The US Government is Suing Google
The United States Justice Department is finally suing Google over antitrust violations that have stifled competition.
The lawsuit is the first of its kind since the US sued Microsoft for anticompetitive practices in 1998, and could force Google to split into smaller companies.
Unlike the FTC’s failed investigation in 2012, which focused on complaints of “search bias,” the DOJ lawsuit focuses on anticompetitive practices. “Absent a court order, Google will continue executing its anticompetitive strategy, crippling the competitive process, reducing consumer choice, and stifling innovation,” reads the suit.
The suit is backed by 11 Republican-led states, though progressive lawmakers including Senator Elizabeth Warren (D-MA) agree with the need to do something about Google’s monopoly.
“Google search is not a neutral gateway to the information available on the web,” argues former DOJ antitrust official David Dinielli. “Google search is a set of algorithms designed to make Google – or Alphabet, its parent company – the most money it can possibly make.”
The DOJ suit also has support from Yelp, which has been outspoken about Google’s unfair advantage. “By systematically reducing the quality of its search results in order to entrench and extend its search and search advertising monopolies, Google is directly harming consumers,” argues Yelp executive Luther Lowe. “Yelp applauds the work at the DOJ and encourages swift action by state attorneys general who are conducting parallel investigations into other aspects of Google’s business.”
Google’s monopoly is such that it controls more than 80% of search queries in the US, including 95% of searches from mobile devices. Google’s YouTube is the planet’s largest video platform, used by nearly 75% of American adults. Overall, the company is estimated to be worth nearly $1 trillion.
Aiding Google’s monopoly are its agreements with smartphone makers and browsers. Apparently, Google is paying billions of dollars per year to Samsung, Apple, LG, Motorola and others to ensure that its search engine is the default search engine on their devices.
All search services, including advertising, require complex algorithms that are constantly learning and changing; so by maintaining distribution agreements with smartphone makers, Google gets to enjoy a scale that is unavailable to competitors. Google’s advertising business alone raked in $135 billion last year (84% of its total revenue).
“The end result is that no one can feasibly challenge Google’s dominance in search and search advertising,” laments AG Bill Barr.
Google’s unfair monopoly has been addressed repeatedly by the European Union, which fined the tech giant $2 billion in 2019 for blocking websites from utilizing search engines other than Google to find advertisers, $4.9 billion in 2018 for blocking rival search engines on Android operating systems, and $2.6 billion in 2017 for prioritizing its own products in shopping queries.
Rather than restrictions and fines, the DOJ lawsuit asks for “structural relief” – a request that typically leads to forced asset sales. “Ultimately, it is consumers and advertisers that suffer from less choice, less innovation, and less competitive advertising prices,” reads the suit. “So we are asking the court to break Google’s grip on search distribution so the competition and innovation can take hold.”
When asked if Google would be forced to follow in the footsteps of Standard Oil, DOJ official Ryan Shores said “nothing is off the table.”
As expected, Google opposed the lawsuit as “deeply flawed” and claimed that people are using Google because they want to, not because they are forced to. Forcing Google to split into smaller companies would produce higher costs for consumers and put individuals at the mercy of poor-quality search engines, claims Google spokesman Kent Walker, who added that Google’s search engine has always been free.
The lawsuit, which follows a years-long investigation by the Justice Department, is expected to take years to resolve. In the meantime, nearly all US attorneys general are conducting their own investigations into Google.
A separate report from the Senate cites Google’s “monopoly power,” accuses Amazon of mistreating third-party sellers, and describes Facebook’s moves to stifle competition through targeted acquisitions.
The Senate Commerce Committee plans to meet with the CEOs of Google, Facebook, and Twitter later this month.
Author’s Note: This lawsuit has been a longtime coming. Google, Facebook, and others have made so political enemies that they could be in real trouble. Their control is massive, but they are not invincible nor are they accountable, and they have abused their power every step along the way.