We have heard much about Google's many self-inflicted legal woes. The Street View/Spy-fi debacle alone has produced convictions of Google in at least nine countries, according to the Electronic Privacy Information Center, not to mention Google's $500 million fine under a no-indictment agreement with the U.S. Department of Justice for violating U.S. laws prohibiting counterfeit drugs and the importation of controlled substances.
Google's legal problems come in many flavors, but one of the worst for the company's stockholders is probably antitrust and Google has several cupcakes of that flavor on its plate. The U.S. Federal Trade Commission is investigating Google. The European Commission's competition investigation appears to be on its way to a settlement, but anyone who has dealt with Google knows there's a long way between appearance and reality. Texas Attorney General Greg Abbott also has an active state law antitrust investigation against Google in Austin.
Common Facts With International Antitrust Cases
Partly due to Google's borderless monopoly power, there is a good deal of factual overlap among all of these antitrust cases. Core issues in each include allegations of Google's use of its monopoly power to favor its own products in search and Google's unauthorized use or "scraping" of content that Google's competitors paid to develop that is then used by Google's own products to compete with the very services whose content Google scraped in the first place.
It is this overlap that makes Google's current problems with General Abbott all the more interesting. When responding to the Texas Antitrust Division's request for documents in the State's civil antitrust investigation, Google has both accidentally produced a few documents that they now want back, and refused to produce some 14,000 other documents, all on an extraordinarily broad claim of "privilege."
It's important to remember that Texas took quick action to protect its consumers against Google (Texas started its first antitrust investigation of Google in July 2010). While there are both differences in state law antitrust (often called "unfair competition") and U.S. federal antitrust law, as well as differences again between U.S. law and European law (often called "competition law"), the behavior that runs afoul of these laws is pretty much the same although the legal standards of punishment may differ depending on the legal jurisdiction.
Since General Abbott's prescient antitrust investigation of Google appears to have preceded them, both European and U.S. antitrust investigators will probably be very interested in the success of Google's privilege argument in Texas for a simple reason.
All the investigators would like to get their hands on the same documents. The documents at issue in Texas will likely also be at issue in both the European Commission's competition settlement with Google as well as the Federal Trade Commission's extensive antitrust investigation. The European Commission's competition regulator reportedly is about to offer Google a settlement -- should he do so without knowing what is in the 14,000 documents at issue in Texas?
Because of Google's borderless monopoly, General Abbott's actions against Google should be front of mind with every antitrust investigator on the planet (and vice versa). General Abbot may well hold the key to finally protecting consumers from Google's high handed (and possibly illegal) business practices.
Is Google Entitled to Privilege or Just Entitled?
Google's approach in the Texas case should sound familiar -- a kind of tense cooperation masking an entitled and fearful desire for secrecy. On the one hand, Google produced some documents as requested -- and frankly, could scarcely do otherwise and continue to enjoy the privileges of a U.S. public company. (Google reportedly produced millions of documents to a U.S. federal grand jury in its drug investigation but reportedly is now trying to block their production in shareholder suits against Google based on mishandling the same drug fine.)
On the other hand, Google has attempted to withhold or claw back what we presume Google thinks are the most sensitive of these documents based on what Texas argues is an ill-founded claim of attorney-client privilege.
What Is a Privileged Document?
Whether a document is privileged is a bit inside baseball, so here's a short explanation: "Attorney-client communication" -- that sounds fair when you first hear the words, particularly if you're not as familiar with what constitutes a privileged document as Google is.
"Privileged" means that the docs are protected from disclosure because they contain information that is considered confidential. Not all communications that include a lawyer (in-house or outside) on the cc list enjoy "privilege." Think about it. If that were true, executives at a big company like Google would only need to copy a lawyer -- any lawyer -- on all communications and those communications would magically disappear. (I wish I had a dollar for every time I've heard that.)
What makes a document privileged? It must be from a client seeking legal advice from a professional legal adviser in that capacity in a communication relating to that purpose that is made in confidence. That communication will be permanently protected from disclosure by the client or by the legal advisor unless the protection is waived. It is important to note that only the communication itself and not the underlying facts in the communication are subject to the attorney-client privilege.
The U.S. Supreme Court gave a succinct example:
"The client cannot be compelled to answer the questions, 'What did you say or write to the attorney?', but may not refuse to disclose any relevant fact within his knowledge merely because he incorporated a statement of such fact into his communication with his attorney." (Upjohn Co. v. United States, 449 U.S. 383, at 396 (1981).)
Google's Claims Are All Hat and No Cowboy
With the Supreme Court's admonition in mind, General Abbott is correctly challenging Google's assertion that the documents in question are privileged:
"Google's counsel [identified] eleven ... documents containing versions of [an] allegedly privileged email and requesting that the Attorney General delete all copies of these documents. The email in question is from one Google Vice President to his superior. [Note: Right away, not likely to be privileged.] Though the email begins with a header noting that it purports to be "Attorney Client Priveleged [sic]," neither the author nor the recipient is an attorney, and the content of the email makes no reference to legal advice. Six other Google employees, including one in-house Google attorney, are copied on the email.
General Abbott's office properly noted that this email fails to meet the standards for the attorney-client privilege and should be able to persuade the Court that it fails. So why did this seemingly routine exchange that is usually handled informally require General Abbott to seek a court order to get Google to cut out the mickey mouse -- an infrequent process?
My guess is that it's because Google knows that if they fail to persuade the Texas court of their overbroad standard of privilege, both the documents they inadvertently produced and those they have refused to produce might become available to the host of international antitrust investigators on their six. If that happens, the company might well bring itself down all by itself -- because the truth would come out. So while Google's response is typical -- "We have shared hundreds of thousands of documents with the Texas Attorney General, and we are happy to answer any questions that regulators have about our business" -- what we have come to know is that a Google "answer" often means that they rightly or wrongly refuse to answer (plead the fifth, assert some species of privilege -- or the more succinct "make me"). But General Abbott continues to press ahead.
In the words of the Lyle Lovett classic, "that's right, you're not from Texas, but Texas wants you anyway."
Chris Castle is Managing Partner of Christian L. Castle, Attorneys with offices in Austin, Texas. Founded in 2004, the firm represents a variety of clients in music, motion pictures and television, as well as technology companies and video game publishers.