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US takes on Google in landmark antitrust trial

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Over 10 weeks of testimony involving more than 100 witnesses, Google will try to persuade a federal judge that the landmark case brought by the DoJ is without merit
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Google begins a marathon battle in a federal court on Tuesday to fight accusations from the US government that it acted unlawfully to become the world’s preeminent search engine.

Over the course of 10 weeks of testimony involving more than 100 witnesses, Google will try to persuade Judge Amit P. Mehta that the landmark case brought by the Department of Justice is without merit.

Held in a Washington courtroom, the trial is the biggest US antitrust case against a big tech company since the same department took on Microsoft more than two decades ago over the dominance of its Windows operating system.

The Google case centers on the government’s contention that the tech titan unfairly forged its domination of online search by entering into exclusivity contracts with device makers, mobile operators and other companies that left rivals no chance to compete.

Through these payments of billions of dollars every year to Apple and others, Google secured its search engine default status on phones and web browsers, allegedly burying upstarts before they had a chance to grow.

That dominance has made Google parent Alphabet one of the richest companies on Earth, with search ads generating nearly 60 percent of the company’s revenue, dwarfing income from other activities such as YouTube or Android phones.

“Two decades ago, Google became the darling of Silicon Valley as a scrappy start-up with an innovative way to search the emerging internet,” the Justice Department said in its lawsuit. “That Google is long gone.”

Dozens of US states, led by Colorado, have also joined the battle even though some of their arguments that Google illegally down-ranked sites such as Yelp and Expedia were tossed out pre-trial by Judge Mehta.

– 90 percent share –

The biggest alleged victims in the case are rival search engines that have yet to eke out a meaningful market share against Google, like Microsoft’s Bing and DuckDuckGo.

Google remains the world’s go-to search engine, capturing 90 percent of the market in the United States and across the globe, much of which comes through mobile usage on iPhones and phones running on Google-owned Android.

The company will contend that its success is due to the unbeatable quality of its search engine that has been judged a cut above the rest since its launch in 1998 by founders Sergey Brin and Larry Page.

“In sum, people don’t use Google because they have to — they use it because they want to,” said Kent Walker, Google president of global affairs in a blog post.

Judge Mehta’s ruling is expected many months after the roughly three months of expected hearings.

He could dismiss the case or order drastic remedial action such as a break up of Google’s businesses or a revamp of the way it operates.

Whatever the outcome, the ruling will almost certainly be appealed by either side, potentially dragging the case on for years.

Launched in 1998, Washington’s case against Microsoft ended in a settlement in 2001 after an appeal reversed an order that the company be split up.

The US government launched its case against Google during the Trump administration and the suit carried over in the transition to President Joe Biden.

Biden has also made a point of challenging tech giants and nominated well known tech critics to key posts, but with little yet to show for it.

In January, Biden’s Department of Justice launched a separate case against Google involving its advertising business and this could go to trial next year.

The company also faces various lawsuits from US states that accuse it of abusing monopolies in ad tech and for blocking competition in its Google Play app store.

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After long peace, Big Tech faces US antitrust reckoning

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US Assistant Attorney General for the Antitrust Division of the Department of Justice Jonathan Kanter speaks at the "Enforcers' Roundtable" panel at the American Bar Association's 2024 antitrust spring meeting in Washington, on April 12, 2024
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After more than a decade of leaving Big Tech largely to itself, US antitrust enforcers have cranked up the heat, with several high-profile cases underway that could radically change the way the industry’s giants do business.

Launched under both the Trump and Biden administrations, five major cases from the Federal Trade Commission (FTC) and the Department of Justice (DOJ) are moving forward against major US technology companies — including two against Google that could see the company split up.

The most recent came in March against Apple by the FTC, which alleges the iPhone maker abuses its dominance of the premium smartphone sector.

Washington had largely remained silent on Big Tech cases since its wars with Microsoft that began in the 1990s and ended in a settlement in the early 2000s, after a bruising battle with the DOJ.

Inspired by moves in Europe and elsewhere, the new generation of cases allege that the practices of tech giants including Amazon and Meta stifle competition, harm consumers, and warrant significant changes in business operations.

The cases are on different timelines, before different federal judges and are based on a wide variety of allegations. With appeals, the lawsuits could drag on as long as a decade.

The first case in the campaign, launched in 2020 against Google over its search engine, could have an initial decision as early as the end of this year.

In the second Google case, also brought by the DOJ, the company is targeted for its dominance of the digital advertising sector. Amazon and Meta meanwhile face cases with the FTC.

The suits have drawn applause from lawmakers, with frustration over the power of big tech companies running high with the public. 

But many in the business community and legal profession have balked, seeing the lawsuits as legally thin or politically motivated.

The heads of the FTC and the DOJ’s antitrust section adamantly stand by their cases, seeing their mission as a means to protect consumers.

“It’s always good to kind of look at the actual facts rather than go off of the vibes,” FTC chair Lina Khan told a conference in Washington, organized by the American Bar Association, in response to her critics.

“We’re really addressing the pain points that affect people’s lives including health care and digital (tech), but way, way beyond that,” she said.

Instead of getting bogged down in legal theory, Khan said the FTC’s cases were “fit for purpose in the year 2024.”

“That means… not relying on outdated assumptions and theories that are clearly contravened with what we’re seeing with our own eyes,” she added.

– Legally creative? –

In an informal survey of 19 top antitrust scholars by University of Michigan Law professor Daniel Crane, a majority of respondents believed the cases would be difficult to prosecute.

