Sandy Litvack, a dogged trustbuster in pursuit of Google

Google and Yahoo are household names. But, Sandy Litvack? Not so much.

While Litvack may be obscure to the general public, he is well-known in antitrust circles as a sharp litigator--and one who Yahoo and Google may soon become acquainted with if the Department of Justice challenges the companies' controversial search advertising partnership.

Sandy Litvack in 2004. (Photo credit: Kevin Heslin/Getty Images)

For now, it's unclear whether the scope of the investigation will only focus on the Yahoo-Google deal. Some sources told CNET News that a federal investigation could broaden to examining Google's overall impact on the marketplace.

But there’s little question that bringing in Litvack indicates just how serious federal trustbusters are in their pursuit of Google.

Litvack, a former antitrust chief for the Department of Justice under the Democratic Carter administration, was pulled back into service from private practice litigation by the DOJ earlier this month, in order to serve as a consultant in the antitrust unit of its networks and technology department, according to a DOJ source. This marks Litvack's third pass through the antitrust department, with his first as a trial lawyer fresh out of Georgetown Law Center in 1959.

Given his reputation as a sharp litigator, some former DOJ attorneys say the antitrust staff has likely completed its analysis of the case, and is now seeking Litvack's assistance on whether he could build a case that could be won at trial.

"They're not using Sandy to analyze the facts of the case. They're not asking his opinion whether this is a good thing or a bad thing," said one former DOJ antitrust attorney, who requested anonymity. "They want to know if he thinks he can sell this case in court."

In order to make a complex case simple so that a judge hearing the antitrust case will understand it, the prosecutors will want to simplify it, latching onto issues such as market share that can be understood in a courtroom. That's where someone like Litvack would come in.

"Good litigators can take a complex subject and make it sound simple," the source said.

By most accounts, the Yahoo-Google transaction announced in June is complex. The non-exclusive agreement allows Google to have its ads appear on Yahoo's search pages. Although Yahoo notes it is free to decide where Google's ads will appear and to what extent they will appear, the Internet search pioneer is planning to use Google enough to yield hundreds of millions of dollars.

Yahoo, for example, expects to receive $800 million in revenue from the deal in its first year and another bit of operating cash flow to the tune of $250 million to $450 million in the same period.

It's clear the deal has rankled more than a few. A major advertising trade group on Sunday announced it had sent a letter to the DOJ to protest the proposed transaction.

The advertisers worry the deal would diminish competition, increase concentration of market power, limit choices currently available and, as a result, lead to a rise in advertising prices. Microsoft has also weighed in with its opposition to the search advertising deal, as well as some legislators.

"A bright, seasoned litigator"
While Litvack may lack the high profile of former Microsoft special prosecutor David Boies (who initially was hired as a DOJ consultant and later litigated in the famed Microsoft trial), few question Litvack's skills as a litigator. Before joining the DOJ in 1980, Litvack had worked in private practice as an antitrust litigator for nearly 20 years.

He caught the attention of John Shenefield, who was head of the DOJ's antitrust unit and was being promoted to associate attorney general.

"He was a bright, seasoned litigator with an enthusiastic personality. And at the DOJ, you have either litigators or academic types, and I felt we needed a litigator," Shenefield said in an interview with CNET News.

Litvack brought a nose-to-the-ground sensibility to a department that had historically been dominated by policy-setters and academics.

"During a Christmas party, there was a skit and the person playing Sandy said, 'fundamentally, I'm a litigator' and everyone in the room knew exactly what he meant," said a source who worked for Litvack. "He liked to litigate. He liked the rough and tumble, whereas some people who had served in that position liked to dot all the I's and cross all the T's."

The antitrust unit, while experienced with analyzing cases, is far weaker on preparing a case for litigation and presenting at trial, said former DOJ attorneys. It needed someone like Litvack--and it may still if it goes after Google.

"Just having someone on hand like a Sandy or David Boies shows there is a serious issue there and that the parties need to consider their other options," Shenefield added.

Some of those options can include restructuring an agreement to placate regulators, backing away from a transaction altogether, or bracing for a legal fight. It has yet to be seen whether the DOJ will force the issue and how the companies may respond.

