On Tuesday morning, the anticipated antitrust case against Google was filed by The United States Department of Justice (DOJ). The search giant is accused of disadvantaging competitors through a network of exclusionary business deals. Google has already fired back, claiming it is not a monopoly, giving detailed examples to support its defense. Here's what both sides in this battle are arguing, and an indication of where this landmark lawsuit could lead.
The four major US tech companies including Google, Apple, Amazon, and Facebook, have commonly become known collectively as 'Big Tech'. Big Tech is no stranger to scrutiny over monopolistic practices, and the European Union has been raising these types of questions for some years now. The EU has fined Google a total of $9 billion in two years for both antitrust and data privacy violations. There's no doubt, though, that the DOJ action this week is the biggest legal challenge any of the big four has faced to date.
If Google loses this case, which is likely to take years to settle whichever way it goes, a major restructuring of the way Big Tech operates will surely follow. Google will not go down without a fight though, and victory in the courts could cement its power, setting a precedent that would protect Mountain View from future legal scrutiny.
What The United States Department of Justice says
The DOJ says it is suing 'monopolist Google' for violating its antitrust laws, with the aim of restoring competition in the search and search advertising markets. The civil antitrust lawsuit has been filed in the U.S. District Court for the District of Columbia, and the DOJ is working with eleven state Attorneys General. The participating state Attorneys General offices represent Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina, and Texas.
As alleged in the Complaint, the DOJ accuses Google of entering into a series of exclusionary agreements that collectively lock up the primary avenues through which users access search engines, and thus the internet, by requiring that Google be set as the preset default general search engine on billions of mobile devices and computers worldwide and, in many cases, prohibiting preinstallation of a competitor. In particular, the Complaint alleges that Google has unlawfully maintained monopolies in search and search advertising by:
- Entering into exclusivity agreements that forbid preinstallation of any competing search service.
- Entering into tying and other arrangements that force preinstallation of its search applications in prime locations on mobile devices and make them undeletable, regardless of consumer preference.
- Entering into long-term agreements with Apple that require Google to be the default – and de facto exclusive – general search engine on Apple’s popular Safari browser and other Apple search tools.
- Generally using monopoly profits to buy preferential treatment for its search engine on devices, web browsers, and other search access points, creating a continuous and self-reinforcing cycle of monopolization.
The Complaint alleges that Google’s anticompetitive practices have had harmful effects on competition and consumers. It states that Google has foreclosed any meaningful search competitor from gaining vital distribution and scale, eliminating competition for a majority of search queries in the United States.
By restricting competition in search, Google’s conduct is claimed to have harmed consumers by reducing the quality of search (including on dimensions such as privacy, data protection, and use of consumer data), lessening choice in search, and impeding innovation.
By suppressing competition in advertising, Google is accused of having the power to charge advertisers more than it could in a competitive market and to reduce the quality of the services it provides them.
The case calls Google "the monopoly gatekeeper to the internet for billions of users and countless advertisers worldwide". Google, which is owned by Alphabet Inc., has a market value of more than $1 trillion.
"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 Deputy Attorney General Jeffrey A. Rosen.
You can read the full 64-page complaint here.
What Google says
Google was quick to respond to the lawsuit on Twitter. It's likely that bosses knew this was coming, as the antitrust case had been heavily anticipated. Google's Public Policy account swiftly claimed the case was "deeply flawed", promising to release a full statement the same day.
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. We will have a full statement this morning.— Google Public Policy (@googlepubpolicy) October 20, 2020
That statement came in the form of an extensive blog post titled: A deeply flawed lawsuit that would do nothing to help consumers. Google's defense is based around its claim that everyone uses Google because they choose to (because it's the best product), and not because they're forced to or because they can't find alternatives.
The post, written by SVP of Global Affairs, Kent Walker, also claims that the lawsuit 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.
The blog post details how simple and easy it is to change search engines on both desktop and mobile. Google says that Apple uses Google Search in its Safari browser because it thinks Google is the best - something that Tim Cook is on record as believing. Google also highlights that changing your search engine in Safari is easy, and that in iOS14 with the new widgets, it’s even easier.
The post goes on to detail how Google doesn't come preloaded on Windows devices, and that in the Edge browser on Windows devices, Bing is the default search engine.
On Android, things are a little more complicated for Google, where Mountain View has promotional agreements with carriers and device makers to feature Google services. However, it says that these agreements enable Google to distribute Android for free, claiming that the practice directly reduces the price that people pay for phones. A series of GIFs demonstrate how to add a Bing search widget on Samsung devices, and how rival email and browser apps are often pre-installed on Android smartphones.
Perhaps the most interesting part of Google's response is the claim that it doesn't only compete with other search engines. "People look for news on Twitter, flights on Kayak and Expedia, restaurants on OpenTable, recommendations on Instagram and Pinterest," Walker writes. "When searching to buy something, around 60 percent of Americans start on Amazon."
Google does not dispute that it pays to promote its own products, saying that countless other businesses do it too. It compares its practices to that of a cereal brand paying a supermarket to stock its products at the end of a row or on a shelf at eye level. It also notes that Mozilla’s Firefox browser is funded almost entirely by revenue from search promotional agreements.
What happens now?
Google says that it is confident that a court will conclude that this suit doesn’t square with either the facts or the law. In the meantime, the company says it will remain absolutely focused on delivering the free services that help Americans every day, "because that’s what matters most".
No date has been set for when the charges will be put in front of Google, but the US district judge Amit Mehta has already been chosen to hear the case. Most antitrust cases don't go to court, but judge Mehta does have experience with this kind of case.
If the case does go to court, The DOJ has to prove that Google gained or maintained monopoly power through abusive conduct. Google will claim that user choice has led to its undisputed dominance. And it's there where this case will be won and lost. Did Google unfairly steer consumers away from its rivals or did they get there by choice?
Laura Petrone, Senior Analyst in the Thematic Research Team at GlobalData, a leading data and analytics company, offers her view: "The lawsuit against Google is a watershed moment for Big Tech regulation. There is now a consensus on both sides of the Atlantic in favor of tackling data monopolies."
Perhaps the biggest winner of this whole saga, depending on how it plays out, could be Microsoft and its Bing search engine. It could also be an opportunity for lesser-known, smaller search engines, such as Ecosia. The eco-friendly search engine, which has 15 million users in the United States, uses advertising revenues to plant trees in areas affected by deforestation.
Whatever happens, we'll be watching this one closely. What do you think about the landmark lawsuit? Are we on the verge of change or will it be business as usual for Google at the end of all of this? Let us know below the line.