US Justice Department files antitrust lawsuit against Google

The US Department of Justice has filed an antitrust lawsuit against Google, accusing the company of “unlawfully maintaining monopolies in the markets” for general search services and advertising.

The 64-page complaint contends that Google used a combination of “exclusionary agreements” and other anticompetitive business practices – including increasing barriers to market entry and excluding rivals from effective distribution channels – to control vital access points on the internet and secure its dominant position in both the US’s general and mobile search markets, where it has accounted for nearly 90% and 95%, respectively, of all queries made.

The Department of Justice complaint said: “For years, Google has entered into exclusionary agreements, including tying arrangements, and engaged in anticompetitive conduct to lock up distribution channels and block rivals. Google pays billions of dollars each year to distributors… to secure default status for its general search engine and, in many cases, to specifically prohibit Google’s counterparties from dealing with Google’s competitors.

“Google has thus foreclosed competition for internet search. General search engine competitors are denied vital distribution, scale and product recognition – ensuring they have no real chance to challenge Google. 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 “grip on distribution” allegedly enjoyed by Google has also allowed it to build further monopolies in “search advertising and general search text advertising”, where “advertisers pay about $40bn annually to place ads on Google’s search engine results page”, said the complaint.

It added that Google “shares” these search advertising monopoly revenues with distributors in return for commitments to favour Google’s search engine – making enormous payments that create a strong disincentive for distributors to switch.

“The payments also raise barriers to entry for rivals – particularly for small, innovative search companies that cannot afford to pay a multibillion-dollar entry fee. Through these exclusionary payoffs, and the other anticompetitive conduct… Google has created continuous and self-reinforcing monopolies in multiple markets,” the document said, adding that these practices are “especially pernicious because they deny rivals scale to compete effectively”.

A Google spokesperson told Computer Weekly: “Today’s lawsuit by the Department of Justice is deeply flawed. People use Google because they choose to – not because they are forced to or because they can’t find alternatives.”

Kent Walker, Google’s senior vice-president of global affairs, added separately in a blogpost that the lawsuit “would do nothing to help consumers”.

He wrote: “To 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.

“We understand that with our success comes scrutiny, but we stand by our position. American antitrust law is designed to promote innovation and help consumers, not tilt the playing field in favour of particular competitors or make it harder for people to get the services they want. We are confident that a court will conclude that this suit doesn’t square with either the facts or the law.”

The lawsuit has been signed by the attorneys general in 11 US states, all of which are Republican, including Arkansas, Florida, Georgia, Kentucky, Louisiana and Michigan.

It follows a 16-month investigation into the competitive practices of the four dominant tech giants – also including Amazon, Apple and Facebook – by the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law, which identified a “pressing need for legislative action and reform” to rein in these firms’ monopoly power.

“Each platform now serves as a gatekeeper over a key channel of distribution,” it said. “By controlling access to markets, these giants can pick winners and losers throughout our economy. They not only wield tremendous power, but they also abuse it by charging exorbitant fees, imposing oppressive contract terms, and extracting valuable data from the people and businesses that rely on them.”

The subcommittee also made a number of policy recommendations that, if adopted by Congress, would dramatically change how the four tech giants and the wider tech sector operate.

This includes imposing “structural separations and line-of-business restrictions” on the companies, which will “prohibit a dominant intermediary from operating in markets that place the intermediary in competition with the firms dependent on its infrastructure… and generally limit the markets in which a dominant firm can engage”.

Although the Department of Justice complaint doesn’t go into much detail, it does request that the court “enter structural relief as needed to cure any anticompetitive harm”, signalling that the case could end up with Google selling off part of its business.

“Absent a court order, Google will continue executing its anticompetitive strategy, crippling the competitive process, reducing consumer choice and stifling innovation,” it said. “Google is now the unchallenged gateway to the internet for billions of users worldwide.

“As a consequence, countless advertisers must pay a toll to Google’s search advertising and general search text advertising monopolies, American consumers are forced to accept Google’s policies, privacy practices and use of personal data, and new companies with innovative business models cannot emerge from Google’s long shadow.”

As well as requesting “structural relief”, the complaint asks the court to decree that Google has acted unlawfully, to enjoin it from continuing its anticompetitive behaviour, and to restore competitive conditions in the affected markets.

Tim Bray, a former vice-president at Amazon Web Services who quit in May over the company’s firing of Covid-19 whistleblowers, said in a blogpost that he was disappointed about the brevity of these requests for relief, which “doesn’t even fill one of the 64 pages”.

“I’d have hoped for some specific, creative ideas on how to accomplish these good things,” said Bray, suggesting either “utility-style regulation” or breaking up Google as a way forward.

“One big problem with monopolies is that they use their locked-in profits to invade other business sectors and compete unfairly because they can afford to forgo profit,” he said. “The classic solution is just to break the monopolist the hell up.”

Bray added that Google’s search engine could also be regulated in the same way as power, water and other natural-monopoly utilities, whereby users are charged a very low fee per search.

“You’d require that the monopoly offer a straightforward full-text-based document retrieval API [application programming interface] that implements several different ranking algorithms and bills per search,” he said. “You’d forbid it from engaging in any advertising businesses. Then you’d free up people to build consumer-facing search interfaces and compete to sell advertising on them.

“They could also compete on enriched search, the kind of thing Google does where it converts units and currencies, does arithmetic, knows time zones and populations and capital cities, and branches to the right Wikipedia article while you’re still typing.

“It’d be tricky to work out. But it might give us a much, much nicer internet. And a richer intellectual landscape.”

Similar antitrust legal challenges from the European Union have ended in multiple fines for Google, which was forced to pay $1.7bn in 2019 over search ad brokering; $2.6bn in 2017 for prioritising its own shopping business in search; and $4.9bn in 2018 for abusing the dominance of its Android mobile operating system.