During his time at the DOJ, Litvack inherited the long-running AT&T antitrust case that began in the mid-1970s. Litvack kept the pressure on the telecom giant and supported the trial staff, Shenefield said. A year after Litvack left the DOJ and in the early Reagan administration, a settlement was reached with AT&T that resulted in the break-up of Ma Bell.

Swimming against the tide
But what Litvack was most known for during his time at the DOJ, say former antitrust attorneys, is swimming against the tide in litigating resale price maintenance cases, even though his predecessors chose not to take up the pursuit and some economists considered such action to be "pro-competitive."

The resale price maintenance laws basically found it unlawful for a manufacturer to have an agreement with a reseller that prohibited them from reselling a product at a higher or lower price than expressly stated in the contract.

"Sandy had an attitude that if is it's the law, I'm a prosecutor, I'll go out and prosecute," said a former antitrust DOJ attorney. Ultimately, the U.S. Supreme Court ruled that such activity was considered legal.

"Sandy should have never pursued it. It was a waste of time," said another former DOJ attorney.

Other former DOJ attorneys, however, were less critical of Litvack's pursuit, characterizing his resale price maintenance fixation as an example of his doggedness.

One of the more significant roles Litvack played at the DOJ, which was not widely known, was his advisory role to U.S. Attorney General Ben Civiletti in the handling of President Carter's brother Billy, Shenefield said.

Civiletti was debating whether to take legal action against Billy Carter, who later admitted to receiving a $220,000 loan from the Libyan government and eventually was forced to register as a foreign agent of the Libyan government, in a controversy dubbed "Billygate."

"Ben Civiletti wanted someone to advise him on whether the allegations, in a litigator's mind, made sense and how he would handle it as a matter of public record," Shenefield recalled. "Ben had been a litigator in private practice too and recognized Sandy's common sense."

After leaving the DOJ in 1981, Litvack returned to private practice until joining the Walt Disney Co. in 1991. While at Disney, where he spent eight years, Litvack first served as general counsel, then corporate operations chief, and finally vice chairman before leaving that post in 2000. After Disney, Litvack returned to private practice, before leaving earlier this month to rejoin the DOJ.

So why would a seasoned litigator who is 72 and on the tail-end of his career consider jumping aboard in what may prove to be a rigorous case should the DOJ ultimately pursue it and Yahoo and Google maintain their resolve and fight it?

"He loved his time at the division. It was fun for him," Shenefield said. "This is recess for him and a way to provide public service...other people raise horses."

(Litvack could not be reached for comment, and the DOJ declined to comment on his hiring.)

[viss9434]

Nice article, thanks Dawn.

[Renegade Knight]

Google? The only reason Google is king is that they earned it. They have zero monopoly power in search. I can use several different search engines and as it happens Google still does a good job for me. When it doesn't I'll try something else.

[vtchuck2000]

You clearly have no legal understanding of what antitrust law entails. Put in simple terms, one does NOT need to have 100% market share to be considered in antitrust violation, it's about what they do with their presumably dominating market share.

[iRhapsody]

you may be right about it partially. They earned it at the very beginning, but they have changed so much in form. Btw, it is not merely on the topic of search engine.

[Kwasiowusu]

Renegade Knight : "Google? The only reason Google is king is that they earned it"

Umm.. the DOJ is not going after Google because of they are "king". The DOJ is going after Google because Google is effectively trying to take over, and render Yahoo an ineffective competitor, and take their market share to over 90% through what is efffectively a takeover.
You can have all the matket share you want, so far as you don't obtain that market share through taking over your biggest competitor. Read your anti-trust laws.


Renegade Knight : " They have zero monopoly power in search"

Google + Yahoo = over 90% of US search market = monopoly


Renegade Knight : " I can use several different search engines"

So what?
Google + Yahoo is still equal to over 90% of search. I don't care if you can use different search engines or not. That's not what anti-trust law is about.
Consumers and firms will still have to go to Google/Yahoo to place over 90% of their search ads, with Google/Yahoo controlling over 90% of the search ads business, and doing any price fixing they want. This attempt by Google to hoodwink the American consumers and the DOJ is doomed to failure. It will be stopped.

