Google officially charged with antitrust by Justice Department – MarketWatch
The Justice Department formally charged Alphabet Inc.s Google with antitrust violations Tuesday, the first major action against Big Tech for its staggering market power and valuations.
Google is a monopolist in the general search services, search advertising, and general search text advertising markets, according to the Justice Departments complaint, filed in federal court in Washington, D.C., on Tuesday morning. Google aggressively uses its monopoly positions, and the money that flows from them, to continuously foreclose rivals and protect its monopolies.
Deputy Attorney General Jeff Rosen said Tuesday morning that Google GOOG GOOGL was charged with violating the Sherman Act with its search and search-advertising businesses after a 16-month investigation. The specific issues referenced included Googles deals to be the default search engine on popular online services and browsers, Google tying its search engine into phones running Alphabets Android operating system, and anti-forking agreements that manufacturers who use Android sign.
Google has maintained its monopoly power though exclusionary practices that have harmed competition, Rosen said in a teleconference with the news media early Tuesday.
Todays lawsuit by the Department of Justice is deeply flawed, Google Chief Legal Officer Kent Walker said in a blog post. People use Google because they choose to, not because theyre forced to, or because they cant 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.
Proceedings were filed in federal court in Washington, D.C., for United States of America et al vs. Google LLC; states joining the U.S. in that suit were listed on the docket as Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina, and Texas.
Google is now the unchallenged gateway to the internet for billions of users world-wide. As a consequence, countless advertisers must pay a toll to Googles search advertising and general search text advertising monopolies; American consumers are forced to accept Googles policies, privacy practices, and use of personal data; and new companies with innovative business models cannot emerge from Googles long shadow, the initial complaint in the case states.
For the sake of American consumers, advertisers, and all companies now reliant on the internet economy, the time has come to stop Googles anticompetitive conduct and restore competition.
See also: Google could face antitrust charges from Justice Department this month
Seven other states that were investigating Google Colorado, Iowa, Nebraska, New York, North Carolina, Tennessee, and Utah will continue investigating, and any eventual complaint would seek to consolidate with the feds charges and litigate cooperatively, as in the Microsoft Corp. MSFT, +0.62% antitrust case during the dot-com boom, New York Attorney General Letitia James said Tuesday morning.
For more: Big Tech was built by the same type of antitrust actions that could now tear it down
Charges center on Googles search business, which dominates the key arena of finding information on the internet world-wide, with Justice Department officials noting Tuesday that Google receives 80% of search queries in the United States. Google has repeatedly denied any wrongdoing, and insists consumers have access to other sources for information than its dominant search engine, such as Twitter Inc. TWTR, +0.31% for news and Amazon.com Inc. AMZN, +0.88% for products. The company says it competes for advertising with Facebook Inc. FB, +2.39%, Amazon, Oracle Corp. ORCL, +0.35%, Verizon Communications Inc. VZ, +1.09%, and others.
Competitors such as Yelp Inc. YELP, -0.47% have been vocal in seeking relief from regulatory agencies, as they say that Google competes with them unfairly and reaps advertising dollars in exchange.
By systematically reducing the quality of its search results in order to entrench and extend its search and search advertising monopolies, Google is directly harming consumers, Yelps senior vice president for public policy, Luther Lowe, wrote in a blog post Tuesday. Yelp applauds the work of the DOJ and encourages swift action by state attorneys general who are conducting parallel investigations into other aspects of Googles business.
The complaint does not specify what specific changes are sought to rectify Googles market power, instead requesting structural relief as needed to cure any anticompetitive harm and restore competitive conditions in the markets affected by Googles unlawful conduct.
One potential risk, as outlined in an AB Bernstein note Tuesday, is a search choice screen on new devices including the removal of exclusivity deals, and unbundling of Android and G-Suite. The filing called out Googles monopoly in search advertising and general search text advertising,' Bernstein analyst Mark Shmulik wrote. The careful wording aims to exclude Facebook (non-search digital advertising) and Amazon (product-specific search) as competitors.
