Antitrust Regulation

US justice department sues Google over accusation of illegal monopoly

Today Google is a “monopoly gatekeeper for the internet” that has used “pernicious” anticompetitive tactics to maintain and extend its monopolies

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BIZ PRESS GROUP

The US justice department filed a lawsuit against Google on Tuesday, accusing the tech company of abusing its position to maintain an illegal monopoly over search and search advertising.

“Two decades ago, Google became the darling of Silicon Valley as a scrappy startup with an innovative way to search the emerging internet. That Google is long gone,” the suit alleged.

Today Google is a “monopoly gatekeeper for the internet” that has used “pernicious” anticompetitive tactics to maintain and extend its monopolies.

The antitrust suit is the most significant legal challenge to a major tech company in decades and comes as US authorities are increasingly critical of the business practices of the major tech companies.

The long-awaited case, filed in Washington DC, alleges that Google unfairly acts as a gatekeeper to the web through a series of business agreements that effectively lock out competition.

Justice officials have also challenged an arrangement in which Google’s search application is preloaded, and cannot be deleted, on mobile phones running its Android operating system.

The company pays billions each year to “secure default status for its general search engine and, in many cases, to specifically prohibit Google’s counterparties from dealing with Google’s competitors,” the suit states, in a move that has “foreclosed competition for internet search”.

Google’s alleged anticompetitive practices are “especially pernicious because they deny rivals scale to compete effectively”, and thwart potential innovation, the suit alleged.

In a statement Google called the suit “deeply flawed”. “People use Google because they choose to – not because they’re forced to or because they can’t find alternatives,” the company 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.”

Google dominates online search in the US, accounting for about 80% of search queries.

The suit marks a stunning reversal for Silicon Valley which has largely avoided clashes with Washington even as European regulators have levied huge fines against Google and others.

European regulators have fined Google a total of $9bn for anticompetitive practices. In 2018 Donald Trump attacked the EU decisions. “I told you so! The European Union just slapped a Five Billion Dollar fine on one of our great companies, Google,” Trump tweeted. “They truly have taken advantage of the US, but not for long!”

Since then the mood has changed, with Trump and other conservatives joining liberals including senators Elizabeth Warren and Bernie Sanders in attacking the dominance of tech firms including Amazon, Google, Facebook and others.

While Democrats have largely stuck to criticizing the scale of big tech’s dominance Republicans, including Trump, have accused the major tech companies of censoring conservative speech.

Trump’s attorney general, William Barr, reportedly pushed for the justice department to file its suit against the company against the wishes of lawyers who wanted to take more time on the case.

“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 Barr.

The case comes after a hard-hitting House subcommittee report concluded big tech wielded “too much power” and was censoring political speech, spreading fake news and “killing” the engines of the American economy.

The charges mark the first time since the famous Microsoft lawsuit of 1998 that the US government has accused a company of operating a monopoly under the Sherman Act, a law that dates back to 1890 encouraging competition between enterprises.

In the suit the government lawyers point out that Google was among those who argued Microsoft’s practices were anticompetitive, “and yet, now, Google deploys the same playbook to sustain its own monopolies”.

But the justice department said Google’s parent company Alphabet had learned one thing from the Microsoft case. “Referring to a notorious line from the Microsoft case, Google’s chief economist wrote: ‘We should be careful about what we say in both public and private. ‘Cutting off the air supply’ and similar phrases should be avoided.’”

Google’s employees have also “received specific instructions on what language to use (and not use) in emails”, the suit claimed. Google employees were instructed to avoid using terms such as “crush”, “kill”, “hurt” or “block” competition, and to avoid observing that Google has “market power” in any market.

Google has $120bn in cash and deep political ties in Washington. The case will take years before any decision is reached and will likely set off a cascade of other legal actions.

Attorneys general across the US are already investigating the company and the justice department is conducting a separate investigation into Google’s ad-tech practices.

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