[Penguinisto]

Err, Yahoo approached Google about the deal - not the other way 'round.

So what if "Google + Yahoo = 90% search"* ? All it takes is for any entrepreneur to come up with a better set of algorithms, get some press buzz, and *bam* - no more Google. OEMs and browsers alike would happily incorporate it, since they all include multiple search engines into their little search bars (and Firefox lets you easily add more if you want).

Unlike Microsoft's monopolistic practices, the cost-of-entry into the Search market is not high - the consumer literally pays $0.00. The up-and-coming business only pays for the servers and bandwidth needed to support the traffic it gets. Google imposes no artificial barrier to competitors at all (unlike Microsoft, which did in many cases, and was rightly convicted for doing so).

Look at Cuil - if it was decently-coded, it would have been able to become a big player, and Google+Yahoo would no longer be dominant. Cuil's problem was that its algorithms and infrastructure collapsed in the face of public usage.

This is why any DOJ investigation would only embarrass the investigators.


* that's a drop-stupid defense if I ever heard one... "Google + Yahoo" means a 'duopoly' at best, but in this market, it doesn't even mean that considering that consumers can go anywhere they want without any barriers to entry or exit.

[Kwasiowusu]

Penguinisto : "Err, Yahoo approached Google about the deal - not the other way 'round"

You still don't get it do you?
Who approached who has aboslutely nothing to do with the anti-trust ramifications in this case. Its what market share Google and Yahoo end up with that counts.
Not to mention you are actually wrong on that.
It was Erich Schmidt, CEO of Google, that placed a phone call to Jerry Yang, and suggested they carve up the search market, and screw Microsoft at the same time. As a matter of fact, that particular phone call is the subject of a DOJ investigation

[Penguinisto]

You apparently are the one who doesn't get it - the search "market" and the ad "market" have no barriers to entry, and no mechanisms in place to lock out competition.

[Kwasiowusu]

Penguinisto : "All it takes is for any entrepreneur to come up with a better set of algorithms, get some press buzz, and *bam* - no more Google"

Yeah?
All it takes is for someone to make another soda ( much easier to write a great search algorithm to take on Google) and *bam" they can take on Coca Cola. Yet there is no way, the DOJ or the EU will tolerate a merger between Coca Cola and Pepsi Cola, despite the existence of literally hundreds of soda makers in all kinds of countries all over the world.

[Penguinisto]

You too easily confuse the words "another" with "better". please re-read what was written. Thx.

[Kwasiowusu]

Penguinisto : "Look at Cuil - if it was decently-coded, it would have been able to become a big player"

Cuil is getting nowhere fast. It won't have any effect on Google.


Penguinisto : "This is why any DOJ investigation would only embarrass the investigators"

Wanna bet?
I am going to bet that the DOJ win this one. Easy. There is a groundswell and momentum building up not just at the DOJ, but in lots of state AG's and the advertising business against this deal. And its only going to get worse for Google.

[Penguinisto]

Cuil got nowhere fast because they had an arguably inferior product. It wasn't Google (or Yahoo's) fault that Cuil failed. It was all Cuil's fault.

And yep - I'll happily take that bet. There's no anti-trust angle to bust Google and/or Yahoo on. Neither of the two have raised any barriers to entering the market. Neither have locked out any competitor from performing business and marketing.There's no price-fixing here. Unlike MSFT OEM exclusivity contracts and pre-bundling, there's no way Google and/or Yahoo are leveraging what they have to the detriment of anyone else (unless the simple act of providing a superior product is now somehow illegal...)

[globalist_agenda]

Wall Street Destroys $Trillions In Wealth. Nobody cares. Nobody goes to jail. Talk about a diversion and false-flag op. We have a housing and stock market crash and this dufus is worried about GooHoo? Entire neighborhoods around the country are destoyed. People's 401Ks are wiped out. The country has $75 trillion in unfunded liabilities (according to Comptroller General). But Justice has time to dick around with GooHoo?

[Kwasiowusu]

So according to you, if someone has managed to get away with muder and is acquitted and discharged after trial, it means that the goverment shouldn't even attempt to prosecute the next guy that committs murde, and is caught by the goverment?