# United States v. Google/Conclusions of Law/Section 7A

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    A. The Sherman Act Imposes No Liability on Google for Its Refusal to Grant Feature Parity to Microsoft Ads on SA360.
Plaintiff States’ SA360 theory falters at the threshold because it conflicts with the settled principle that firms have “no duty to deal” with a rival. “As a general rule, businesses are free to choose the parties with whom they will deal, as well as the prices, terms, and conditions of that dealing.” Pac. Bell Tel. Co. v. Linkline Comm’n, Inc., 555 U.S. 438, 448 (2009). “Even a monopolist generally has no duty to share (or continue to share) its intellectual or physical property with a rival.” Novell, Inc. v. Microsoft Corp., 731 F.3d 1064, 1074 (10th Cir. 2013) (Gorsuch, J.). That is because “[c]ompelling” a dominant firm “to share the source of their advantage . . . may lessen the incentive for the monopolist, the rival, or both to invest,” and “[e]nforced sharing” requires courts to “act as central planners,” “a role for which they are ill suited.” Verizon Commc’ns Inc. v. Law Off. of Curtis V. Trinko LLP, 540 U.S. 398, 407–08 (2004); see also New York v. Meta Platforms, 66 F.4th 288, 305 (D.C. Cir. 2023) (stating that a Section 2 claim that “suppose[s] that a dominant firm must lend its facilities to its potential competitors” “runs into problems” under Trinko). Therefore, “a firm with no antitrust duty to deal with its rivals at all is under no obligation to provide those rivals with a ‘sufficient’ level of service.” Linkline, 555 U.S. at 444.
Although the Supreme Court has placed a “high value” on the right of firms to refuse to deal with others, it has said that “the right is [not] unqualified.” Trinko, 540 U.S. at 408 (quoting Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 601 (1985)). “Under certain circumstances, a refusal to cooperate with rivals can constitute anticompetitive conduct and violate § 2.” Id. Such circumstances are “limited,” Linkline, 555 U.S. at 448, however, and the Court has ​“been very cautious in recognizing such exceptions, because of the uncertain virtue of forced sharing and the difficulty of identifying and remedying anticompetitive conduct by a single firm,” Trinko, 540 U.S. at 408.
The “leading case for § 2 liability based on a refusal to cooperate with a rival” is Aspen Skiing, a case “at or near the outer boundary of § 2 liability.” Id. at 408–09. To fit within the Aspen Skiing exception, a plaintiff must make at least two, if not three, showings. First, “before the defendant refused its competitors access[,] the defendant ‘voluntarily engaged in a course of dealing with its rivals.’” Meta Platforms, 66 F.4th at 305 (quoting Trinko, 540 U.S. at 409). Second, the defendant’s “unilateral termination of a voluntary (and thus presumably profitable) course of dealing suggested a willingness to forsake short-term profits to achieve an anticompetitive end.” Trinko, 540 U.S. at 409 (emphasis omitted); see also Covad Commc’ns Co. v. Bell Atl. Corp., 398 F.3d 666, 675 (D.C. Cir. 2005) (stating that “in order to prevail upon [a refusal to deal] claim Covad will have to prove Bell Atlantic’s refusal to deal caused Bell Atlantic short-term economic loss”) (citation omitted); Novell, 731 F.3d at 1075 (same).
In Novell, then-Judge Gorsuch distilled a third requirement from the Court’s prior precedents: “a showing that the monopolist’s refusal to deal was part of a larger anticompetitive enterprise, such as . . . seeking to drive a rival from the market or discipline it for daring to compete on price.” 731 F.3d at 1075 (citing Aspen, 472 U.S. at 597); see also FTC v. Facebook, Inc., 560 F. Supp. 3d 1, 23 (D.D.C. 2021) (“The larger anticompetitive enterprise that characterizes an Aspen Skiing violation, crucially, cannot simply be an intent to harm—or, the flip side of the same coin, to avoid helping—a rival or rivals.”) (internal quotation marks omitted). Because a monopolist may rationally withdraw from a prior course of dealing and suffer short-term losses “to pursue perfectly procompetitive ends—say, to pursue an innovative replacement product of its ​own,” Novell also required “a showing that the monopolist’s refusal to deal was part of a larger anticompetitive enterprise.” 731 F.3d at 1075.
Plaintiff States seek to bypass the “no duty to deal” doctrine entirely. They assert that “Trinko has no application where there is a voluntary, ongoing course of dealing,” and that “[e]xclusionary conduct occurring within a voluntary, ongoing commercial relationship is entirely actionable under Section 2.” PSTB at 34. According to Plaintiff States, the “no duty to deal” principle has been applied only to circumstances not applicable here: when “(i) the business relationship was government mandated, (ii) there was no prior dealing at all, or (iii) any prior dealing had ended.” Id. at 33–34. Here, by contrast, Google has chosen to “engage with another marketplace participant” and even has an agreed-upon “escalation process” by which the two companies raised the SA360 dispute to the CEO level. Id. at 34; see PSFOF ¶ 233 (citing PSX671).
