Department of Justice Hits Google with Antitrust Lawsuit

In late October 2020, the Department of Justice filed claims against the technology giant, Google, alleging violations of antitrust laws. The complaint, filed in the United States District Court for the District of Columbia, accuses Google of unlawfully holding a monopoly over search engine markets in violation of the Sherman Act. The suit is precedential in the area of antitrust law in the digital era, and will likely affect other big technology companies in the future.

The Antitrust Allegations

As the complaint describes in its opening paragraphs, “[t]wo 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. The Google of today is a monopoly gatekeeper for the internet, and one of the wealthiest companies on the planet…” The complaint alleges that Google had used anticompetitive tactics to maintain a monopoly over its markets in general search services, search advertising, and general search text advertising.

The complaint also outlines one of Google’s alleged tactics in preserving its monopoly. This is described as securing exclusionary agreements with distributors of its search services (i.e., computers and mobile devices that offer browsers) that secure Google as its preset default search engine. Google accounts for over 90% of the browser usage on mobile devices and 60% of computer browser usage in the United States. As a result, the large majority of searches are covered by Google’s exclusionary contracts and own properties, leaving only a small fraction for competitors.

The complaint further alleges that Google has maintained its hold on search advertising and general search text advertising markets—which is specialized advertising that offers search results based on an algorithmic collection of a user’s data—because it controls a majority of the distribution channels. This control has permitted Google more power to manipulate the quantity of ad inventory “in ways that allow it to charge advertisers more than it could in a competitive market.” The complaint has requested structural relief to cure any anticompetitive harm and to restore competitive conditions in the market. It further requests that the court enjoin Google from continuing to engage in anticompetitive practices.

The present lawsuit is likely to be one of many, as nearly four dozen states and jurisdictions, including New York and Texas, have conducted similar investigations into Google’s marketing practices. Eleven state attorneys general have signed on to support the federal lawsuit.

Google’s Denial

Google has denied any wrongdoing, noting that it still has strong competition in the search market with sites such as Amazon. In the company’s blog post addressing the lawsuit, its Chief Legal Officer, Kent Walker, maintains that, “People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.”

Google also argues that the lawsuit would not help consumers, but “[t]o the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices and make it harder for people to get the search services they want to use.”

The Future of Big Tech

Google is not the only technology company facing scrutiny. In a recent report by lawmakers on the House Judiciary Committee, Google, along with Apple, Amazon, and Facebook were adamantly criticized for its business practices, which the Committee compared to the era of “oil barons and railroad tycoons.” Lawmakers have accused the companies of abusing their dominant positions in the market by setting and dictating the rules and prices in the markets of search, advertising, social networking, and publishing. The Committee had recommended breaking up the companies by preventing their acquisition of start-up businesses. It also proposed reforming antitrust laws altogether in an effort to make them more applicable to the digital era. Like Google, antitrust investigations into Amazon, Apple, and Facebook are being conducted by the Department of Justice, the Federal Trade Commission, and dozens of state attorneys general.

How Can the Experts Weigh In?

The present lawsuit against Google, as well as any future suits against the four “Big Tech” companies, will undoubtedly change antitrust law for years to come. Whether Google’s tactics were prohibited by antitrust laws is yet to be determined. Digging into this question on whether Google unreasonably deprived consumers of the benefits of competition and a free market will require analysis by those with expertise in the particular and unique market of search engines and search advertising. Antitrust experts and economists have debated the appropriate method of relief, since the digital era and the issues that come with it—data privacy, advertisements, algorithms—are all relatively novel. As proponents of antitrust reforms argue, the laws need to address digital products (which, like Google search engines, are free) in order to effectively assess how the consumer suffers harm from the anticompetitive conduct.

However, some experts have argued that reforming the laws is not enough, but rather, regulatory agencies will be needed to control and break up Big Tech. Proponents of regulations have argued that antitrust law is simply not suited to restrain such an evolving market and that bringing separate antitrust cases against the four major companies would drain government resources. Similar to how the Securities and Exchange Commission regulates the financial markets, the regulatory agency governing Big Tech would establish and enforce basic rules of conduct concerning competitive practices. Whether further legislation or federal governance will be established likely hinges on the outcome of the current antitrust lawsuit.