On Tuesday, the Department of Justice filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia to halt Google’s anticompetitive behavior. The much-anticipated lawsuit specifically targets Google’s general search services, search advertising, and general search text advertising practices.
Attorneys general from 11 states joined the antitrust lawsuit – Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina, and Texas on behalf of their citizens and economies in their respective states. The purpose of the civil action is to stop Google’s anticompetitive conduct and restore competition for the sake of consumers, advertisers and all companies who rely on the internet economy.
Attorney General Barr speaks out
“Today, millions of Americans rely on the internet and online platforms for their daily lives. 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,” said Attorney General William Barr in the October 20 announcement.
“Since my confirmation, I have prioritized the Department’s review of online market-leading platforms to ensure that our technology industries remain 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,” Barr added.
Deputy Attorney General Jeffrey A. Rosen also commented on the civil antitrust lawsuit against Alphabet-owned Google.
Get immediate access to Subscription Show 2020 sessions, on-demand on your schedule. Hear from leading brands and experts on subscriber acquisition, subscriber retention, subscription M&A, compliance issues, subscription payment processing, market strategy, and more. Enjoy immediate access, track what sessions you have viewed (77 total!). Learn how to minimize churn, maximize retention and revenue, and set your business up for success in 2021 and beyond!
“As with its historic antitrust actions against AT&T in 1974 and Microsoft in 1998, the Department is again enforcing the Sherman Act to restore the role of competition and open the door to the next wave of innovation—this time in vital digital markets,” said Rosen.
The allegations against Google
The 64-page antitrust complaint comes after more than a year investigating Google. The DOJ accuses Google, which is valued at approximately $1 trillion, of using anticompetitive practices to maintain its monopoly in online search and search advertising. The announcement called out four particular actions:
- Google has entered into exclusivity agreements to forbid preinstallation of competing search engines.
- Google has entered into arrangements that force the preinstallation of the Google search engine in prime locations on mobile devices and make them undeletable.
- Google has a long-term agreement with Apple that requires Google be the default and de facto exclusive general search engine on Apple’s Safari browser and other Apple search tools.
- Google has used monopoly profits to buy preferential treatment for its search engine on devices, browsers and other search access points, continuing the monopoly.
The complaint also said that, as a result of its anticompetitive behavior, Google accounts for nearly 90% of all general search engine queries in the United States and almost 95% of search queries on mobile devices. Meanwhile, Google uses its monopoly to make $40 billion annually from advertisers who put ads on Google’s search engine results page. These business practices virtually eliminate competition. In addition, the DOJ said that consumers are harmed by Google’s actions because the company’s anticompetitive behavior reduces the quality of search results, lessens the choices available in search and impedes innovation.
Item 13 in the Nature of This Action section is particularly telling.
“Absent a court order, Google will continue executing its anticompetitive strategy, crippling the competitive process, reducing consumer choice, and stifling innovation. Google is now the unchallenged gateway to the internet for billions of users worldwide. As a consequence, countless advertisers must pay a toll to Google’s search advertising and general search text advertising monopolies; American consumers are forced to accept Google’s policies, privacy practices, and use of personal data; and new companies with innovative business models cannot emerge from Google’s long shadow. For the sake of American consumers, advertisers, and all companies now reliant on the internet economy, the time has come to stop Google’s anticompetitive conduct and restore competition,” the complaint said.
Google responds to “deeply flawed” antitrust lawsuit
In a blog post, Google calls the DOJ’s antirust lawsuit “deeply flawed.”
“Google Search has put the world’s information at the fingertips of over a billion people. Our engineers work to offer the best search engine possible, constantly improving and fine-tuning it. We think that’s why a wide cross-section of Americans value and often love our free products,” wrote Kent Walker, senior vice president of global affairs for Google.
“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,” Walker said. “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.”
Walker goes on to provide an overview of some of Google’s agreements with technology companies like Apple, LG and Samsung, and he likens Google’s contracts to buying eye level shelf space at a grocery store. He concludes his post with next steps:
“We understand that with our success comes scrutiny, but we stand by our position. American antitrust law is designed to promote innovation and help consumers, not tilt the playing field in favor of particular competitors or make it harder for people to get the services they want. We’re confident that a court will conclude that this suit doesn’t square with either the facts or the law,” Walker wrote.
“In the meantime, we remain absolutely focused on delivering the free services that help Americans every day. Because that’s what matters most. You can learn more about our approach to competition at g.co/competition.”
There isn’t a lot to say here, except that this is likely to drag on for years. This is the lifeblood of Google, so they are not likely to capitulate under any circumstances. And the U.S. government is on a mission, perhaps looking beyond anticompetitive behavior toward a more political agenda. We won’t speculate on the latter, but one thing is for sure. This lawsuit has the potential to change how we use the internet and search engines in the future.