The United States accused Google of illegally using its market power.
Washington:
The United States sued Google on Tuesday, accusing the $ 1 trillion company of illegally using its market power to hamper rivals in the biggest challenge of big tech power and influence in decades. decades.
The Justice Department lawsuit could lead to the dissolution of an iconic company that has become almost synonymous with the Internet and which has assumed a central role in the daily lives of billions of people around the world.
Such an outcome is far from certain, however, and the matter will likely take years to resolve.
The lawsuit marks the first time the United States has cracked down on a major tech company since it sued Microsoft Corp for anti-competitive practices in 1998. A settlement has left the company untouched, though the government’s earlier foray into it. The Big Tech antitrust – the 1974 case against AT&T – led to the dissolution of the Bell system.
The federal government’s complaint against Alphabet Inc., which alleges that Google acted illegally to maintain its position in search and search advertising on the Internet, was joined by 11 states. “In the absence of a court order, Google will continue to execute its anti-competitive strategy, crippling the competitive process, reducing consumer choice and stifling innovation,” said the lawsuit.
The government said Google has nearly 90% of all general search engine queries in the United States and almost 95% of mobile searches.
Attorney General Bill Barr said his investigators found that Google did not compete on the quality of its search results, but instead bought its success through payments to mobile phone makers and others. .
“The end result is that no one can challenge Google’s dominance in search and search advertising,” Barr said.
When asked on a conference call whether the department is looking for a break-up or other remedy, Ryan Shores, an official with the Department of Justice, said: “Nothing is out of the question, but a matter of appeal is best handled by the court after having had a chance. to hear all the evidence. “
In its complaint, the Justice Department said Americans were hurt by Google’s actions. In its “request for redress”, it said it was seeking “structural redress necessary to remedy any anti-competitive damage”. “Structural relief” in antitrust matters generally means the sale of an asset.
“Ultimately, it is consumers and advertisers who suffer from less choice, less innovation and less competitive advertising prices,” the lawsuit said. “We are therefore asking the court to break Google’s grip on search distribution so that competition and innovation can take hold.”
Google called the lawsuit “deeply flawed”, adding that people “use Google because they choose to do so – not because they have to or because they can’t find alternatives.”
Investors seemed to ignore the news of the lawsuit, sending Alphabet shares up 1.9% to $ 1,563.51 on Tuesday afternoon.
“It’s like locking the proverbial door after the horse has locked itself,” said Neil Campling, head of research on technology media and telecommunications at Mirabaud Securities in London, who added that Google had already invested in billion dollars in infrastructure, technology and talent. “You can’t just roll out a decade of meaningful progress.”
POLITICAL ELEMENT
Tuesday’s federal trial marks a rare moment of agreement between the Trump administration and Progressive Democrats. US Senator Elizabeth Warren tweeted on September 10, using the hash tag #BreakUpBigTech, that she wanted “swift and aggressive action.”
Yet, a few days before the US presidential election, the timing for the filing of the dossier could be considered a political gesture, as it fulfills a promise made by President Donald Trump to his supporters to ask certain companies to return accounts for the supposedly suffocating conservative voices.
Republicans often complain that social media companies, including Google, are taking steps to reduce the spread of conservative views on their platforms. Lawmakers have sought, without explaining how, to use antitrust laws to compel Big Tech to end these so-called limitations.
The lawsuit highlighted the billions of dollars Google is paying smartphone makers like Apple Inc, Samsung and others to make Google’s search engine the default search engine on their devices.
That means competing search engines never get the scale they need to improve their algorithms and thrive, according to the complaint.
“General search services, search advertising, and general search text advertising require complex algorithms that constantly learn which organic results and ads best meet user queries,” the government said in its complaint. “By using distribution deals to lock down the scale for itself and deny it to others, Google illegally maintains its monopolies.”
Google has managed to protect its profits derived from the Android mobile operating system, which is officially open source, but companies that modify it are excluded from lucrative revenue-sharing deals.
Justice Department investigators found that an internal Google analysis of restrictive agreements determined that only 1% of Google’s global Android search revenue was at risk of being lost to competitors.
“This analysis noted that the growth in Google’s search ad revenue from Android distribution was” driven by increased platform protection efforts and agreements, “” the complaint revealed.
OTHER CHALLENGES
The 11 states that joined the trial all have Republican attorneys general.
Further prosecutions could be pending as investigations by state attorneys general into Google’s broader business are ongoing, along with an investigation into its broader digital advertising business. Texas-led attorneys general are expected to file a separate digital advertising-focused lawsuit as early as November, while a Colorado-led group is considering a broader lawsuit against Google.
The lawsuit comes more than a year after the Department of Justice and the Federal Trade Commission launched antitrust investigations into four big tech companies: Amazon.com Inc, Apple, Facebook Inc and Google.
Seven years ago, the FTC settled an antitrust investigation of Google over alleged bias in its search function to favor its products, among other things. The settlement came over objections from some attorneys for FTC staff.
Google has faced similar legal challenges overseas.
The European Union fined Google $ 1.7 billion in 2019 for preventing websites from using Google rivals to find advertisers, $ 2.6 billion in 2017 for promoting its own buying activity in research and $ 4.9 billion in 2018 for blocking rivals on its Android wireless operating system.
