The US Department of Justice — along with eleven State Attorneys General — filed a civil antitrust lawsuit in the US District Court for the District of Columbia to stop Google from unlawfully maintaining monopolies through anticompetitive and exclusionary practices in the search and search advertising markets and to remedy the competitive harms.
The 11 states joining the action include Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina, and Texas.
For its part, Google called the action “deeply flawed”.
Kent Walker, Google’s SVP of Global Affairs, wrote on a blog after the news became public, “People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives. This lawsuit would do nothing to help consumers. To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use.”
At the heart of the Government’s case is the suggestion that Google illegally used its monopoly power to create exclusionary agreements with companies like Apple, which hurt competition and ultimately consumers.
Apple’s deal to make Google the default search engine for the Safari browser on iPhones is one such example (and is reminiscent of the browser bundling deals Microsoft forced upon PC manufacturers in the early days of the Web).
Addressing this specific point, Walker wrote, “Our agreements with Apple and other device makers and carriers are no different from the agreements that many other companies have traditionally used to distribute software. Other search engines, including Microsoft’s Bing, compete with us for these agreements. And our agreements have passed repeated antitrust reviews.”
According to NPR, “Justice Department officials said Google spending profits made from its powerful position to buy special treatment for its search engine on devices and Web browsers created a ‘self-reinforcing cycle’ of monopoly power abuse.”
According to US Attorney General Bill Barr, “Competition in this industry is vitally important, which is why today’s challenge against Google — the gatekeeper of the internet — for violating antitrust laws is a monumental case both for the Department of Justice and for the American people.”
Barr said in a statement that since becoming AG he has prioritised the Department’s review of online market-leading platforms to ensure that the technology sector remained competitive. “This lawsuit strikes at the heart of Google’s grip over the internet for millions of American consumers, advertisers, small businesses, and entrepreneurs beholden to an unlawful monopolist.”
Already critics have pointed to the fact that the Federal Government and all 11 states in the action are Republican administrations, while others seized on reports that Barr pushed for the action to be taken before the election. However, the truth is that this action has been inevitable and predictable for years given Google’s market dominance.
The move by the DOJ is the most serious action the Federal Government has taken against a technology company since it went after Microsoft in the 1990s. While Microsoft avoided the fate of AT&T — which was famously broken into the Baby Bells in the 1980s — Microsoft insiders say the rules forced upon it by the DOJ crippled its operating agility for years.
According to Anthony M. Sabino, professor of law at The Peter J. Tobin College of Business at St. John’s University the DOJ will need to clear two obstacles to be successful.
“First, it must correctly identify the relevant market that Google allegedly monopolizes. Would that be only search engines or the totality of all social media?” he asks. “A difficult question to be sure, yet vital because you cannot prove a monopoly unless you can clearly and rationally define the market that is allegedly monopolized.”
“Second, did Google attain or does it preserve its alleged monopoly by anticompetitive means?” he adds. “Or, is its purported dominance the natural result of an organic monopoly; in other words, does Google’s market strength simply emanate from the fact that people think it makes a superior product?”
Sabino said that in the late 1990s, the government took on another tech giant, Microsoft, and its case foundered when a federal appeals courts ruled that the prosecutors erred in defining the relevant market because the Justice Department characterized it too narrowly.
He argues that the prosecutors also failed to acknowledge that much, if not all, of Microsoft’s dominance, simply came from the fact that the public strongly favored the company’s software over those of its rivals.
Drawing a comparison, Sabino says that “like U.S. v. Microsoft, U.S. v. Google has a long, long way to go.”