Google CEO Sundar Pichai has insisted in the past that the company runs fairly. The lawsuit has not yet been filed
The Department of Justice on Tuesday filed an antitrust lawsuit against Google, claiming it unlawfully maintains a monopoly to preserve its position as the ‘gatekeeper to the internet’ and stop any would-be competitors from even coming close to having a bite of the market.
The complaint alleges that Google dominates the market unfairly by making billions in ad revenue then using the money to cement its presence on smartphones and devices with ‘exclusionary’ deals with the likes of Apple, Samsung, LG to ensure it is the only search engine promoted anywhere.
It makes it not only unfair for consumers who are deprived of ‘innovation and choice’ but, according to the government, shuts out any possible competitor like Yahoo or Bing from promoting their product anywhere and in turn, ‘starves’ them of the opportunity to compete.
HOW GOOGLE DOMINATES THE MARKET
1) Dominating search engine space
Google, through both its deals placing its search engine above others on devices and through public interest in it, accounts for 80 percent of every internet search in the US
In 2020, it accounted for 94% of all mobile searches in the US
2) Monetizing its dominance through ads
Google monetizes the amount people use it with ads which generates around $40billion in revenue every year
3) Spending its billions to cement its dominance with ‘exclusionary deals’
With the money it makes through ads, Google pays companies like Apple, LG and others to block out any of its competitors from having their search engine preferred on devices
Among the deals is one with Apple. Google is the default on Safari on iPhones and it’s also the default on Siri. The deal amounts to up to a fifth of Apple’s worldwide income which last year would have been around $11billion
Eleven states have co-signed on the lawsuit – Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina and Texas. Each state’s Attorney General is Republican.
White House Adviser Larry Kudlow says Trump also consulted the DoJ on the lawsuit, which is the result of a 16-month investigation and a promise from AG Bill Barr to go after the predominantly Democrat world of big tech.
It comes less than two weeks before the election but Deputy Attorney General Jeffrey Rosen on Tuesday told reporters that the timing was not political. Big tech CEOs are due to go before congress to answer questions on unrelated issues next week.
The lawsuit lays out how Google pays companies like Apple, LG, Motorola, Samsung, AT&T, T-Mobile, Verizon, Mozilla, Opera and UCWeb ‘billions’ to make sure it is the default search engine on smartphones, TVs and other devices that the companies produce.
They also, according to prosecutors, enter deals that specify that no other search engine can be installed on the devices. Among the contracts is one Google has with Apple that makes it the default on the iPhone Safari browser and Siri.
The money Apple makes from Google on the deal amounts for 15-20 percent of its worldwide net income, according to the complaint. In 2019, that would have amounted to $11billion.
The deal is so vital to Google that the company views losing its default status on Apple devices as a ‘Code Red’ scenario. In 2018, the complaint states, a senior Apple employee wrote to a Google counterpart: ‘Our vision is that we work as if we are one company.’
In an announcement on Tuesday morning, Attorney General Bill Barr said: ‘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.
‘Since my confirmation, I have prioritized the Department’s review of online market-leading platforms to ensure that our technology industries remain competitive.
‘This lawsuit strikes at the heart of Google’s grip over the internet for millions of American consumers, advertisers, small businesses and entrepreneurs beholden to an unlawful monopolist.’
The lawsuit contains graphs and charts chronicling how Google has grown its market dominance over the last 10 years, shutting out competitors by boosting its ad revenues
In 2020, Google dominated 94% of the mobile search engine market across the US – no other competitor comes close
Central to the government’s complaint is that Google makes its money through ads, dominating the space on its search engine with shopping ads and text ads, which companies pay a premium for to appear first in search results
According to the government’s complaint, Google then takes the billions it makes in ads and enters into ‘exclusionary’ agreements with other tech companies to ensure it is the only search engine that is installed or encouraged on their devices. It promotes more ads for them and keeps the cycle going
Google, in response, called the lawsuit ‘deeply flawed’ but would not give further comment.
‘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,’ the company said in a statement.
On a call with reporters on Tuesday morning, Deputy Attorney General Jeffrey Rosen said Google had had some ‘early success’ that ‘no one begrudges’ but that they’d grown into a ‘monopolist’ and advertising ‘behemoth’.
Google met with the DoJ before the lawsuit was filed but officials would not discuss whether or not they’d had settlement talks.
‘For years, there have been broad bipartisan concerns about business practices in our online economy.
‘Google is the gatekeeper to the internet and a search advertising behemoth…it has maintained its monopoly power through exclusionary uses,’ he said.
The 64-page complaint begins: ‘Two decades ago, Google became the darling of Silicon Valley as a scrappy startup with an innovative way to search the emerging internet.
The news boosted shares of Alphabet, Google’s parent company, as analysts predicted breaking the company up would bring value out of it
‘That Google is long gone. The Google of today is a monopoly gatekeeper for the internet, and one of the wealthiest companies on the in planet, with a market value of $1 trillion and annual revenue exceeding $160 billion.
‘For many years, Google has used anticompetitive tactics to maintain and extend its monopolies in the markets for general search services, search advertising, and general search text advertising—the cornerstones of its empire.’
Shares of Alphabet, Google’s parent company, were up by more than 1 percent after the announcement. Analysts were quick to predict that breaking it up could extract more value from the company. It comes amid growing questions and concerns in the government over the power of big tech.
Rosen insisted on Tuesday that the lawsuit was not politically driven.
‘There is non-partisan, bipartisan, across the board interest.
‘I want to make sure there’s no confusion… there are people and concerns that are very separate from the antitrust issues we’re talking about today.
Deputy AG Jeffrey A. Rosen on Tuesday told reporters Google had ‘unlawfully maintained a monopoly’
‘The antitrust case is very separate from the questions of social media about skew or bias that have been the subject or at least for us, section 230, that’s a totally separate set of concerns dealt with by different people in the department,’ he told reporters.
Facebook has come under similar scrutiny in recent years for running a monopoly on how people communicate, through Facebook, Instagram or WhatsApp – all of which Mark Zuckerberg owns.
Facebook, Twitter and Google – all notoriously run by left-leaning businessmen and predominantly out of California – have also been accused of using their power to exert political bias over the billions of people who use them.
Google has long been accused or favoring left-wing media in Google News. Its CEO, Sundar Pichai, has claimed repeatedly that an algorithm determines what is shown and nothing else.
Last week, Facebook and Twitter were accused of election interference by blocking an unflattering article about Joe Biden and his dealings with Ukraine.
Facebook claimed it wanted its fact checkers to vet the story, without explanation, and Twitter said it violated privacy laws.
The lawsuit is the result of a years-long investigation into Google.
Not only does it occupy the search engine space but Alphabet, its parent company, also owns YouTube, which has dominated online video platforms for years.