The DOJ-Google suit is expected to be followed by legal actions by the Federal Trade Commission against Facebook later this year. Amazon and Apple Inc. AAPL, -0.61% are also being investigated for their business practices. In Tuesdays event, Justice Department officials noted Tuesday that investigations into other tech issues were continuing.
That has little sway on Congress, the Trump administration, and the Biden-Harris campaign, all of whom agree that techs biggest names have too much power. Everyone from liberal Democrats to conservative Republicans have painted tech as the modern-day corporate and cultural boogeyman, and state attorneys general were pushing their own suits before several Republican-controlled states apparently signed on with the feds for their suit Tuesday morning. The Senate Commerce Committee has scheduled a hearing with chief executives of Google, Facebook, and Twitter on Oct. 28.
Read more: Congress should consider breaking up Big Tech and limiting acquisitions, House report says
The Google suit, as well as anticipated Facebook action, will spill into 2021 and beyond, and would most likely continue under a Democratic-controlled House and Senate. While a House subcommittee on antitrust has urged solutions from breaking up large tech companies to restricting their ability to gobble up some acquisitions, a handful of Senators led by Elizabeth Warren, D-Mass., and Amy Klobuchar, D-Minn., have advocated similar measures and the notion of revisiting antitrust law.
Read more: If the Democrats win the Senate, Big Tech better be ready for a bigger fight
Antitrust enforcement against Google is long overdue, Rep. David Cicilline, D-R.I., said in a statement Tuesday morning; he leads the subcommittee that released the antitrust report.
It is critical that the Justice Departments lawsuit focuses on Googles monopolization of search and search advertising, while also targeting the anticompetitive business practices Google is using to leverage this monopoly into other areas, such as maps, browsers, video, and voice assistants.
The Justice complaint does not portend an onslaught of legislation against tech companies but could signal consumer-protection laws down the line, Shubha Ghosh, a law professor specializing in tech issues at Syracuse University, told MarketWatch.
The Department of Justices case against Google is the first salvo in a coming war against big tech companies, added Will Rinehart, senior fellow at the Center for Growth and Opportunity.
Read more: The road map to antitrust changes contains many potential routes following charges against Google
Nonetheless, the history of antitrust actions against tech no matter how bold and time consuming often comes to naught, cautions Bhaskar Chakravorti, dean of global business at Tufts University. He points to the 1956 case against the Bell System monopoly that was left intact after a seven years; a 13-year antitrust action against International Business Machines Corp. IBM, +0.20% in which it remained unbroken; and the 1998 action against Microsoft Corp. MSFT, +0.62% that ended three years later with a settlement and the company intact.
So far, there has been a scattershot, muddled attempt to rein in Big Tech this year from multiple government agencies against several companies in distinctly different markets, Chakravorti told MarketWatch. There is one good thing about the Google action: It is the focus of a single agency with specific complaints.
Greg Sterling, vice president of insights at internet marketing service Uberall, told MarketWatch it is unlikely Google will emerge totally unscathed [from the lawsuit] but far from certain that the requested structural remedies will take place.
Consumer advocates called the antitrust lawsuit long overdue but narrow in scope. Google has nine products with more than a billion users, and it has market power in maps, online display advertising, and video, as well as general search, browsers, and niche but significant areas like access to airline ticketing information, Sarah Miller, executive director of the American Economic Liberties Project, said in a statement. Fortunately, efforts to address Googles control over online commerce are growing.
A major technology organization, meanwhile, claimed the DoJ suit will harm consumers and blunt innovation.
Government action to weaken American innovators like Google will not help the U.S. maintain its status as a global tech leader, Gary Shapiro, CEO of Consumer Technology Association, said in a statement. Instead, such steps will cede market share to Chinese competitors, handing China a massive gift in its efforts to catch and surpass U.S. tech companies.
Googles class C shares were trading about 2% higher Tuesday afternoon.
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Google officially charged with antitrust by Justice Department - MarketWatch