June 18, 2024

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Google’s CEO takes another turn on the antitrust witness stand

Google’s CEO takes another turn on the antitrust witness stand

Two weeks ago, Google had a big day in Washington. President Biden signed an executive order to create AI safeguards that could impact Google’s most pressing projects, and Secretary of State Antony Blinken gave the company an award for its work helping Ukrainian refugees and promoting women’s economic security.

Google CEO Sundar Pichai spent much of the day on the witness stand in a federal courthouse two miles from the White House, defending his company from allegations that it crushed competitors in the search and online advertising markets.

On Tuesday, Pichai testified again, this time in San Francisco, to counter allegations made by video game company Epic Games that his company violated the law and exercises monopoly power over app developers on the Google Play store for Android.

Over the past month, Mr. Pichai has become the face of Google’s antitrust court battles on both sides of the country. His visits to the witness stand underscore the growing importance for leaders of big tech companies to be sharp witnesses for their companies, whether in an antitrust trial or in hearings on Capitol Hill.

Testifying under oath is a task that many tech CEOs may be asked to do in the coming years, as Amazon, Meta and others face their battles in antitrust court. It’s not a task at which many executives excel.

Although he was never called to the witness stand to testify, Bill Gates, who was Microsoft’s CEO in the last big tech antitrust case brought by the Justice Department more than two decades ago, came across in depositions as combative. And elusive.

Over the past few years, CEOs, including Mark Zuckerberg and OpenAI’s Sam Altman (and of course Mr. Pichai), have been asked to testify before Congress for various reasons, with varying degrees of success. At times, Zuckerberg angered lawmakers with vague responses, while Mr. Altman appeared to charm senators at a hearing this year.

The main duty on the witness stand for Mr. Pichai — a low-key, detail-oriented executive — was to keep the temperature low under questioning and stick to the central point of Google’s antitrust defense: that it was an innovative company that maintained its leadership through innovation and hard work rather than monopolistic behavior. Illegal.

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On Tuesday, Mr. Pichai faced aggressive questioning from Epic’s lawyer, Lauren Moskowitz, who asked him to provide yes or no answers.

That led to at least one small revelation: Mr. Pichai confirmed that his company gave Apple 36% of search revenue generated by iPhones, and said the total payments “far exceeded $10 billion” last year. Ms. Moskowitz confirmed that the number was at least $18 billion.

Lawyers for Google and Apple fought Tuesday morning to keep the numbers hidden, stressing the need for company privacy that persisted during Google’s two trials. Judge James Donato denied their requests, saying, “Just coming in and saying we’re kind of sensitive about this isn’t going to work.”

Ms. Moskowitz was trying to respond to Google’s claims that it cannot be considered a monopoly because of its competition with Apple. She wondered: If that was the case, why was Apple given preferential treatment over other companies such as Samsung, which said it received a 16% share of search revenue from its devices?

Pichai later said, when asked by a Google lawyer, “We are very competitive with Apple, across the operating system, the smartphones, and the App Store.” “Competition has been good for consumers and developers.”

The Justice Department filed the landmark antitrust suit against Google in October 2020, arguing that the company’s default search deals with phone makers and browser companies helped it illegally maintain a monopoly.

Google summoned Mr. Pichai, 51, to the stand two weeks ago. Instead of sitting in the witness stand, Mr. Pichai stood on the stand for nearly four hours, wearing a microphone, as if he were giving a speech at a corporate conference. His therapists said he had to stand because of a sprained lower back.

He talked about his background – he got a phone as a teenager in Chennai, India, and understood the power of technology – before deftly answering questions about his company’s competitive position, the relationship with Apple, and virtual research contracts that the government says are illegal. .

Mr. Pichai tried to refute the government lawyers’ arguments that Google paid Apple billions of dollars a year to keep it out of the search market. He offered a different story, saying his company wanted to be the default search engine for the iPhone because of the “value” of that place, and the need to ensure Apple would protect the user experience.

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“I felt like the deal had done well since 2016,” Mr. Pichai said. “It has been continuing to increase search usage and search revenue.”

In cross-examination, Mr. Pichai repeated the rationale for the deal so many times that for a moment he seemed to lose patience with the questioning style, saying: “I just gave all the reasons” for the deal.

Adam Kovacevich, a technology industry lobbyist for the Room for Progress who spent 12 years working at Google, said Mr. Pichai’s testimony gave the court a high-level view into how the company makes strategic decisions.

“He did well,” Mr. Kovacevic said of Mr. Pichai’s performance. “The most important thing to me is that when you’re in this position, your first goal is not to be like the Bill Gates of the Microsoft experience. Your first goal is to be responsive and reasonable.

Excerpts of Mr. Gates’ videotaped combat testimony were played in court more than two decades ago. Antitrust lawyers say the Microsoft co-founder undermined his and his company’s credibility before the judge in the case.

In San Francisco, Mr. Pichai was questioned on topics ranging from why emails were mismarked as subject to attorney-client privilege (to prevent them from being forwarded) to whether Facebook and Amazon could have provided competition to the Google Play Store when they had smartphones. Ambitions.

“There are nuances to these questions,” he said, smiling as Ms. Moskowitz began speaking to him. “I’m trying to answer your question.”

Several times, Judge Donato asked Ms. Moskowitz to “remain silent” to allow Mr. Pichai to speak.

There will be a big difference between the lawsuits: An antitrust trial in Washington does not have a jury. The decision will be made by the judge. In San Francisco, Pichai had to appeal to a nine-person jury, which could be open to the idea of ​​a giant tech company exploiting much smaller companies. Epic CEO Tim Sweeney is also expected to testify at the trial.

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Google and Epic declined to comment.

Epic, the maker of the popular game Fortnite, filed suit against Google in 2020, in an attempt to evade fees ranging from 15 to 30 percent of subscriptions and in-app purchases that it must pay to Google.

The game developer has antagonized Google and Apple by asking users to pay for in-app transactions directly through Epic. In response, Google and Apple suspended Fortnite from their app stores. Epic claims that Google also intimidated other companies into dropping deals with Epic before banning them from app stores.

Google faces another Justice Department antitrust lawsuit accusing it of illegally abusing its monopoly power over technology that delivers online advertising.

A trial in the case could begin next year, but it is too early to know whether Mr. Pichai will be called to testify.

Mr. Pichai tried to keep Google employees from being distracted by the lawsuit. He encouraged them to “keep doing what they’re doing,” and assigned a relatively small number of employees to work on the Justice Department case — hundreds out of more than 180,000 employees.

But Mr. Pichai’s court appearance took time away from his other commitments as head of the company, including his plan to restore Google’s primacy in the fast-growing field of generative artificial intelligence.

In the middle of Mr. Pichai’s testimony in October, the secretary of state, Mr. Blinken, was honoring Google’s subsidiary in Poland for its work promoting women’s economic security and helping Ukrainian refugees. Hours later, Mr. Biden hosted a signing ceremony at the White House, but Mr. Pichai’s officials could not say yes because there was a chance he might still have been in court when the matter began.

“It’s not the best use of his time,” Richard Cramer, an analyst at Ariete Investment Research, a London-based investment research firm, said in an interview. “No CEO wants to spend his time being questioned by government lawyers.”