The U.S. Justice Department on Tuesday sued Google for antitrust violations, alleging that it abused its dominance in online search and advertising to stifle competition and harm consumers.
The lawsuit marks the government’s most significant attempt to protect competition since its groundbreaking case against Microsoft more than 20 years ago. It could be an opening salvo ahead of other major government antitrust actions, given ongoing investigations of major tech companies including Apple, Amazon and Facebook at both the Justice Department and the Federal Trade Commission.
“Google is the gateway to the internet and a search advertising behemoth,” U.S. Deputy Attorney General Jeff Rosen told reporters. “It has maintained its monopoly power through exclusionary practices that are harmful to competition.”
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Antitrust cases in the technology industry have to move quickly, he said. Otherwise “we could lose the next wave of innovation.”
Lawmakers and consumer advocates have long accused Google, whose corporate parent Alphabet Inc. has a market value just over $1 trillion, of abusing its dominance in online search and advertising to stifle competition and boost its profits. Critics contend that multibillion-dollar fines and mandated changes in Google’s practices imposed by European regulators in recent years weren’t severe enough and that structural changes are needed for Google to change its conduct.
Google responded immediately via tweet: “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.”
The case was filed in federal court in Washington, D.C. It alleges that Google uses billions of dollars collected from advertisers to pay phone manufacturers to ensure Google is the default search engine on browsers.
President Donald Trump’s administration has long had Google in its sights. One of Trump’s top economic advisers said two years ago that the White House was considering whether Google searches should be subject to government regulation. Trump has often criticized Google, recycling unfounded claims by conservatives that the search giant is biased against conservatives and suppresses their viewpoints, interferes with U.S. elections and prefers working with the Chinese military over the Pentagon.
The Justice Department isn’t seeking specific changes in Google’s structure, but it asked the court to order structural relief “as needed to remedy any anticompetitive harm.” That opens the door to possible fundamental changes such as a spinoff of the company’s Chrome browser.
Sally Hubbard, an antitrust expert who runs enforcement strategy at the Open Markets Institute, said it was a welcome surprise to see the Justice Department’s openness to the possibility of structurally breaking up Google, not just imposing conditions on its behaviour as has happened in Europe.
“Traditionally, Republicans are hesitant to speak of breakups,” she said. “Personally, I’ll be very disappointed if I see a settlement. Google has shown it won’t adhere to any behavioural conditions.”
Google controls about 90 per cent of global web searches. The company has been bracing for the government’s action and is expected to fiercely oppose any attempt to force it to spin off its services into separate businesses.
The company vowed to defend itself in court against a “deeply flawed” case that relies on “dubious legal arguments.” Barring a settlement, a trial would likely begin late next year or in 2022.
The company, based in Mountain View, Calif., has long denied the claims of unfair competition. Google argues that although its businesses are large, they are useful and beneficial to consumers. It maintains that its services face ample competition and have unleashed innovations that help people manage their lives.
Most of Google’s services are offered for free in exchange for personal information that helps it sell its ads. Google insists that it holds no special power forcing people to use its free services or preventing them from going elsewhere.
In a Tuesday presentation with a handful of reporters, Google argued that its services have helped hold down the prices of smartphones and that consumers can easily switch away from services like Google Search even if it’s the default option on smartphones and in some internet browsers.
A recent report from a House Judiciary subcommittee, following a year-long investigation into Big Tech’s market dominance, concluded that Google has monopoly power in the market for search. It said the company established its position in several markets through acquisition, snapping up successful technologies that other businesses had developed – buying an estimated 260 companies in 20 years.
The argument for reining in Google has gathered force as the company stretched far beyond its 1998 roots as a search engine governed by the motto “Don’t Be Evil.” It’s since grown into a diversified goliath with online tentacles that scoop up personal data from billions of people via services ranging from search, video and maps to smartphone software. That data helps feed the advertising machine that has turned Google into a behemoth.
The company owns the leading web browser in Chrome, the world’s largest smartphone operating system in Android, the top video site in YouTube and the most popular digital mapping system. Some critics have singled out YouTube and Android as among Google businesses that should be considered for divestiture.