Landmark federal investigation into Google could cause serious trouble for Big Tech
Google is facing an anti-trust lawsuit in a landmark case brought against it by the US Department of Justice, together with eleven US states. No details have emerged as to what remedies the department is seeking but the case looks set to be explosive with justice department officials emphasising that “Nothing’s off the table” and talks of “structural relief” which could suggest breaking up the company.
The case filed does not pull any punches in its language calling Google “a monopoly gatekeeper for the internet”. It further accuses the tech giant of using “anticompetitive tactics to maintain and extend its monopolies in the markets for general search services, search advertising, and general search text advertising”.
In concrete terms, the case focuses on Google paying various companies – phone and computer manufacturers, wireless carriers, and web browsers – billions of dollars to ensure Google is their default search engine. These agreements sometimes also ban these companies from dealing with Google’s rivals, and/or require them to also accept and prominently feature a bundle of Google apps.
The result is Google rakes nearly 60% of all searches, rising to 80% when one includes queries funnelled through other Google owned service like Chrome. The case further alleges that Google uses this “search monopoly” to build another monopoly in online advertising.
Google has vigorously pushed back against these claims. In a blog post, Kent Walker, Google’s Chief Legal Officer and Senior Vice President of Global Affairs, called the case “A deeply flawed lawsuit that would do nothing to help consumers”. In it he argues that paying for prominent positioning is a practise all sorts of companies pay for – e.g. cereal companies paying to have their boxes place prominently in supermarkets. He also claims Google faces vigorous competitors who also engage in these practises.
Still, things look bad for Google. In an age marked by rancorous political division, a suspicion of Big Tech has emerged as a rare point of bi-partisan consensus in the US. Democrats and Republicans are already both up in arms against social media – the former accusing big social media companies of churning out disinformation and the latter of censoring conservatives. The latter of these two sets of charges sometimes gets thrown at Google as well.
A recent inquiry of the House Judiciary Committee’s antitrust panel also produced an absolutely scathing report, which also found that the companies at the heart of its enquiries – Google, Facebook, Amazon, and Apple – wielded “monopoly power”. It went on to declare “These firms have too much power, and that power must be reined in and subject to appropriate oversight and enforcement, our economy and democracy are at stake.”
Meanwhile, Google’s protestations that consumers are very satisfied with its services will likely cut very little ice. There is a strong precedent for this sort of case – most notably 2001’s United States vs Microsoft, which took aim at Microsoft pre-installing its software on devices sold to consumers.
The Department of Justice will also likely be keen to avoid a repeat of previous failed actions against Google. Notably, in 2013 Google managed to convince Federal Trade Commission not to take any formal action following its two-year investigation of the company – in return for Google voluntarily changing its business practises. The fact that Google is now once again facing accusations of anti-competitive practises gives some indication of how effective this is seen to have been.
Perhaps most fundamentally there also seems to be a growing shift in how anti-trust is thought about. Harm to consumers has been the litmus test used to decide whether anti-trust action is needed over the past few decades.
However, as Matt Stoller, a ferocious critic of modern monopolies, has warned for sometime, monopolies can choke out smaller competitors and distort politics. The approach consciously draws upon the work of anti-monopoly crusader and early 20th century Supreme Court Justice, Louis Brandeis. References to Brandeis, and early 20th century trust-busting campaigns, now peppers the speech of many influential figures on Capitol Hill can only seem ominous for Google, and the other Big Tech behemoths.