PHOTO CREDITS: CNET
The Justice Department on Tuesday filed a lawsuit against Google illegally holding monopolies in search and search advertising.
The lawsuit is the culmination of more than a yearlong investigation into alleged anticompetitive practices at the company, and the first such antitrust case in the tech world in decades. The federal government alleges that Google violated antitrust laws to act as a “gatekeeper” to the internet. The complaint says the company unlawfully blocked out competitors by reaching deals with phone makers including Apple and Samsung to be the preset, default search engine on devices. Google also abused the dominance of its Android operating system to strong-arm manufacturers to preload Google’s apps onto phones, the lawsuit alleges.
“As the antitrust complaint filed today explains, [Google] has maintained its monopoly power through exclusionary practices that are harmful to competition,” Jeff Rosen, US deputy attorney general, told reporters on a conference call. “If the government does not enforce the antitrust laws to enable competition, we could lose the next wave of innovation. If that happens, Americans may never get to see the next Google.”
Eleven states, all with Republican attorneys general, are joining the lawsuit as plaintiffs: Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina and Texas. The lawsuit marks the latest in a series of moves by the US government to put big tech under a more intense microscope. It also represents a reversal from the attitude of Silicon Valley companies from just a few years ago, when the likes of Google and Facebook were hailed as American success stories and darlings on Wall Street.
Google, whose corporate parent Alphabet Inc. has a market value just over $1 trillion, controls about 90% of global web searches. Google’s power stems from its massive digital ad business, a juggernaut that brings in about 85% of the company’s roughly $160 billion in annual sales. The tech giant denied it has engaged in anticompetitive behavior. “Today’s lawsuit by the Department of Justice is deeply flawed,” Kent Walker, Google’s senior vice president of global affairs, said in a blog post. “People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.” Barring a settlement, a trial would likely begin late next year or in 2022 (Boston Herald).
Separate from the DOJ announcement, seven states including New York and Colorado said they plan to conclude parts of their own investigations into Google in the coming weeks. If they file a complaint, they’ll file a motion to consolidate it with the Justice Department case, they said. Aside from Google, rivals Apple, Amazon and Facebook are also under investigation by federal regulators and lawmakers.
The subcommittee released its findings in a 449-page report earlier this month, accusing the tech giants of “abuses of monopoly power.” For Google, much of the scrutiny was directed at the company’s alleged promotion of its own products over those of rivals. “Evidence shows that once Google built out its vertical offerings, it introduced various changes that had the effect of privileging Google’s own inferior services while demoting competitors’ offerings,” the report says. Google has faced scrutiny from federal regulators in the past. In 2013, the Federal Trade Commission wrapped up a two-year investigation into Google after allegations of biased search results. Tuesday’s lawsuit, though, heavily criticizes Google’s business contracts with outside partners. The complaint says the tech giant “locks up” search distribution on Android, which powers almost nine out of every 10 smartphones shipped globally.
In a lengthy blog post, Google’s Walker denied any wrongdoing when it comes to the search deals it makes with other companies. Google, which spends billions of dollars a year on those deals, compared the practice to a cereal brand paying for “eye level” placement on a grocery store shelf, instead of having the product stocked on a lower shelf. “On mobile, that shelf is controlled by Apple, as well as companies like AT&T, Verizon, Samsung and LG,” Walker wrote. “On desktop computers, that shelf space is overwhelmingly controlled by Microsoft.”
Lawmakers on both sides of the aisle applauded the DOJ complaint, though Sen. Amy Klobuchar, a Democrat from Minnesota, scrutinized its timing. “For years we have heard complaints that Google has used its dominance in online search markets to undermine rivals and limit competition,” Klobuchar said in a statement. “I am pleased that the Justice Department is finally taking action, but I hope the questionable timing of the suit so close to the election doesn’t undercut the work that must be done for American consumers in the weeks and months ahead.”
The DOJ’s Rosen said the lawsuit is “nonpartisan” and strictly about antitrust — not about the “skew” or “bias” of social media platforms. Alleged anti-conservative censorship has been a familiar refrain among Republicans. Pichai, as well as Zuckerberg and Dorsey, are expected to appear at a Senate hearing later this month about Section 230 of the Communications Decency Act, a rule that shields tech companies from legal liability for content on their platforms. Google’s antitrust issues aren’t limited to the US. Last March, the search giant was hit with a $1.7 billion fine from the European Commission for abusive online ad practices. The Commission said Google exploited its dominance by restricting its rivals from placing their search ads on third-party websites (CNET).
One of Trump’s top economic advisers said two years ago that the White House was considering whether Google searches should be subject to government regulation. Trump has often criticized Google, claiming that the search giant is biased against conservatives and suppresses their viewpoints. Rosen told reporters that allegations of anti-conservative bias are “a totally separate set of concerns” from the issue of competition.
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