By John P. Mello Jr.
Oct 21, 2020 4:00 AM PT
Google found itself in the crosshairs of government regulators Tuesday as the U.S. Justice Department filed a civil lawsuit against the tech giant for unlawfully maintaining a monopoly in online search services and in search advertising.
“This is a monumental case for the Department of Justice and, more importantly, for the American consumer,” U.S. Attorney General William P. Barr said in a statement.
He explained that over the last 16 months, his agency’s Antitrust Division has collected convincing evidence that Google no longer competes only on merit but instead uses its monopoly power — and billions in monopoly profits — to lock up key pathways to search on mobile phones, browsers, and next generation devices, depriving rivals of distribution and scale.
The end result, Barr continued, is that no one can feasibly challenge Google’s dominance in search and search advertising.
“Twenty-five years ago, the Department of Justice sued Microsoft, paving the way for a new wave of innovative tech companies — including Google,” he said. “The increased competition following the Microsoft case enabled Google to grow from a small startup to an Internet behemoth.”
“Unfortunately, once Google itself gained dominance, it resorted to the same anticompetitive playbook,” he observed.
“If we let Google continue its anticompetitive ways, we will lose the next wave of innovators and Americans may never get to benefit from the ‘next Google,’ Barr added. “The time has come to restore competition to this vital industry.”
Devastating News industry
One industry that has complained loudly about Google’s advertising hegemony are newspapers. “Google has abused its market power at the expense of the journalism industry for years,” Laura Bassett, cofounder of the Save Journalism Project, said in a statement.
“It’s long past time that Google’s anticompetitive practices land the company in court,” she maintained.
“Concern and anger about Google’s multiple monopolies is bipartisan and is a major focus of Congress, the Executive Branch, and state governments,” she continued. “We are encouraged by this broad support for action to reign in the excesses of Google that have decimated journalism and many other businesses.”
“This is just the first step in what we believe will be a defining moment for our economy and our democracy,” she added.
The Save Journalism Project explained that Google’s monopoly on search means it is the top external referrer to news websites, making news outlets utterly dependent on Google for readers.
Google then uses that reliance to require news publishers to conform to its demands. One of those demands was forcing news websites to use Google’s Accelerated Mobile Pages format in order to rank higher on search results.
AMP is a stripped down format that has less advertising space, produces less revenue for news publishers, and gives Google access to more data on news websites’ readers, the project noted.
Choice, Not Duress
Google Senior Vice President of Global Affairs Kent Walker, writing in a company blog, called the DoJ’s lawsuit “deeply flawed.”
“[P]eople don’t use Google because they have to, they use it because they choose to,” he wrote.
“This isn’t the dial-up 1990s, when changing services was slow and difficult, and often required you to buy and install software with a CD-ROM,” he noted. “Today, you can easily download your choice of apps or change your default settings in a matter of seconds — faster than you can walk to another aisle in the grocery store.”
“This lawsuit claims that Americans aren’t sophisticated enough to do this,” he continued. “But we know that’s not true.”
Walker noted that people downloaded a record 204 billion apps in 2019. Many of the world’s most popular apps aren’t preloaded, he wrote, such as Spotify, Instagram, Snapchat, Amazon and Facebook.
“We understand that with our success comes scrutiny, but we stand by our position,” he asserted. “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,” he added.
DoJ’s Uphill Struggle
Other tech experts share Google’s view.
“It’s a tough case to win,” said Joe Kennedy, a senior fellow at the Information Technology & Innovation Foundation, a public policy and technology innovation organization in Washington, D.C.
“If the DoJ wants to breakup Google or impose significant structural remedies, that would be extremely difficult for them to accomplish,” he told TechNewsWorld.
Asheesh Agarwal, deputy general counsel at TechFreedom, a technology advocacy group in Washington, D.C. also believes the DoJ has a rocky case against Google.
“It’s going to be an uphill climb,” he told TechNewsWorld. “There hasn’t been a successful monopolization case in several decades.”
He explained that the traditional marketplace metrics used in an antitrust case using the consumer welfare standard don’t support the DoJ’s case. Advertising prices are falling. Output is increasing. New entry is happening. Consumers have multiple choices.
Moreover, Google is no longer number one in product searches. “That mantle has been passed to Amazon,” Agarwal said. “That’s where the big money in advertising is made, and where Google has fallen behind.”
Sending a Message
While antitrust actions are supposed to benefit consumers, that may not be the case in DoJ v. Google. “Consumers could actually be harmed,” Agarwal maintained.
He explained that the reason Google can continue offering its Android mobile operating system for free is because it requires phone makers to install a suite of apps on their devices.
“That’s how Google makes money,” he said. “If it’s prevented from doing that, it’s entirely possible it will start charging manufacturers for Android, and the manufacturers will pass on that cost to consumers.”
Even if the DoJ doesn’t win its case against Google, it could still have an impact on the high tech industry. “It sends a clear warning to companies that have used their scope or cash assets to effectively dominate and control specific markets and industries,” said Charles King, the principal analyst at Pund-IT, a technology advisory firm Hayward, Calif.
“If the DoJ is willing to take on a company as large and impactful as Google, it isn’t difficult to imagine them pursuing Apple, Facebook and Twitter,” he told TechNewsWorld.
Sending a message appears to be a big part of why the lawsuit was filed. “This has always been about political theater,” maintained TechFreedom’s President Berin Szoka.
“The administration is trying to turn up the pressure on all the tech companies through every tool they have available,” he told TechNewsWorld.
“The administration has been having a collective temper tantrum about technology firms for years,” he added. “There is no reason to expect that they wouldn’t use every tool in their arsenal against their perceived enemies.”