The Justice Department lawsuit could lead to the dissolution of an iconic company that has become synonymous with the Internet and assumed a central role in the daily lives of billions of people around the world.
However, that outcome is far from assured and the case will likely take years to resolve.
The lawsuit marks the first time the United States has cracked down on a major technology company since it sued Microsoft Corp for anti-competitive practices in 1998. A settlement left the company intact, although the government’s previous foray into Big Tech antitrust: 1974 case against AT&T – led to the breakdown of the Bell system.
The federal government’s complaint against Alphabet Inc, which alleges that Google acted illegally to maintain its position in Internet search and search advertising, was joined by 11 states. “In the absence of a court order, Google will continue to execute its anti-competitive strategy, crippling the competitive process, reducing consumer choice and stifling innovation,” the lawsuit states.
The government said Google has almost 90% of all general search engine queries in the United States and almost 95% of searches on mobile devices.
Attorney General Bill Barr said his investigators had found that Google did not compete on the quality of its search results, but bought its success through payments from cell phone makers and others.
“The bottom line is that no one can feasibly challenge Google’s dominance in search and search advertising,” Barr said.
When asked in a conference call if the department was seeking a breakup or other remedy, Ryan Shores, a Justice Department official, said: “There is nothing off the table, but the court better address a question of remedies after you’ve had a chance. ” to hear all the evidence. ”
In its complaint, the Justice Department said that Americans were affected by Google’s actions. In its “request for relief,” it said it was seeking “the structural relief necessary to cure any anti-competitive damage.” “Structural relief” in antitrust matters generally means the sale of an asset.
“Ultimately, it is consumers and advertisers who suffer less choice, less innovation and less competitive advertising prices,” the lawsuit states. “So we are asking the court to break Google’s grip on search distribution so that competition and innovation can take hold.”
Google called the lawsuit “deeply flawed” and added that people “use Google because they want to, not because they are forced to or because they can’t find alternatives.”
Investors appeared to ignore news of the lawsuit, sending Alphabet’s shares soaring 1.9% to $ 1,563.51 on Tuesday afternoon.
“It’s like closing the proverbial door after the horse has been shot,” said Neil Campling, head of research for telecommunications and technology media at Mirabaud Securities in London, adding that Google has already invested billions of dollars in infrastructure, technologies and talent. “You can’t just rest a decade of significant breakthroughs.”
POLITICAL ELEMENT
Tuesday’s federal lawsuit marks a rare moment of agreement between the Trump administration and progressive Democrats. US Senator Elizabeth Warren tweeted on September 10, using the hashtag #BreakUpBigTech, that she wanted “quick and aggressive action.”
Still, just days before the US presidential election, the timing of the presentation could be seen as a political gesture, as it fulfills a promise made by President Donald Trump to his supporters to hold certain companies to account for supposedly stifling conservative voices.
Republicans often complain that social media companies, including Google, take steps to reduce the spread of conservative views on their platforms. Lawmakers have sought, without explaining how, to use antitrust laws to force big technology to stop these alleged limitations.
The complaint pointed to the billions of dollars that Google pays smartphone makers like Apple Inc, Samsung and others to make Google’s search engine the default on their devices.
This means that rival search engines never get the scale they need to improve their algorithms and grow, the complaint says.
“General search services, search advertising and general search text advertising require complex algorithms that are constantly learning which organic results and ads best respond to user inquiries,” the government said in its complaint. “By using distribution agreements to block scale for itself and denying it to others, Google illegally maintains its monopolies.”
Google has managed to protect its profits derived from the Android mobile operating system, which is officially open source, but the companies that change it cannot access lucrative revenue-sharing agreements.
Investigators from the Justice Department found that an internal Google analysis of the restrictive agreements determined that only 1% of Google’s Android search revenue worldwide was at risk of being lost to competition.
“This analysis noted that growth in Google’s search ad revenue from Android distribution was ‘driven by increased platform protection efforts and agreements,'” according to the complaint.
OTHER CHALLENGES
All 11 states that joined the lawsuit have Republican attorneys general.
More lawsuits could be in the offing, as state attorneys general are underway on Google’s broader businesses, as well as an investigation of its broader digital advertising businesses. Texas-led attorneys general are expected to file a separate lawsuit focused on digital advertising as early as November, while a Colorado-led group is contemplating a broader lawsuit against Google.
The lawsuit comes more than a year after the Department of Justice and the Federal Trade Commission launched antitrust investigations at four big tech companies: Amazon.com Inc, Apple, Facebook Inc and Google.
Seven years ago, the FTC settled an antitrust investigation against Google for allegedly biasing its search function to favor its products, among other issues. The settlement came after objections from some attorneys on the FTC staff.
Google has faced similar legal challenges abroad.
The European Union fined Google $ 1.7 billion in 2019 for preventing websites from using Google’s rivals to find advertisers, $ 2.6 billion in 2017 for favoring its own search shopping business, and $ 4.9 billion. in 2018 for blocking rivals on its Android wireless operating system.
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