory to connect Crimea with the breakaway regions. Russian troops could advance on Nova Kakhovka, the Dnipro river town where the canal begins.

Some Crimean Tatars, an indigenous ethnic group whose members largely opposed Russia’s annexation, have set up a makeshift camp near the dams to make sure the water flow does not resume.

A Crimean Tatar activist on the North Crimean Canal
A Crimean Tatar activist enters his base on the North Crimean Canal. Tatars have set up camp to make sure the water flow does not resume © Pierre Crom/Getty

A Ukraine military vehicle drives past a Soviet monument marking the entrance to Brylivka
A Ukraine military vehicle drives past a Soviet monument marking the entrance to Brylivka, a village on the North Crimean Canal © Pierre Crom/Getty

“It will be a full-scale war,” said a 55-year-old activist who gave his name as Alibaba. He said he and his fellow activists were willing to take up arms to defend the blockaded canal. “There will be nowhere to hide in these fields. Let them try,” he added.

At the Kalanchak border crossing near the new dam, Russian and Ukrainian troops have dug trench positions a few hundred meters apart.

Tensions have also flared in the Black Sea, not just with Ukraine but also with western navies. Russia fired warning shots in the path of a British destroyer sailing through contested waters off Crimea last month. Sevastopol, Crimea’s largest city, is home to Russia’s Black Sea fleet.

Moscow has insisted it would not go to war over Crimea’s water supplies, even as it conceded that Ukraine was unlikely to restore them. “All these hysterical statements from Ukrainian politicians are completely baseless — they’re just stupid, aggressive propaganda aimed at inciting hatred between the Russian and Ukrainian people. There won’t be any ‘water war’,” Crimea governor Aksyonov said.

Reznikov, the Ukrainian minister, said Kyiv was ready to provide Crimea with humanitarian assistance, including drinking water, which it already does for the separatist-run eastern territories, but no request had been made.

“For Russia to admit they’re weak is very difficult . . . it would amount to an admission that they made the wrong decision,” he said.



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