Breakup threat. US Department of Justice lawsuit accuses Google of abusing its position to dominate search and search advertising
Google has been hit (as expected) with a lawsuit from the US Department of Justice (DoJ), which alleges the Alphabet division abuses its position to maintain an illegal monopoly over search and search advertising.
But Google also immediately hit back and said that the DoJ lawsuit is ‘deeply flawed’ and said people use Google by choice, not because they are forced to.
The lawsuit is perhaps one of the most significant legal threats to a major tech company, with the possibility of an enforced breakup of Google. It comes as governments and regulators around the world become increasingly critical of the business practices of major tech firms.
In July 2019 the DoJ had said it would review whether “market-leading online platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers.”
At the time, the antitrust investigation did not name any particular companies, but it was widely assumed it will include the likes of Facebook, Google, Amazon and maybe even Apple.
But other investigations were also under way.
In June 2019 the US House of Representatives also launched a probe into digital markets and “anti-competitive conduct” in the tech industry.
That resulted in the CEOs of Amazon, Apple, Facebook and Google were all summoned for a grilling before the committee earlier this summer.
And earlier this month big name tech firms Amazon, Apple, Google and Facebook were slated in a report from the antitrust subcommittee of the US Judiciary Committee.
That report was scathing of technology firms, and the central thrust of its findings is that tech firms have become so big they now flout anti-competition rules.
On top of this, dozens of US states were also investigating Google for allegedly using its dominance to harm smaller competitors.
And now after a year of investigation, the DoJ in its lawsuit filed on Tuesday, made clear that it views ‘monopolist Google’ as having violated antitrust laws.
“Today, the Department of Justice – along with eleven state Attorneys General – filed a civil antitrust lawsuit in the US District Court for the District of Columbia to stop Google from unlawfully maintaining monopolies through anticompetitive and exclusionary practices in the search and search advertising markets and to remedy the competitive harms.”
It said participating state Attorneys General offices include Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina, and Texas.
“Today, millions of Americans rely on the Internet and online platforms for their daily lives. Competition in this industry is vitally important, which is why today’s challenge against Google – the gatekeeper of the Internet – for violating antitrust laws is a monumental case both for the Department of Justice and for the American people,” said Attorney General William Barr.
“Since my confirmation, I have prioritised the Department’s review of online market-leading platforms to ensure that our technology industries remain competitive,” said Barr. “This lawsuit strikes at the heart of Google’s grip over the internet for millions of American consumers, advertisers, small businesses and entrepreneurs beholden to an unlawful monopolist.”
The DoJ said it was enforcing the Sherman Act, which is a law that dates back to 1890 encouraging competition between enterprises.
The DoJ cited previous historic antitrust actions against AT&T in 1974 and Microsoft in 1998.
The DoJ said that Google is one of the wealthiest companies on the planet with a market value of $1 trillion, and it is “the monopoly gatekeeper to the internet for billions of users and countless advertisers worldwide.”
It cited that Google has for years accounted for almost 90 percent of all search queries in the United States and has “used anticompetitive tactics to maintain and extend its monopolies in search and search advertising.”
Essentially, the DoJ alleges that Google “entered into a series of exclusionary agreements that collectively lock up the primary avenues through which users access search engines, and thus the internet, by requiring that Google be set as the preset default general search engine on billions of mobile devices and computers worldwide and, in many cases, prohibiting preinstallation of a competitor.”
“By restricting competition in search, Google’s conduct has harmed consumers by reducing the quality of search (including on dimensions such as privacy, data protection, and use of consumer data), lessening choice in search, and impeding innovation,” said the DoJ.
“By suppressing competition in advertising, Google has the power to charge advertisers more than it could in a competitive market and to reduce the quality of the services it provides them,” it added. “Through filing the lawsuit, the Department seeks to stop Google’s anticompetitive conduct and restore competition for American consumers, advertisers, and all companies now reliant on the internet economy.”
Google’s response to the DoJ lawsuit can be found in a separate article, located here.