“Gathering the overall sense, it’s fair to say that there is an expectation that more of the cases will lose than win,” Crane wrote, with the Google cases seen as the government’s strongest and Amazon as the weakest.

Khan’s critics point to widespread opinions in the legal community that the Biden administration’s cases walk on thin legal ground.

“I’m kind of exasperated by these lawsuits, because they seem highly motivated, rather than based on sober legal and economic analysis,” said Michael Santoro, a professor of management at Santa Clara University, who was not part of the survey.

A senior executive from a tech giant, on condition of anonymity, said that “ultimately they are turning antitrust law upside down.”

Speaking in Washington with her US counterparts, the EU’s competition czar Margrethe Vestager said she wished she had been more on the offensive in her earlier antitrust decisions.

“If I were to redo it, I would have been bolder, because we don’t have a lot of time. Concentration is increasing in every jurisdiction,” she said.

Vestager, in office for almost a decade, has pursued her own wave of cases against tech companies that have been accused of being far-fetched or legally creative.

In its latest tech-related decision, last month the EU hit Apple with a 1.8-billion-euro fine ($1.9 billion) for preventing music streaming services from offering subscription options outside of its App Store.

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Sam Bankman-Fried appeals fraud conviction, 25-year jail term

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Fallen crypto wunderkind Sam Bankman-Fried has formally appealed his conviction and sentence
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Fallen cryptocurrency wunderkind Sam Bankman-Fried has appealed his federal conviction and 25-year jail sentence in a sweeping fraud case, according to a legal filing made public Thursday.

News of the appeal comes two weeks after US District Court Judge Lewis Kaplan set the prison term and ordered Bankman-Fried, known as “SBF,” to pay $11 billion in forfeiture.

Bankman-Fried had soared to the top of the crypto world, becoming a billionaire before age 30 and turning FTX, a small start-up he cofounded in 2019, into the world’s second largest exchange platform.

But in November 2022, Bankman-Fried’s breakneck rise came crashing down, with a deluge of customer withdrawals and revelations that billions of dollars had been illegally moved from FTX to Bankman-Fried’s personal hedge fund, Alameda Research.

He was convicted by a federal jury in New York in November 2023 on seven counts of fraud, embezzlement and criminal conspiracy. 

During last month’s sentencing hearing, Bankman-Fried expressed regret about the firm’s demise, which also affected many colleagues.

“It haunts me every day,” he said. “I made a series of bad decisions.”

But the judge said Bankman-Fried had not fully accepted responsibility.

Bankman-Fried said “mistakes were made, but never a word of remorse for the commission of a terrible crime,” said Kaplan, who characterized the violations as “brazen” and called out SBF for his “exceptional flexibility” towards the truth.

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Corporate climate pledge weakened by carbon offsets move

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Critics say offsets give corporations a free pass to keep polluting without cleaning-up their act
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The world’s main benchmark for vetting corporate climate action has been accused by its own staff of “greenwashing” after allowing businesses to use carbon credits to offset pollution from their value chains.

The ruling by the Science-Based Targets Initiative (SBTi) was slammed as a “coup” on Thursday and has sparked a revolt by staff who want the decision reversed and the non-profit’s CEO and board to resign.

Experts say it could irreversibly damage the credibility of the SBTi, which is partnered with the UN Global Compact and WWF, and is the gold standard for assessing the net zero plans of big business.

An internal letter sent to SBTi leadership, and seen by AFP, said the board’s decision was taken without adequate consultation, defied science, and “resulted in significant harm to our organisation’s reputation and viability.

“We stand ready to support any efforts aimed at ensuring that the SBTi does not become a greenwashing platform where decisions are unduly influenced by lobbyists, driven by potential conflicts of interest and poor adherence to existing governance procedures,” read the letter to SBTi’s CEO and Board of Trustees.

“In the event that our concerns are not addressed, SBTi staff will have no choice but to take further action,” it added, without elaborating on what that would mean.

It was signed by staff from “the Target Validation Team, Target Operations Team, the Technical Department, Communications, Impact and IT, and multiple department heads.”

Comment has been sought from SBTi and the We Mean Business Coalition, one of its main partners. 

– ‘Extremely serious’ –

On April 9, SBTi issued a statement rolling back its previous opposition to the use of carbon credits to offset Scope 3 emissions. 

These occur in the value chain, and represents the lion’s share of the carbon footprints — in some cases more than 90 percent — of most companies.

Carbon credits are generated by projects that reduce or avoid emissions — like renewable energy, tree planting and forest protection — and sold to companies wanting to offset pollution from their activities.

But critics say offsets give corporations a free pass to keep polluting without cleaning-up their act, and their usage to make claims of “carbon neutrality” has become increasingly contentious.

Gilles Dufrasne from Carbon Market Watch, who sits on the technical advisory group to SBTi, said allowing their usage by companies represented a “fundamental U-turn on SBTi policy so far”.

“It is pretty much a coup from the board,” he told AFP, adding at least one member of the advisory group had resigned in protest.

“It’s extremely serious, I’ve never seen anything like it.”

Verification by SBTi allows companies to say their climate plans align with science and the goals of the Paris agreement to limit global warming.

More than 4,000 companies and financial institutions have sought to have their net zero claims verified by SBTi, the nonprofit said.

Dufrasne said the decision was “extremely damaging” to corporate climate responsibility because it sent a signal that companies could just pay someone else if they can’t meet their own targets.

“I’m not sure if SBTi’s credibility can survive this,” he said.

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