As Google faces at least four major antitrust investigations on two continents, internal documents obtained by The Markup show its parent company, Alphabet, has been preparing for this moment for years, telling employees across the massive enterprise that certain language is off limits in all written communications, no matter how casual.
The taboo words include âmarket,â âbarriers to entry,â and ânetwork effects,â which is when products such as social networks become more valuable as more people use them.
âWords matter. Especially in antitrust law,â reads one document titled âFive Rules of Thumb for Written Communications.â
âAlphabet gets sued a lot, and we have our fair share of regulatory investigations,â reads another. âAssume every document will become public.â
The internal documents appear to be part of a self-guided training session for a wide range of the companyâs more than 100,000 employees, from engineers to salespeople. One document, titled âGlobal Competition Policy,â says it applies not only to interns and employees but also to temps, vendors, and contractors.
The documents explain the basics of antitrust law and caution against loose talk that could have implications for government regulators or private lawsuits.
In one of the documents, which appear to be written by the legal team, employees are advised to choose their words carefully and use only third-party data when referencing Googleâs âposition in searchâ in sales pitches. They are further cautioned never to print or hand out their slides.
âWe use the term âUser Preference for Google Searchâ and never the term market share,â that document says.
Google Search is the companyâs most profitable product and, as such, a large target for antitrust regulation. Itâs estimated that nine in 10 web searches in the U.S. are completed on Google.
To take action against a company, antitrust regulators must establish that it has a dominant share in a market. The more broadly a market is defined, the easier it is for the company to argue that it has real competition. In the slides, employees are cautioned that defining a market is hard and best avoided.
âThese are completely standard competition law compliance trainings that most large companies provide to their employees,â Google spokesperson Julie Tarallo McAlister said in an email. âWe instruct employees to compete fairly and build great products, rather than focus or opine on competitors. Weâve had these trainings in place for well over a decade.â
Bad words
One part of the presentation, subtitled âCommunicating Safely,â advises employees on which terms are âBadâ and âGood.â
Instead of âmarket,â employees may say âindustry,â âspace,â âarea,â or simply cite the region, according to the presentation.
Instead of ânetwork effects,â the presentation suggests âvaluable to users.â
And instead of âbarriers to entry,â substitute âchallenges.â
Alphabet is under investigation by 50 attorneys general and the Department of Justice for potentially abusing its dominance to undermine competition. Its acquisitions, along with those of other major U.S. tech giants, are being reviewed for anticompetitive effects by the Federal Trade Commission. The European Commission announced an âin-depthâ investigation of Googleâs acquisition of fitness tracker Fitbit and is probing possible antitrust violations regarding Google for Jobs.
McAlister said Google representatives âcontinue to engage with ongoing investigationsâ and pointed to a blog post where the company said its deal with Fitbit âwill increase choice.â
She also said the company âvigorouslyâ denies claims by Sonos in its patent infringement suit, which alleges that Google first partnered with the company and then copied its technology. Sonos CEO Patrick Spence testified in a hearing before the House Judiciary Committee in January that Google uses its dominance to shut down competition. Google countersued in June, alleging that Sonos infringed on its patents.
Last week, Alphabet CEO Sundar Pichai faced a grueling 61 questions from lawmakers referencing the companyâs dominance in online video, advertising, search, and other areas at a hearing before the House Judiciary antitrust subcommittee.
During the hearing, the chair of the subcommittee, Rep. David Cicilline, mentioned an investigation by The Markup that showed Google Search presented its own results and products above competitorsâ. He held it up as evidence that Google has turned search into a âwalled garden.â
According to a CSPAN transcript of the hearing, Pichai did not say the words ânetwork effectsâ or âdominantâ once and steered clear of defining any particular market. âGoogle operates in highly competitive and dynamic global markets, in which prices are free or falling, and products are constantly improving,â he said.
Why ânetwork effectsâ matter
Respected Silicon Valley antitrust lawyers Doug Melamed of Stanford University and Gary Reback of Carr & Ferrell both said itâs not unusual for a giant company such as Alphabet to coach employees to avoid talking about dominance.
âItâs not just trying to hide the truth, itâs really trying to avoid the use of inflammatory language,â said Melamed, a former acting assistant attorney general in charge of the antitrust division at the U.S. Department of Justice. âThe use of the word âmarketâ could be very innocent, but it could be misleading and provocative to an antitrust enforcer. Antitrust enforcers really get exercised when they think someone dominates a market.â
Alphabetâs emphasis in training documents on avoiding the term ânetwork effectsâ is a new one, both lawyers said, and goes to one of the main issues in tech antitrust.
