Google's expert witness today cautioned a US federal court against designing a remedy that resembles a regulatory action to address the tech giant's illegal monopoly in the Internet search markets, calling instead for remedies that are restorative or corrective in nature. Professor Kevin Murphy appeared as an expert witness in economics and industrial organization for Google as a remedy trial in the US Department of Justice's monopolization case wraps up.
Google's expert witness today cautioned a US federal court against designing a remedy that resembles a regulatory action to address the tech giant's illegal monopoly in the Internet search markets, calling instead for remedies that are restorative or corrective in nature. Professor Kevin Murphy appeared as an expert witness in economics and industrial organization for Google as a remedy trial in the US Department of Justice's monopolization case wraps up.
The economics professor at the University of Chicago Booth School of Business told the court that the DOJ's proposed remedies of forcing Google to sell off its Chrome browser, share user search query data and syndicate ads with rivals "seek to diminish the natural entry barriers through extensive regulatory interventions."
The government's remedy also violates sound remedy principles by propping up rivals and hampering Google, said Murphy, who was appearing as a witness for Google for a second time. The expert testified in late 2023 during the liability trial (see here). The DOJ's proposal also diminishes Google's incentives to innovate, invest in and improve products, he said.
In his expert report, Murphy had written that to the extent past illegal acts have injured competition, the revenue should work to restore the prospects for consumer welfare to the level that would have existed absent the illegal acts. The professor also wrote that the overarching goal of protecting and enhancing consumer welfare should guide how remedies are imposed.
During cross-examination by DOJ counsel Adam Severt, Murphy was asked whether he would endorse a remedy that promotes consumer welfare even if that remedy generates more competition and more consumer welfare than would have existed in the "but-for world."
Murphy replied that he "would not go there."
"If you want to propose that, that's a regulatory action, and I'm all for if you think regulation is going to improve consumer welfare.... but it's not a remedy. At that point, you're regulated," the Google expert said.
The guidance the court has from the liability phase of the trial is to craft remedies that are of a restorative type and corrective type, he said.
According to Murphy, remedies should not reshape market features unrelated to the conduct or the harm, or achieve other policy goals by distorting the competitive process.
The Google expert was also asked whether he believes that disgorgement of the fruits of the violation should be a goal of a remedy when there is anticompetitive conduct.
"No, I'm saying remedies that are designed to affect market conduct going forward should not be designed to disgorge," Murphy said. "They should be designed to promote consumer welfare. If you want to punish somebody or disgorge [the fruits of anticompetitive conduct] from them, do it in another way that disgorges or punishes but doesn't punish consumers in the process."
Murphy said he advocates for denying the fruits of anticompetitive conduct "but by harming Google, you're also harming consumers and that has a very big downside... that's interfering in the competitive process."
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Google today rested its case-in-chief. Omkar Muralidharan, Google's vice president of product for search ads, was the tech giant's last witness.
The executive was asked during direct examination about specific provisions of the DOJ's remedy proposals and the difficulties of implementing those as well as the consequences of going through with them.
Collette Conor, counsel for Google, asked about search text-ads auction changes that the DOJ wants Google to provide on a monthly basis to a technical committee and to the government. The DOJ proposes that Google be required to submit a report outlining all changes made to its search text-ads auction in the preceding month. Connor said the government has the right to challenge any disclosures they deem inadequate. "What do you understand this provision to require?" she asked Muralidharan. “Do you understand would have to be included in this report?”
“My understanding is many, many launches,” the executive said.
“We run many, many experiments all the time just to understand things. Most of them don't go on to launch. Many of them were not even intended to launch,” he said.
Google makes thousands of ads launches over the course of a year that would be encompassed here, he said.
Muralidharan said “it would be an enormous amount of work” to explain the auction changes to the DOJ and the technical committee. That means thousands of bug fixes, launches and experiments.
“Would this requirement impact the pace of ads launches and experiments at Google?” Connor asked.
“I definitely think so. This would be very chilling on our ability to innovate,” the Google executive replied.
There are also risks to sharing this information publicly, he said.
“One of the risks I worry about is gaming,” Muralidharan said. “A lot of our quality systems are trying to find good ads, and more importantly, to weed out bad ads. But those signals would often lose their effectiveness if they were exposed.”
The search-ads executive said that in general, in the gaming adversarial space, Google has seen that “people react very, very quickly to what Google does. And the faster you give them information that helps them react, the harder it is to stay ahead of the bad actors.”
The DOJ and states will present a rebuttal case tomorrow featuring experts Kinshuk Jerath and Tasneem Chipty.
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