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It’s an attack just before the final whistle. Two weeks before the presidential election, the Trump administration filed an antitrust lawsuit against Google on Tuesday. If federal judges in Washington lean toward the 64-page complaint in the coming months, Donald Trump and his attorney general, William Barr, may no longer be in office.
So what is the United States government doing? Critics suspect that behind the move is simply Trump’s anger at tech companies, by whom he feels notoriously mistreated. Others suspect that the incumbent wants to demonstrate the electorate’s ability to act in the last meters. But a third explanation is also conceivable: Former telecoms lawyer Barr wants to go down in the history books as the one who broke the power of the Silicon Valley giants. Or at least he tried.
Whatever the reasons, the effects shouldn’t just hit the search engine provider, but other tech giants like Facebook and Amazon as well. The industry must now be aware that the wind has changed. For a long time, his business conduct had met with resistance, especially in Europe, while a laissez-faire attitude prevailed at home. But even in the domestic market, Google & Co is no longer everyone’s favorite. But the big corporations looked on suspiciously.
Democrats also welcome the measure
Prosecutors from eleven states have joined the government’s demand. And for once, Democrats agree with the Trump administration on the push. So even Democratic Sen. Elizabeth Warren drew a kind of praise for herself: even though “Bill Barr is a corrupt friend of Trump who shouldn’t be Attorney General,” she told the Recode technology blog. The Justice Department, however, is pursuing “a long-standing and legitimate lawsuit against Google for anti-competitive, manipulative, and often illegal behavior,” Warren added:
But it was primarily Barr himself who pushed the process, while his lawyers cautioned against a hasty approach. Many people would be surprised at “how these enormous monsters that exist today in Silicon Valley took shape in the eyes of the competition’s watchdog,” the minister justified his haste.
The ministry is now focusing on one accusation: that Alphabet’s subsidiary Google, thanks to a near-monopoly on search queries, earns $ 40 billion a year from advertisers, and that it pays phone operators mobile with this income to configure Google as a search engine by default. According to estimates by analytics firm Sanford C. Bernstein, Apple alone raises about $ 8 billion a year. Overall, according to the complaint, 95 percent of all search queries on mobile devices are run through Google today. So, in effect, a monopoly.
Google Declares Lawsuit Deeply “Flawed”
It is questionable whether this dominance can be achieved with fair or unfair market means. Google declared the lawsuit “deeply flawed” on Tuesday. People would use the search engine “because they choose, not because they are forced or can’t find alternatives,” the company said on Twitter:
But the overwhelming power of the Alphabet company, which is worth about a trillion dollars on the stock market and has cash reserves of 120 billion dollars, is not just a thorn in the side of Trump’s attorney general. Tech companies are under concerted attack from US politics and competition agencies:
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Almost every 50 states they have now launched their own investigations against Google. One group of prosecutors has taken over the advertising business, another deals with search behavior. According to estimates by service provider eMarketer, Google’s annual revenue from digital ads will increase from around $ 34 billion in 2019 to more than $ 42 billion in 2022 in the US alone.
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the Democrats in the House of Representatives recently filed a 449-page blanket statement with the tech industry. Members of the responsible committee accuse Google, Apple, Amazon and Facebook of abusing their position in the market. Once “underprivileged and aggressive start-ups” have become monopolies, “as we last saw them in the era of the oil and rail moguls,” the report sums up.
Some industry experts are still skeptical. Politicians lacked the instruments to divide corporations, believes Isaac Boltansky of investment bank Compass Point. The bag also reacted quite bored. Alphabet shares lost slightly at the open and then rose again later in the day. Eight years ago, the competition authority had already examined the legal proceedings against Google. The officers collected material for a year, but eventually resigned.
Microsoft proceedings dragged on for more than ten years
Alphabet is not an easy opponent: the financially strong company can send armies of lawyers and public relations consultants to battle with politicians. But at least: The nearly $ 12 million the company spent lobbying in Washington last year could not prevent the lawsuit.
The Justice Department is now proving “that it’s not just Silicon Valley that can successfully clone products,” says competition expert Tim Wu of Columbia Law School. “Basically they cloned the Microsoft case and added the name to Google.”
If this assessment is correct, then Trump and his attorney general will probably not live to see the outcome of the proceedings, even if they win the election in November, contrary to current polls. The monopoly proceedings against Microsoft dragged on for more than a decade before finally ending in a settlement. Looking back, some observers do not consider the concessions agreed at that time to be the real success of the cartel authorities. But that Microsoft’s management got so involved in the legal dispute that there was room for competition in the market.
