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Google’s European Search Menu Draws Interest of U.S. Antitrust Investigators

OAKLAND, Calif. — For the last few months, some people who bought a new smartphone in Europe with Google’s Android software were presented with an extra option while setting up the device: choosing a search engine other than Google.

This so-called choice menu started appearing on new smartphones and tablet computers running Google software after March, part of an effort by the internet giant to address a 2018 ruling from European authorities that the company had abused its dominance in smartphone software to unfairly give an advantage to its search engine.

The move to provide users with an easy choice in search has now caught the attention of the Justice Department lawyers who are preparing to bring antitrust charges against the internet giant as early as this summer, according to an executive who has interacted with antitrust investigators. A case would be one of the biggest monopoly actions taken by the United States in decades, and department officials are looking at whether what Google has done for its European customers could make sense for customers in the United States.

Over the last year, the Justice Department and state attorneys general have been investigating the company’s business practices around web search and online advertising technology. Google controls about 90 percent of web searches globally and it captures about one-third of every dollar spent on online advertising.

Gabriel Weinberg, chief executive of DuckDuckGo, a privacy-focused search engine, said Justice Department officials investigating Google’s search business have asked the company on several occasions in the last month for details about the preference menu and the impact it could make in leveling the playing field.

“They had a lot of very pointed questions,” said Mr. Weinberg, who made similar remarks in an article published earlier by Bloomberg. He did not discuss specific questions.

As the Justice Department prepares its case against Google, the keen interest in the Android phone’s preference menu offers insight into the focus of the investigation and one potential approach that would not require the U.S. government to pursue the most extreme — and legally challenging — path of trying to break up the company.

“It doesn’t seem like too much of an imposition on Google’s business model, while opening the floodgates to competition a bit,” said Michael Carrier, a law professor at Rutgers University Law School. “The fact that Europe has gone first gives the D.O.J. a benefit to see how it’s working.”

Google started presenting the search preference menu as a way to comply with Europe’s record 4.34 billion euro fine in 2018, worth about $4.9 billion today, and demand that the company alter its anti-competitive practices. Google is appealing the ruling.

The search preference menu seeks to address one of the enduring forces in technology — the power of defaults, or predetermined choices, to guide people’s decisions in what internet services they use. The idea is that if people were presented with a convenient way to use a search engine other than Google, they may actually do so.

Google is the default search engine on nearly all of the world’s smartphones. Google is the predetermined option for most handsets with its Android software, which accounts for about 80 percent of smartphones. For non-Google software phones, the company pays Apple billions of dollars a year to be the default choice on iPhones.

DuckDuckGo said it has also held discussions with nearly every governmental investigator, including Australia and the United Kingdom, looking into Google about its views on the search preference menu. It has also spoken to state attorneys general who are investigating Google’s online advertising technology and web search businesses.

In a statement, Julie Tarallo McAlister, a Google spokeswoman, said the company continues “to engage with the ongoing investigations led by the Department of Justice” and state attorneys general. “Our focus is firmly on providing services that help consumers, support thousands of businesses, and enable increased choice and competition.”

ImageGabriel Weinberg, chief executive of the browser company DuckDuckGo.
Credit…Michelle Gustafson for The New York Times

A spokeswoman for Microsoft, which owns Bing, declined to comment, as did a spokesman for Yahoo owner Verizon. Brianna Herlihy, a spokeswoman for the Department of Justice, also declined to comment.

There is precedent for this sort of solution to an antitrust problem. The 2001 settlement that ended the long-running antitrust battle between Microsoft and the federal government included a requirement that users be able to change some of their default software from the company’s own applications, like Internet Explorer, to those designed by competitors.

In 2006, Google told antitrust officials that Microsoft should have to give Internet Explorer users a choice of default search engines when starting the browser.

Bill Baer, a former assistant attorney general in charge of the Justice Department’s antitrust division, said the agency has in recent years expressed a preference for outcomes in cases or settlements that fundamentally alter a business, like requiring a company to divest aspects of its business.

But when it recently approved the merger of T-Mobile and Sprint, it complemented that kind of structural solution with additional restrictions on the company’s behavior.

Mr. Baer said prosecutors often have settlement discussions even as they prepare for trial, and that he would expect something similar to occur in the Google probe.

“It is often done in parallel,” said Mr. Baer, who is now a fellow at the Brookings Institution. “At some point I think there will be at least a discussion about whether there is a way to remedy this without war.”

Google has agreed to choice menus in other cases, too. In a 2017 settlement with the Russia Federal Antimonopoly Service, Google agreed to update its Chrome browser on Android phones in Russia so that a choice menu would appear, giving users the choice of selecting a default search engine other than Google.

But rivals have taken issue with how Google has implemented the choice menu in Europe. It is limiting the number of non-Google search engine options to three in any country. It is also forcing companies interested in appearing as one of the choices to participate in an auction every three months to bid for how much they are willing to pay each time they are selected as the default option. The three highest bidders appear alongside Google on the menu.

DuckDuckGo said appearing on the menu should be free and that more than four providers should be presented. The company said the current format is not working as it should and will only serve to cement Google’s dominance and line its pockets.

So far, the bidders have not had to pay much since only a limited number of handsets with the menu installed have come out in Europe since March. In fact, DuckDuckGo said it did not pay anything in March or April. Google said the preference menu has appeared in front of new users, but declined to specify any figures.

So far, Google’s biggest competitors are not showing up in the choice menu. Microsoft’s Bing, the world’s second most-used search engine, will not appear on the choice menu in any of the 31 countries in the European Economic Area from July to September, because it was not among the three highest bidders. Microsoft declined to say whether it placed bids for the auction and Google said it was not its place to say.

DuckDuckGo said it saw preference menus as a good way to increase competition, if implemented properly. But it said the auction drives up prices, putting smaller companies like it at a disadvantage, and it warned that it may not be able to afford to participate in future auctions.

“A pay-to-play auction is bad for consumers (and competition),” Mr. Weinberg said. “Google knows how to work the system and consumers lose in the end.”

Daisuke Wakabayashi reported in Oakland and David McCabe reported in Washington. Cecilia Kang contributed reporting in Washington.