Pichai’s court testimony won’t worry Google’s shareholders

The Department of Justice’s antitrust case against Google has been heralded as the most significant since US regulators prevailed over Microsoft two decades ago. The similarities are obvious: Two huge companies using their market dominance—Microsoft with PC software, Google with search—to unfairly solidify their position by blocking competition. Where the cases differ is that one defence has had the benefit of learning from the failings of the other. This played out in court in Washington on Monday, when Google CEO Sundar Pichai took the stand for the first time since proceedings began.

While Bill Gates offered up an agitated and irritable deposition in 1998, the slick Pichai, called by the defence, was calm and measured—the kind of display expected from a well-briefed Silicon Valley CEO, particularly one coached by Kent Walker, who was on the opposing side against Microsoft but who now works for Google.

Because of a lower back injury, Pichai stood for his testimony, giving it a sermon-like quality. According to Pichai, Google’s multibillion-dollar search deals simply give consumers the very best of the internet. Making Google the default option across many devices, most notably Apple’s iPhone, was “enhanced promotion” for products everyone wants to use of their own volition.

Another valuable lesson from Microsoft’s loss is the importance of a paper trail. When the Justice Department scored its Microsoft victory, internal communications helped prosecutors get around Gates’s incessant don’t-recalls. “Many of the technology chief’s denials and pleas of ignorance have been directly refuted by prosecutors with snippets of E-mail Gates both sent and received,” read a Businessweek report then. Prosecutors have yet to produce similar evidence confirming anti-competitive intent by Google. That may be because none existed. Or, the DoJ has implied, it could be for another reason: Such messages were automatically deleted, thanks to a culture of obstructive secrecy.

Users of Google’s instant-messaging products over the years will be familiar with the simple feature that let chat history be turned off. Businesses using Google’s enterprise tools can set company-wide defaults, keeping all chats on the record or off. The latter means messages between colleagues are deleted after 24 hours.

At Google, the policy used to be an ‘on’ default. That was until 2008, when scrutiny prompted a serious rethink. Emailing all the Googlers, the company’s legal team urged employees to be smart because of “several significant legal and regulatory matters”—in that case, an investigation into a deal Google had made with Yahoo. “Please write carefully and thoughtfully,” read the memo, co-written by Walker. “We’re an email and instant-messaging culture. We conduct much of our work online.”

To help, chat histories would be off by default. It was a policy that stayed in place for 15 years. To emphasize its concern, the DoJ pointed to one chat transcript in which Pichai himself asked a colleague to turn off chat history in an exchange with a colleague (seconds later, he deleted the request, according to a court filing).

Pichai testified it was likely so he could discuss a personnel issue. The prosecution said it was evidence that Pichai didn’t hesitate to make his conversations auto-destruct and that there could be others. The prosecution asked whether he recalled making similar requests in other group chats. Pichai said it was possible, but if he had, he quipped, he was sure prosecutors would have found it.

In another exchange, prosecutors pressed Pichai on his overzealous use of attorney-client privilege to stop internal emails from being eligible for “discovery” —the process by which an opposing side in a lawsuit can demand internal documentation related to the case. “There have been occasions where I’ve just marked things as privileged to indicate it’s confidential,” Pichai admitted in court. It was a practice said to be used by other Googlers, too.

All this looks sketchy, but it falls way short of proving Google was acting to illegally destroy its competition. If anything, the case has so far most vividly demonstrated Google’s relentless and costly efforts to stop Apple from being tempted to use its own monumental power to deflect users away from the most popular (and best) search engine and instead toward some other services, possibly its own.

Like other antitrust cases brought under the direction of the Biden administration, prosecutors have yet to draw a strong enough line between a tech giant’s actions and a direct measurable harm to the consumer. After what could’ve been a grilling for its top executive, nobody at Google is losing any sleep. ©bloomberg