The Department of Justice sues Google over antitrust concerns
Google is accused of “unlawfully maintaining monopolies” around search and search-related advertising.
We all knew it was coming. Today, the US government’s Department of Justice filed an antitrust lawsuit against Google. The company, which is a part of Alphabet, is accused of having an unfair monopoly over search and search-related advertising. In addition, the department disagrees with the terms around Android, the most widely-used mobile operating system, that forces phone manufacturers to pre-load Google applications and set Google as the default search engine. That decision stops rival search providers from gaining traction and, as a consequence, ensures that Google continues to make enormous amounts of cash via search-related advertising.
“Google pays billions of dollars each year to distributors—including popular-device manufacturers such as Apple, LG, Motorola, and Samsung; major U.S. wireless carriers such as AT&T, T-Mobile, and Verizon; and browser developers such as Mozilla, Opera, and UCWeb— to secure default status for its general search engine and, in many cases, to specifically prohibit Google’s counterparties from dealing with Google’s competitors,” the lawsuit filing reads.
The department hasn’t suggested any punishments for Google just yet. As the Wall Street Journal reports, potential remedies will be discussed later in the case. It’s possible that the department will try to fine Google, impose restrictions on its primarily ad-fueled business, or break up its services and products into separate businesses. The latter two would likely be designed to help other companies — especially those fighting for smaller lumps of marketshare — to court more customers and, by extension, dollars in the US. It could be years, however, before we hear about any proposals.
Google disagrees with the Department’s assessment. “People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives,” Kent Walker, Google’s SVP of Global Affairs and Chief Legal Officer wrote in a blog post. The company compared its search engine to a cereal brand that pays a supermarket to be on a shelf at eye-level. Yes, it controls Android, but the company has to negotiate with Apple, which runs iOS and Safari, network providers like AT&T and phone manufacturers including Samsung and LG.
Walker also argued that Google competes with platforms such as Twitter, Expedia and OpenTable, which let you search for news, flights and restaurant reservations respectively.” Every day, Americans choose to use all these services and thousands more,” he said.
Some of Google’s rivals feel differently. “We’re pleased the DOJ has taken this key step in holding Google accountable for the ways it has blocked competition, locked people into using its products, and achieved a market position so dominant they refuse to even talk about it out loud,” Gabriel Weinberg, CEO of search engine provider DuckDuckGo said in a Twitter thread. “While Google’s anti-competitive practices hurt companies like us, the negative impact on society and democracy wrought by their surveillance business model is far worse. People should be able to opt out in one click.”
As the Wall Street Journal explains, the Justice Department has been preparing to launch this case for over a year. “Over the course of the last 16 months, the Antitrust Division collected convincing evidence that Google no longer competes only on the merits but instead uses its monopoly power – and billions in monopoly profits – to lock up key pathways to search on mobile phones, browsers, and next generation devices, depriving rivals of distribution and scale,” the Department said in a statement today.
The Federal Trade Commission (FTC) had launched a similar investigation back in 2011, but called it quits a couple of years later after reaching a settlement with Google. Today’s case is being supported by 11 US states, all of which have Republican attorneys general. As Huffpost reports, a separate group led by Texas is expected to launch an investigation into Google’s digital advertising business next month. Another effort led by Colorado is considering a broader lawsuit.
Earlier this year, Google CEO Sundar Pichai was part of an antitrust hearing organized by the House Judiciary Antitrust Subcommittee. He was joined by the chief executives of Amazon, Apple and Facebook, all of which attended via video conferencing. (You can watch the proceedings from July 29th here on YouTube, and hear our thoughts on the various questions and answers here.) The 449-page report that followed recommended that all four companies be broken up into smaller businesses. Unsurprisingly, the Silicon Valley giants that were targeted disagreed with most of the subcommittee’s findings.
In addition, Google has faced multiple antitrust investigations in the European Union. These have criticized its shopping-related search results, Android, and “abusive practices in online advertising.” The fines total roughly €8.2 billion (roughly $9.67 billion), but Google thinks it can contest them all.
Today’s lawsuit is arguably the biggest antitrust move since the government’s case against Microsoft in 1998. Back then, the technology company was accused of using its Windows monopoly to push Microsoft-made software such as Internet Explorer. A judge eventually ordered Microsoft to break up into two separate companies. The technology giant appealed, however, and by the end of 2001 it had reached a settlement with the department. “Back then, Google claimed Microsoft’s practices were anticompetitive, and yet, now, Google deploys the same playbook to sustain its own monopolies,” the Justice Department argues in today’s lawsuit filing.
The antitrust case isn’t a huge surprise. In early September, the New York Times reported that the department could launch the case before the end of the month. According to the paper, the legal team couldn’t agree over how broad the case should be. Attorney General William P. Barr was reportedly pressuring the department to make the announcement so it would be seen as tough action under the Trump administration. Later that month, Bloomberg reported that a dozen states were preparing to join the Justice Department’s case.
“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,” Barr said in a press release today.
As TechCrunch reports, we’re unlikely to see any major updates on this case before the US election. If the Republicans aren’t re-elected, it’s possible that a departmental shakeup will change the focus and internal deadlines around the case. For now, though, these shifts are theoretical.