On Tuesday Department of Justice (DOJ) joined by various states filed a long-awaited complaint in the District of Columbia District Court against Google for antitrust violations, brought under Section 2 of the Sherman Act “to restrain Google LLC (Google) from unlawfully maintaining monopolies in the markets for general search services, search advertising, and general search text advertising in the United States through anticompetitive and exclusionary practices, and to remedy the effects of this conduct.”
The DOJ claimed that the one-time startup is now “a monopoly gatekeeper for the internet, and one of the wealthiest companies on the planet, with a market value of $1 trillion and annual revenue exceeding $160 billion.” The DOJ asserted that for years, Google has engaged in anticompetitive conduct to “maintain and extend its monopolies” in its markets. The DOJ noted that internet searches on mobile devices have greatly increased in the United States.”For a general search engine, by far the most effective means of distribution is to be the preset default general search engine for mobile and computer search access points.” Consequently, “[t]his leaves the preset default general search engine with de facto exclusivity,” particularly for mobile devices.
The DOJ averred that Google has done just that. Purportedly, for years Google has entered into exclusionary agreements, including tying agreements, and engaged in anticompetitive behavior “to lock up distribution channels and block rivals.” Moreover, Google allegedly pays billions of dollars to distributors, manufacturers, and wireless carriers each year to ensure that it is the general search engine default and “in many cases, to specifically prohibit Google’s counterparties from dealing with Google’s competitors.” Furthermore, some agreements mandated that distributors bundle Google apps, including its search engine app, “and feature them on devices in prime positions where consumers are most likely to start their internet searches.” According to the DOJ, “[b]etween its exclusionary contracts and owned-and-operated properties, Google effectively owns and controls search distribution channels accounting for roughly 80 percent of the general search queries in the United States.” The complaint said that Google has approximately 90 percent of all general search engine queries in the country and 95 percent on mobile devices. As a result, the DOJ proffered that Google has “foreclosed competition for internet search” because competitors “are denied vital distribution, scale, and product recognition – ensuring they have no real chance to challenge Google.” The DOJ pointed out that “Google is so dominant that ‘Google’ is not only a noun to identify the company and the Google search engine but also a verb that means to search the internet.” The DOJ used this to further assert its allegations.
The DOJ alleged that Google monetizes its general search engine monopoly through search advertising and general search text advertising. Specifically, “Google uses consumer search queries and consumer information to sell advertising.” In the U.S., “advertisers pay about $40 billion annually to place ads on Google’s search engine results page.” According to the complaint, Google “shares” these revenues “with distributors in return for commitments to favor Google’s search engine,” which the DOJ proffered that these “enormous payments create a strong disincentive for distributors to switch,” and the payments “raise barriers to entry for rivals,” especially, for small search engine companies. As a result, Google has allegedly “created continuous and self-reinforcing monopolies in multiple markets.”
According to the DOJ, “Google’s anticompetitive practices are especially pernicious because they deny rivals scale to compete effectively.” Specifically, general search, search advertising, and general search text advertising allegedly “require complex algorithms that are constantly learning which organic results and ads best respond to user queries,” as a result, “the volume, variety, and velocity of data accelerates the automated learning” process. Google has purportedly illegally maintained its monopoly through its distribution agreements. The DOJ added that “Google’s grip over distribution also thwarts potential innovation.” For example, a subscription-based search engine that does not rely on monetizing user information through advertising, or a search engine like DuckDuckGo, which focuses on its “privacy-protective policies.” However, the DOJ averred that “Google’s control of search access points means that these new search models are denied the tools to become true rivals: effective paths to market and access, at scale, to consumers, advertisers, or data.” Consequently, the DOJ claimed that this further solidifies Google’s market dominance.
As a result of the aforementioned conduct, the DOJ proffered that Google’s alleged conduct is “anticompetitive under long-established antitrust law.” The DOJ pointed to United States v. Microsoft from approximately 20 years ago, which found that “anticompetitive agreements by a high-tech monopolist shutting off effective distribution channels for rivals, such as by requiring present default status (as Google does) and making software undeletable (as Google also does), were exclusionary and unlawful under Section 2 of the Sherman Act.” Furthermore, the DOJ claimed that at the time, “Google claimed Microsoft’s practices were anticompetitive, and yet, now, Google deploys the same playbook to sustain its own monopolies.” Additionally, the DOJ noted that Google has been careful about the language it has used to refer to its own conduct.
According to the DOJ, without relief, Google will continue to engage in this anticompetitive conduct, which harms Americans by forcing them “to accept Google’s policies, privacy practices, and use of personal practices,” affects advertisers who “must pay a toll” for Google’s purported monopolies and prevents new companies from competing. The DOJ concluded that “[f]or the sake of American consumers, advertisers, and all companies now reliant on the internet economy, the time has come to stop Google’s anticompetitive conduct and restore competition.”
The United States is represented by the Technology & Financial Services Section of the U.S. Department of Justice’s Antitrust Division as well as various offices of attorneys general for several states, including Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Missouri, Mississippi, Montana, South Carolina, and Texas.
The government’s antitrust action comes after Google and other tech giants faced a congressional hearing in July for their alleged anticompetitive behavior; the Senate Committee on Commerce, Science, and Transportation subpoenaed Sundar Pichai the CEO of Alphabet, the parent company of Google, for a testimony on Section 230; and the House of Representatives Judiciary Committee’s Antitrust subcommittee issued a 405-page report concluding a 16-month investigation into tech giants, such as Google.