It was one of the concepts the U.S. government and attorneys general from 20 states and the District of Columbia used to prosecute Microsoft for antitrust violations in 1998. They claimed the company broke the law, in part by using its dominance in the PC market to restrict competition by bundling Internet Explorer and other Microsoft products with the Windows operating system. âThe barriers that exist to the entry of new competitors or the expansion of smaller existing competitors, including network effects, mean that dominance once achieved cannot readily be reversed,â the DOJ wrote in its complaint.
âOnce you admit strong network effects,â said Reback, who has represented competitors in antitrust cases against Google, âthen it becomes easier for someone like me to say, âYouâve gotten this dominant share through the exploitation of network effects, itâs clear there are high barriers to entry, weâre going to need to break you up or do something strong to stop you from abusing your position.â â
Reback represented Netscape early on in the Microsoft case and was the co-author of a 222-page white paper about Microsoft that argued that network effects made tech companies gain market share faster than in other industries, and therefore antitrust regulators must be more aggressive.
Alphabetâs training documents lay out the basic concepts of antitrust law: âCompetition laws, aka antitrust laws, are those that govern the conduct of businesses in order to protect fair competition, and, as a result, protect consumers.â
No crushing
The slides also remind employees to keep the focus on how whatever theyâre talking about benefits the public, which is a strong defense in antitrust matters: âPro-tip: when drafting slides, always include at least one that shows how your business decisions will benefit consumers, partners, etc.â
âWe are not out to âcrush,â âkill,â âhurt,â âblock,â or do anything else that might be perceived as evil or unfair,â reads one portion. âMicrosoft famously got into trouble when one of their employees threatened to âcut off Netscapeâs air supply.â â
Employees are given âFive rules of thumb for written communications,â according to the documents:
- Weâre out to help users, not hurt competitors.
- Our users should always be free to switch, and we donât lock anyone in.
- Weâve got lots of competitors, so donât assume we control or dominate any market.
- Donât try and define a market or estimate our market share.
- Assume every document you generate, including email, will be seen by regulators.
âIf they can get their employees to comply with those guidelines, good for them,â said Melamed, the former DOJ antitrust official, who was one of the prosecutors on the Microsoft case. âBut most companiesâ documents are still filled with all sorts of stuff like this.â
European regulators have already used internal emails against Alphabet. In an earlier investigation, they found emails that indicated that its shopping productâs web traffic doubled in 2008, mostly because it was featured in search listings. The European Commission concluded that the company had abused its dominance and in 2017 fined the company âŹ2.42 billion, a record at the time. âThose emails were quoted selectively and out of context,â McAlister said.
Reback, the antitrust lawyer, said there is a limit to how internal communications can be used, especially when theyâre written by lower-level employees. In general, anticompetitive intent is not part of the legal argument, he said. Rather, lawyers for the plaintiff or the government must establish an anticompetitive effect.
Internal communications from higher-level executives that show apparent anticompetitive intent may have more weightâor at least, generate more publicity. The House Judiciary antitrust subcommittee, which held last weekâs hearing, collected text messages in which a Facebook executive suggested that CEO Mark Zuckerberg would go into âdestroy modeâ if Instagram turned down an acquisition offer.
The committee also released an email Zuckerberg wrote musing that âthere are network effects around social productsâ and buying companies like Instagram âwill give us a year or more to integrate their dynamics before anyone can get close to their scale again.â He sent another email less than an hour later clarifying that âI didnât mean to imply that weâd be buying them to prevent them from competing with us in any way.⌠Iâm mostly excited about what the companies could do together if we worked to build what theyâve invented into more peopleâs experiences.â
During its 2012 antitrust investigation into Google, the FTC also collected emails, some of which Alphabetâs legal team would have frowned at.
In one, Googleâs top economist, Hal Varian, celebrated that market research firm Comscore had undervalued Googleâs market share.
âFrom an antitrust perspective,â Varian wrote, âIâm happy to see them underestimate our share.â The FTC ultimately overrode staff recommendations to take legal action against Google and closed the investigation without filing charges.
This article was originally published on The Markup by and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.
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