The U.S. Justice Department on Tuesday sued Google for antitrust violations, alleging that it abused its dominance in online search and advertising to stifle competition and harm consumers.
The lawsuit marks the U.S. government’s most significant attempt to protect competition since its groundbreaking case against Microsoft more than 20 years ago. It could be an opening salvo ahead of other major government antitrust actions, given ongoing investigations of major tech companies including Apple, Amazon and Facebook at both the Justice Department and the Federal Trade Commission.
“Google is the gateway to the internet and a search advertising behemoth,” U.S. Deputy Attorney-General Jeff Rosen told reporters. “It has maintained its monopoly power through exclusionary practices that are harmful to competition.”
Antitrust cases in the technology industry have to move quickly, he said. Otherwise “we could lose the next wave of innovation.”
Lawmakers and consumer advocates have long accused Google, whose corporate parent Alphabet Inc. has a market value just over US$1-trillion, of abusing its dominance in online search and advertising to stifle competition and boost its profits. Critics contend that multibillion-dollar fines and mandated changes in Google’s practices imposed by European regulators in recent years weren’t severe enough and that structural changes are needed for Google to change its conduct.
Google responded immediately via tweet: “Today’s lawsuit by the Department of Justice is deeply flawed. People use Google because they choose to – not because they’re forced to or because they can’t find alternatives.”
The case was filed in federal court in Washington. It alleges that Google uses billions of dollars collected from advertisers to pay phone manufacturers to ensure Google is the default search engine on browsers. Eleven states, all with Republican attorneys-general, joined the federal government in the lawsuit.
But several other states demurred. The attorneys-general of New York, Colorado, Iowa, Nebraska, North Carolina, Tennessee and Utah released a statement Monday saying they have not concluded their investigation into Google and would want to consolidate their case with the DOJ’s if they decided to file. “It’s a bipartisan statement,” said spokesman Fabien Levy of the New York State Attorney-General’s office. “There’s things that still need to be fleshed out, basically,”
U.S. President Donald Trump’s administration has long had Google in its sights. One of Mr. Trump’s top economic advisers said two years ago that the White House was considering whether Google searches should be subject to government regulation. Mr. Trump has often criticized Google, recycling unfounded claims by conservatives that the search giant is biased against conservatives and suppresses their viewpoints, interferes with U.S. elections and prefers working with the Chinese military over the Pentagon.
Mr. Rosen told reporters that allegations of anti-conservative bias are “a totally separate set of concerns” from the issue of competition.
The Justice Department isn’t seeking specific changes in Google’s structure, but it asked the court to order structural relief “as needed to remedy any anticompetitive harm.” That opens the door to possible fundamental changes such as a spinoff of the company’s Chrome browser.
Sally Hubbard, an antitrust expert who runs enforcement strategy at the Open Markets Institute, said it was a welcome surprise to see the Justice Department’s openness to the possibility of structurally breaking up Google, not just imposing conditions on its behaviour as has happened in Europe.
“Traditionally, Republicans are hesitant to speak of breakups,” she said. “Personally, I’ll be very disappointed if I see a settlement. Google has shown it won’t adhere to any behavioural conditions.”
Google controls about 90 per cent of global web searches. The company has been bracing for the government’s action and is expected to fiercely oppose any attempt to force it to spin off its services into separate businesses.
The company vowed to defend itself in court against a “deeply flawed” case that relies on “dubious legal arguments.” Barring a settlement, a trial would likely begin late next year or in 2022.
The company, based in Mountain View, Calif., has long denied the claims of unfair competition. Google argues that although its businesses are large, they are useful and beneficial to consumers. It maintains that its services face ample competition and have unleashed innovations that help people manage their lives.
Most of Google’s services are offered for free in exchange for personal information that helps it sell its ads. Google insists that it holds no special power forcing people to use its free services or preventing them from going elsewhere.
In a Tuesday presentation with a handful of reporters, Google argued that its services have helped hold down the prices of smartphones and that consumers can easily switch away from services like Google Search even if it’s the default option on smartphones and in some internet browsers.
A recent report from a House judiciary subcommittee, following a year-long investigation into Big Tech’s market dominance, concluded that Google has monopoly power in the market for search. It said the company established its position in several markets through acquisition, snapping up successful technologies that other businesses had developed – buying an estimated 260 companies in 20 years.
The Democratic congressman who led that investigation called Tuesday’s action “long overdue” but said it’s important for the Justice Department to look beyond Google’s search business.
“It is critical that the Justice Department’s lawsuit focuses on Google’s monopolization of search and search advertising, while also targeting the anticompetitive business practices Google is using to leverage this monopoly into other areas, such as maps, browsers, video, and voice assistants,” Representative David Cicilline of Rhode Island said in a statement.
The Justice Department “filed the strongest suit they have,” said Columbia Law professor Tim Wu, who called it almost a carbon copy of the government’s 1998 lawsuit against Microsoft. He said via e-mail that the U.S. government has a decent chance of winning. “However, the likely remedies – i.e., knock it off, no more making Google the default – are not particularly likely to transform the broader tech ecosystem.”
Other advocates, however, said the Justice Department’s timing – it’s only two weeks to Election Day – smacked of politics. The government’s “narrow focus and alienation of the bipartisan state attorneys general is evidence of an unserious approach driven by politics and is likely to result in nothing more than a choreographed slap on the wrist for Google,” Alex Harman, a competition policy advocate at Public Citizen, said in a statement.
The argument for reining in Google has gathered force as the company stretched far beyond its 1998 roots as a search engine governed by the motto “Don’t Be Evil.” It’s since grown into a diversified goliath with online tentacles that scoop up personal data from billions of people via services ranging from search, video and maps to smartphone software. That data helps feed the advertising machine that has turned Google into a behemoth.
The company owns the leading web browser in Chrome, the world’s largest smartphone operating system in Android, the top video site in YouTube and the most popular digital mapping system. Some critics have singled out YouTube and Android as among Google businesses that should be considered for divestiture.
With only two weeks to Election Day, the Trump Justice Department is taking bold legal action against Google on an issue of rare bipartisan agreement. Republicans and Democrats have accelerated their criticism of Big Tech in recent months, although sometimes for different reasons. It’s unclear what the status of the government’s suit against Google would be if a Joe Biden administration were to take over next year.
The Justice Department sought support for its suit from states across the country that share concerns about Google’s conduct. A bipartisan coalition of 50 U.S. states and territories, led by Texas Attorney-General Ken Paxton, announced a year ago they were investigating Google’s business practices, citing “potential monopolistic behaviour.”
Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina and Texas joined the Justice Department lawsuit.
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