The phone-hacking scandal never was simply a story about journalists behaving badly: it was and is about power.

On Monday, in an outbreak of peculiarly destructive evidence, Lord Justice Leveson's courtroom became a battlefield for two parts of a defining power struggle.

The first was short term. In the past few weeks, those who lost some of their power last summer, when the facts of the scandal finally erupted, have been trying to reclaim it. In 20 minutes of deftly understated evidence, Deputy Assistant Commissioner Sue Akers sent them packing.

Rupert Murdoch's Sun had led the attempted coup with an outburst of the kind of tabloid fist-waving which has itself been part of the distortion of power. The paper's associate editor, Trevor Kavanagh, reacted to the arrest of 10 of his colleagues by launching a ferocious attack on Scotland Yard. It was full of the rhetorical flourish of great reporting but almost devoid of facts.

Crucially, Kavanagh's claim that the Yard was engaged in a witch-hunt against legitimate journalism was based on a bold assumption that, in the Sun's history of paying sources for stories, "there is nothing disreputable and, as far as we know at this point, nothing illegal". Never pausing to question that assumption, the Daily Mail joined in, reporting the arrests under the headline "Operation Overkill" and running a column by Richard Littlejohn which compared the police to the Stasi engaging in "a sinister assault on a free press".

Lawyers, bloggers and tweeters joined in the attack. Many claimed to know that the police were investigating nothing more than reporters who had paid for a pint for a police officer. Murdoch's Times highlighted claims that the arrested journalists had been acting in the public interest. The Telegraph suggested that police had "overstepped the mark".

Akers took to the Leveson stage and challenged the assumption on which this attack was founded. She was careful to emphasise that she was still dealing in allegation, not proof. She was equally clear that this is not about paying for pints but about the alleged illegal payment by Sun journalists of "regular, frequent and sometimes significant sums of money" to officials in every area of the public life of this country, including the police, military, prisons and health service. "The current assessment of the evidence is that it reveals a network of corrupted officials," she said. And this was not about stories in the public interest, she added, but about "salacious gossip".

The truth about all this remains to be seen. Police inquiries continue – and that, in itself is what is significant. At another time, in another context, the tabloid fist, with the political muscle that lies behind it, might have succeeded in diverting the investigation. But yesterday saw a rare moment, when the power of a cynical press to distort public debate was openly challenged and stopped in its tracks.

Beyond this short-term skirmish, there is a larger and longer-term struggle of power. This is not about the conduct of reporters but about the power of the press in relation to the state, specifically about whether the Murdoch papers had reached a point where the police and the political apparatus had become compliant. Here again, Monday's evidence was peculiarly destructive.

The immediate question is whether to accept Scotland Yard's claim that police failed to expose the truth about crime at the News of the World simply because they had to focus their limited resources on counter-terrorist work where human life was at stake. The evidence disclosed by the former deputy assistant commissioner Brian Paddick and by the former deputy prime minister Lord Prescott keeps alive the alternative theory, that this was an act of favouritism.

If the priority was to protect human life, it is not clear why – as was suggested on Monday – Scotland Yard failed to take any action at all in November 2006 when it found evidence that the News of the World's investigator Glenn Mulcaire had penetrated some of the secrets of the witness protection programme, exposing the new identities of people who were being protected precisely because they were vulnerable to attack.

Equally, it is not clear how Scotland Yard saved resources by writing multiple letters to both Paddick and Prescott, denying that it held any evidence to suggest they had been victims of the hacking, when it could have sent a single letter to each man admitting that both of them were clearly named in Mulcaire's notes – something which, we now know, police had first discovered, in Prescott's case, right back on 8 August 2006, the day they arrested Mulcaire and seized his paperwork.

It is not clear how police saved resources by failing to show prosecutors the now famous "email for Neville", containing the transcripts of 35 voicemail messages, which was the clearest available evidence of Mulcaire's guilt in one of the very few cases which they chose to take to trial, concerning Gordon Taylor of the Professional Footballers Association.

Nor is it clear how they saved resources by telling Mulcaire's trial in January 2007 that he had earned only £12,300 from crime when, according to Monday's evidence, they believed he had earned more than £1m from the News of the World and hacked hundreds of victims.

Nor is there any clear explanation of why the former assistant commissioner John Yates spent two years insisting to press, public and parliament that the scandal had only a small number of victims, all of whom had been contacted by police. Monday's evidence suggested that the original inquiry compiled a "blue book", listing hundreds of victims over 24 pages, almost none of whom was approached by police.

On the question of alleged favouritism, the Leveson inquiry will surely be interested in the evidence disclosed by Paddick that when police in August 2006 went to search the News of the World, they were physically stopped from entering the accounts department and denied access to the computer and safe of the royal reporter Clive Goodman; and that the police responded by drafting a production order and then failing to use it. Paddick said: "It is not usual that a suspect would be permitted to fob the police off in this way."

Now the balance of power has changed. Leveson and Akers have their own power. The FBI may take the inquiry to News Corp headquarters in New York. Murdoch and his allies still control tens of thousands of words of news coverage every day, but they have lost control of events – for now, at least.