Updated: October 22, 2020 7:43:31 am
A Google sign is displayed on a Google building in the Manhattan borough of New York City, New York, USA, October 20, 2020 (Reuters Photo: Carlo Allegri)
United States Department of Justice (DoJ) sued Google on Tuesday, claiming that the company had abused its dominant position in a way that had harmed both its competitors and its customers. Eleven US states have joined the Department of Justice in the antitrust lawsuit against Google “for illegally maintaining a monopoly on general search services and search advertising.”
What is the lawsuit about?
In his statement announcing the initiation of the lawsuit, Justice Department Deputy Attorney General Jeffrey A Rosen said the main concerns are business practices that may have led to “massive concentrations of economic power” at a few companies like Google. . The lawsuit will focus on Google, as “it is the gateway to the Internet and a search advertising giant.”
“Google achieved some success in its early years, and no one regrets it, but, as the antitrust lawsuit filed today explains, it has maintained its monopoly power through exclusionary practices that harm competition. So the Department of Justice has determined that an antitrust response is necessary to benefit consumers, ”Rosen said in his statement.
What led to the lawsuit?
Earlier this month, a panel of the US House of Representatives presented the report of a bipartisan investigation into the operation of Amazon, Apple, Google and Facebook. The investigation had started in July 2019. These companies have been on the radar of the governments of many countries for spending too much and trying to crush the competition by buying from rivals or pressuring suppliers to avoid working with these rivals. The US Congress wanted to know, for example, if Apple, to promote an app that allows parents to limit children’s screen time, had scrapped a rival app on the pretext that it was unsafe.
The panel said that each of these companies now acted as a “gatekeeper” for a key distribution channel, meaning that they had full control over what happened in their respective domains. The report called for the dissolution of large technology companies and a “presumed ban on future mergers and acquisitions by the dominant platform.”
Why is demand important?
The lawsuit marks the first time that there has been a bipartisan effort, involving both the Democratic and Republican parties, to investigate Google’s monopoly powers.
The challenge for Google, the experts said, would be continued scrutiny on its largest revenue-generating segment, which is the publicity garnered from its search engine and affiliate websites. In the April-June quarter, the company earned nearly $ 38 billion, mostly from advertising.
In addition to increased federal scrutiny, big tech companies are likely to face more questions and investigations from US states, which in the recent past have accused them of not doing more to control their influence on the aspects everyday life.
The last time Google faced legal action for allegedly abusing its domain in the search market was almost a decade ago, in 2011, when the Federal Trade Commission (FTC) was acting on a complaint filed by a non-profit investigative agency. Washington-based profit organization. Electronic Privacy Information Center. Although all five commissioners ultimately voted not to bring a case against Google, the company had to, as part of a resolution process, implement a strict user data security policy and accept independent privacy audits for the next 20 years. .
“Google is a player in the global market. This (lawsuit) would have a worldwide impact where Google’s practices could potentially be analyzed. But with that said, the ICC (Competition Commission of India) is already investigating such practices and has already fined Google before. This is well below the ICC’s radar to keep these practices in check, ”said competition law expert and partner at L&L Partners Kanika Chaudhary Nayar.📣 Follow Express explained on Telegram
What are the accusations facing Google in India?
Over the past three years, Google has had multiple confrontations with the ICC for alleged abuse of its dominant position in the search engine market, the Android smartphone and television market, as well as the Google Flights service.
In 2019, India’s antitrust body found Google guilty of misusing its dominant position in the mobile Android market and said the company had imposed “unfair conditions” on device makers to prevent them from using other operating systems. .
And in February 2018, the ICC had fined Google Rs 136 million for unfair business practices in the online search market. He said Google had “disproportionately allocated real estate” for its affiliates, to the disadvantage of other companies that were trying to gain access to the market.
“Furthermore, it was also found that Google has provided an additional link in said business units that takes users to its specialized search results page (Google Flight), resulting in an unfair imposition on users of search services. general too ”, said the ICC.
Google has challenged the ICC’s findings in forums such as the National Societies Law Court of Appeal and the Supreme Court.
What could the action of the US Department of Justice mean for Google?
Although the lawsuit is the first of its kind, swift action on the company is unlikely anytime soon, experts said.
“The lawsuit is just the beginning of something formal, after the House panel report. In the future, Google may argue in court that it is being distinguished from other companies, or try to explain why it is not really abusing its dominance in any market segment, “said a legal expert who had advised some companies against Google Case 2018 at CCI.
“Yes, there may be a spiraling effect, but each country will have to conduct its own separate investigation if the same behavior has taken place there. Regulators will definitely have the feeling to investigate Google’s practices. But will they be guilty of the same problems all over the world? That will have to be evaluated independently, ”said Nayar.
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