Explained: US’ Landmark Antitrust Case Against Google’s ‘Monopoly’

It’s the first time the US govt is initiating antitrust action against a tech company since Microsoft in the 1990s.

It’s the first time that the US government is initiating antitrust action against a tech company since Microsoft in the 1990s.

(Image: Aroop Mishra/The Quint)

After a year of investigation into Google’s business practices, the United States Department of Justice has filed a landmark antitrust lawsuit against the tech giant.

The Justice Department, describing Google as a “monopoly gatekeeper for the internet,” has alleged in its 64-page lawsuit that the $1 trillion company is “unlawfully maintaining monopolies in the markets for general search services, search advertising, and general search text advertising in the United States.”

The agency has accused Google of blocking competition and preventing other search engines from scaling their services by entering into exclusive agreements with device manufacturers like Apple and Samsung as well as telecom service providers.

While the lawsuit refers to Google’s alleged anti-competitive practices with regards to American companies, consumers and advertisers, the core allegations have found an echo across the European Union and, in recent times in India as well.

The Quint dissects and decodes the lawsuit, Google’s response and explains why this is a landmark case, one that may take years to actually go to trial and what implications it could have for Google, India and the internet economy at large.

WHAT ARE THE CORE ALLEGATIONS AGAINST GOOGLE?

The US Justice Department’s lawsuit begins its allegations by stating “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.”

It is important to note that the Department has gone after the Google’s core search engine services, which lies at the foundation of its conglomerate of other services like advertising, video, data mining.

Having investigated present day Google, the agency has listed the following as its primary allegations against Google’s alleged anti-competitive practices:

• They have had harmful effects on competition and consumers
• Entering exclusionary agreements with companies like Apple, LG, Samsung to to be their default search engine
• Google, through its search engine, has become the monopoly gatekeeper of the internet
• Other search engines have no real chance of competing as they are “denied vital distribution, scale, and product recognition”
• Denying competitors to scale effectively
• Blocking vital distribution channels for competitors and, by doing so, Google “thwarts potential innovation.”

WHAT DOES GOOGLE HAVE TO SAY?

In a strong rebuttal, Google has responded to the allegations, calling them “deeply flawed”. Google’s response has two primary parts:

1. Americans don’t use Google because they have to – they use it because they choose to
2. Our competitors are readily available too, if you want to use them.

In an official blog, Kent Walker, SVP of Global affairs, writes, “People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.”

Defending its policies and practices, Walker stated the lawsuit would only “artificially prop up lower-quality search alternatives and raise phone prices.”

Describing the antitrust allegations as “dubious”, the company went on to say, “Yes, like countless other businesses, we pay to promote our services, just like a cereal brand might pay a supermarket to stock its products at the end of a row or on a shelf at eye level.”

Extending the comparison, Google says “we negotiate agreements with many of those companies for eye-level shelf space.”

WHY IS THIS A LANDMARK CASE?

This lawsuit by the Justice Department has come as the most aggressive action against a large Silicon Valley company in decades. Also, it comes as a time when the US economy is buoyed in large part, by big tech companies with tentacles in every corner of the world.

The last time the US government brought in this severe an antitrust action against a company was against Microsoft in the 1990s.

According to a TechCrunch report, the Microsoft monopoly case “began as an investigation in 1992, was filed as a suit in 1997 and finally went into effect (as a settlement) in 2001.”

“Some argue that the government action against Bill Gates’ software giant reshaped the technology industry and set the stage for Google and its peers to flourish. Now, ironically, it’s Google’s turn in the monopoly hot seat,” the report adds.

According to The New York Times, “A victory for the government could remake one of America’s most recognizable companies and the internet economy that it has helped define.”

Moreover, the lawsuit could also set off a cascade of other lawsuits from state attorneys general as nearly all states in the US have been conducting their own investigations into Google.

WHY HAVE SOME US STATES SUPPORTED THE ACTION AND SOME HAVEN’T?

Along with the Department of Justice, eleven other US states have signed onto the lawsuit, all with Republican attorney generals. These include Texas, Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Michigan, Missouri, Montana, and South Carolina.

Over the last year, state attorney generals have conducted separate but parallel investigations into Google’s alleged antitrust practices.

While no Democrat state AG signed onto the lawsuit, New York Attorney General Letitia James and the attorneys general of Colorado, Iowa, Nebraska, North Carolina, Tennessee and Utah made their own statement

“We plan to conclude parts of our investigation of Google in the coming weeks. If we decide to file a complaint, we would file a motion to consolidate our case with the DOJ’s,” their statement said, adding, “We would then litigate the consolidated case cooperatively, much as we did in the Microsoft case.”

WHAT DOES THE US JUSTICE DEPARTMENT SEEK?

Through filing the lawsuit, the Department seeks to stop Google’s anti-competitive conduct and restore competition for American consumers, advertisers, and all companies now reliant on the internet economy.

“Absent a court order, Google will continue executing its anti-competitive strategy, crippling the competitive process, reducing consumer choice, and stifling innovation,” the lawsuit states.

In its lawsuit, the Departments wants the District Court of Columbia to “Adjudge and decree that Google acted unlawfully” to maintain general search services, search advertising, and general search text advertising monopolies in violation of The Sherman Act.

“For the sake of American consumers, advertisers, and all companies now reliant on the internet economy, the time has come to stop Google’s anti-competitive conduct and restore competition.”

US Justice Department lawsuit against Google

WHAT ABOUT GOOGLE’S ANTITRUST ACTIONS IN INDIA AND EUROPE?

Indeed, while Google hasn’t faced as much heat in the United States up till now, the European Union has been far more aggressive in its actions against the tech giant.

Over the last few years, “The European Union has brought three antitrust cases against Google in recent years, focused on its search engine, advertising business and Android mobile operating system,” The New York Times reported.

In India, a coalition of Indian founders, led by PayTm CEO Vijay Shekhar Sharma, have complained about Google’s abuse of monopoly powers in its app store.

On 3 October, 35-40 Indian founders held an hour-and-a-half long virtual meeting with the Union Electronics & IT Ministry, to “discuss the grievances regarding App Store’s billing policy, its 30 percent commission,” CNBC reported.

According to reports, a group of about 15 app founders also held a virtual meeting with officials of the Competition Commission of India to apprise it of their concerns regarding Google’s Play Store policies.