Last week, the U.S. Justice Department filed an antitrust suit against Google. Certainly, Google is one of the most important firms in people’s and companies’ daily lives. Yet, the power of Google leads to an antitrust case that will be watched by all dominant firms. And many more such legal actions are sure to follow around the globe.
Click the image to access the full Justice Department filing.
Over the years, we have written nearly 200 articles on Google. For the most part, these articles cast Google in a very favorable light. Nonetheless, there are questions about Google’s use of its dominance. From an ethical perspective, we ask: Can a company that does so much good also be guilty of bad acts?
A Blockbuster Legal Action: The Power of Google Leads to an Antitrust Case
Since the Justice Department legal action was announced, there have been thousands of stories written. [Do your own Google search to see.] Some observers view this action as the antitrust case of the century due to Google’s global reach and dominance with its core products.
To gain multiple expert insights, our discussion is based on three different sources:
- Business Insider — Google Antitrust Case Revealed
- New York Times — What Is Happening With the Antitrust Suit Against Google?
- Wall Street Journal — Google Antitrust Lawsuit: Why Is the Justice Department Suring the Search Giant?
What the Case Is About
- The Department of Justice filed a heavily anticipated antitrust case accusing Google of having an unfair advantage in search and online advertising.
- The case alleges that Google disadvantaged competitors through a network of exclusionary business deals. It’s the largest legal challenge Google has faced. And it will likely result in a court fight that could last years.
- “Google is a monopoly under traditional antitrust principles and must be stopped,” Associate Deputy Attorney General Ryan Shores said. “We are asking the court to break Google’s grip on search.”
- In addition to its dominance in search and online advertising, the DOJ lawsuit argues that Google unfairly pays smartphone manufacturers to place its apps front and center by preinstalling them on handsets. Which it pays for using revenue from its advertising platform.
- Google is unlikely to back down from the legal fight. If the government wins, the company could be forced to restructure or separate parts of its business.
- The lawsuit takes the rare step of invoking the Sherman Act, an antitrust law passed in 1890 granting the government power to break up monopolies. The most recent high-profile government case that invoked the Sherman Act was a 1998 antitrust lawsuit against Microsoft, which settled with the government and agreed to restructure its business.
The Level of Google Dominance
Having invented the modern search engine, Google continues to dominate this primary portal to the internet. The company is a big force in other areas of consumer technology, from online video (YouTube) to maps (Google Maps). Its Chrome browser controls about 70% of the global online browser market, and roughly half the market in the U.S., according to StatCounter. About 85% of smartphones globally run its Android operating system and about 56% do in the U.S., according to market research firm IDC. Google makes money selling ads in its products.
If you’re buying or selling an ad elsewhere on the Web, chances are very high you’re also doing business with Google. Google sucks up about one in every three dollars spent on digital advertising and generated nearly $135 billion in total ad revenue in 2019. Google’s critics in government and industry say it has amassed this market power through anticompetitive practices.
In a blog post responding to competition concerns, Google said it operates “across many highly competitive sectors where prices are free or falling and products are constantly improving.”
View the video for more from the Wall Street Journal. It offers an interesting Microsoft/Google comparison regarding antitrust.
In short: We’re not dominant. And competition on the Internet is just “one click away.” That is the essence of recent testimony in Congress by Google executives. Google’s share of the search market in the United States is about 80 percent. But looking only at the market for “general” search, the company says, is myopic. Nearly half of online shopping searches, it notes, begin on Amazon.
Next, Google says the deals the Justice Department is citing are entirely legal. Such company-to-company deals violate antitrust law only if they can be shown to exclude competition. Users can freely switch to other search engines, like Microsoft’s Bing or Yahoo Search, anytime they want, Google insists. Its search service, Google says, is the runaway market leader because people prefer it.
And the WSJ’s Hagey notes that:
Google and its supporters say its dominance in advertising has lowered ad prices and allowed it to offer free services to consumers. Some regulators around the world and U.S. antitrust experts see another side of the story. They say companies wind up having to charge consumers more for goods and services than they otherwise would if the online ad market were more competitive.
Critics of antitrust action against tech giants argue that the Sherman Act is a weak legal basis for such a lawsuit. Because it defines monopolies in terms of consumer harm, typically interpreted as an unfair increase in cost. However, Google doesn’t charge consumers for most of its popular products.
The Time Line
Unless the government and Google reach a settlement, they’re headed to court. Trials and appeals in such cases can take years. Whatever the outcome, one thing is certain: Google will face continued scrutiny for a long time.