The court is unpersuaded that Google’s SA360 conduct falls outside the “no duty to deal” framework. The fact that Google and Microsoft continue to have an ongoing course of dealing as to SA360 does not put this case in a different posture than a case such as Novell, where a dominant firm (Microsoft) at first shared its intellectual property with rivals, only to later withdraw it to advantage its own products. See 731 F.3d at 1067–68. The concerns that animate the no-duty-to-deal principle are equally applicable here. Primarily, adjudicating Plaintiff States’ claim would require the court to act as a “central planner” that endeavors to identify the proper “terms of dealing.” Trinko, 540 U.S. at 408. Their claim requires grappling with a host of questions that the court is ill-equipped to handle, such as: (1) by when, from a technical standpoint, could Google have integrated ATB into Microsoft Ads?, FOF ¶ 285 (noting that it took Google between two to three years to integrate its ATB on SA360); (2) how much advertiser interest in ATB does there need to be for Google to act on Microsoft’s request?, see DX179 at .009–.010 (Google survey of ​U.S. Microsoft Ads customers showed that ATB was not among the top 20 features requested for Microsoft Ads in SA360); PSX444 (ATB listed 15th among feature priorities for Microsoft Ads on SA360); and (3) was it improper for Google to commit resources to prioritizing other projects, namely, Projects Amalgam and Myx, FOF ¶ 286, over integrating ATB for Microsoft Ads? And those thorny questions foreshadow the challenges the court would face in administering a remedy. Any relief presumably would require Google to ensure feature parity on SA360 now and into the future. A favorable outcome for Plaintiff States thus would mire the court in Google’s day-to-day operations. See Trinko, 540 U.S. at 415 (“An antitrust court is unlikely to be an effective day-to-day enforcer of detailed sharing obligations.”). The court has learned a lot about Google, but it is “ill suited” for that role. Id. at 408.
To allow a continued course of dealing between rivals to circumvent Trinko’s strict limits also would invite uncertainty as to when antitrust liability attaches to otherwise rational business conduct. See Linkline, 555 U.S. at 453 (stating that “antitrust rules ‘must be clear enough for lawyers to explain them to clients’”) (quoting Town of Concord v. Bos. Edison Co., 915 F.2d 17, 22 (1st Cir. 1990) (Breyer, C.J.)). This case well illustrates the point. What standard should Google have used to determine by when it must integrate ATB or other features for Microsoft Ads to avoid a Sherman Act violation? Caselaw does not provide an answer, and it is difficult to conceive of one that is not highly subjective. The “no duty to deal” framework is appropriately applied in such circumstances.
Applying Trinko then, Plaintiff States have failed to meet their burden of proof. They have not shown that Google deviated from a voluntarily “course of dealing with its rivals” akin to the one that established a duty to deal in Aspen Skiing. In that case, “the monopolist elected to make an important change in a pattern of distribution that had originated in a competitive market and ​had persisted for several years.” 472 U.S. at 603. That change amounted to a “decision by a monopolist to make an important change in the character of the market.” Id. at 604. No similar market change was proven here. True, Google did vow that SA360 would be a “neutral third party.” FOF ¶ 281. But a vague promise made in marketing materials provides a poor yardstick against which to measure antitrust liability.
In addition, the record does not establish that Google was “willing to forsake short-term profits to achieve an important anticompetitive end.” Trinko, 540 U.S. at 409; Covad, 398 F.3d at 675–76. Plaintiff States did not offer any testimony or evidence as to how much Google left on the table by delaying the launch of ATB for Microsoft Ads on SA360. The record does not indicate, for example, how much additional revenue Google would have earned in the first years of an integrated ATB in Microsoft Ads. Plaintiff States made no effort to even ballpark that sum, let alone quantify it.
Finally, Plaintiff States did not show that Google’s action was part of “a larger anticompetitive enterprise,” such as “seeking to drive [Microsoft] from the market.” Novell, 731 F.3d at 1075. Part of the explanation for Google’s unresponsiveness was that it prioritized progressing work on Project Amalgam, which was in effect a new product launch. FOF ¶ 286. It was not improper for Google to prioritize “an innovative replacement” of SA360 over immediately delivering feature parity to a rival. See Novell, 731 F.3d at 1075 (“Neither is it unimaginable that a monopolist might wish to withdraw from a prior course of dealing and suffer a short-term profit loss in order to pursue perfectly procompetitive ends—say, to pursue an innovative replacement product of its own.”). That business decision may have come at Microsoft’s expense, but it does not give rise to Section 2 liability. See id. at 1067–68, 1077 ​(finding no Section 2 liability against Microsoft after it withdrew from sharing its intellectual property with rivals, after initially agreeing to do so, to advantage its own products).