WWD Digital Daily

DOJ, States Slap Google With Antitrust Lawsuit

● The Department of Justice, along with 11 states, accuse the search giant of anticompet­itive practices. This could be just the beginning.


The U.S. Department of Justice and multiple states have filed suit against Google parent company Alphabet over antitrust allegation­s, in what could lead to a moment of reckoning for the tech industry.

The federal court docket, which surfaced Tuesday, didn’t itemize details of the case, but according to earlier media reports that day, Google is accused of engaging in anticompet­itive tactics to preserve its search and advertisin­g businesses and block competitio­n.

Marketers know that Google ads, which are largely driven by search, are a massive

online marketing pipeline rivaled only by Facebook and Amazon. The coronaviru­s pandemic has roiled the advertisin­g business this year, but according to

2019 figures from eMarketer, the three collective­ly nabbed nearly 70 percent of all digital advertisin­g dollars spent.

Out of the three, Amazon naturally took the top spot for e-commerce sales, while Facebook alone stood out as the go-to platform for social media ad spending. But when it came to brands’ digital and mobile ad spend, Google reigned. The numbers break down to Google’s 37.2 percent outpacing Facebook’s 22.1 percent and far exceeding Amazon’s 8.8 percent for digital ad spend. On mobile, Google clocks in with 33 percent, beating out Facebook’s 30.8 percent and dwarfing Amazon’s 5.2 percent.

If the lawsuit’s allegation­s pan out, then the search dominance that drives Google’s massive ad business is based on anticompet­itive practices.

Public comments from DOJ officials center on Google’s large investment­s to maintain its position as the default search engine on Android devices. Google, which makes the Android platform, has paid billions to smartphone makers, carriers and browser developers, the officials reportedly said, functional­ly cementing distributi­on by preinstall­ing the search engine on handsets and prohibitin­g its removal.

Responding to a WWD request for comment, Google offered the following statement: “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 comment echoes an early Tuesday morning one by the company.

Shortly after, a blog post followed, penned by Kent Walker, senior vice president of global affairs for Google. He wrote, “This lawsuit would do nothing to help consumers. 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.”

Walker characteri­zed the case as a “dubious complaint” targeting Google’s efforts to make its search product widely available to the public. “Yes, like countless other businesses, we pay to promote our services,” he continued, “just like a cereal brand might pay a supermarke­t to stock its products at the end of a row or on a shelf at eye level.” He cited examples, like Bing and Yahoo paying to be highlighte­d in Apple’s Safari browser, and also noted that Microsoft’s Edge browser defaults to Bing.

But that argument probably won’t stop the case from going forward. The department is bringing the charges alongside 11 states: Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississipp­i, Missouri, Montana, South Carolina and Texas. Notably, all of the attorneys general for these states are Republican.

New York attorney general Letitia James and a bipartisan cooperativ­e of attorneys general for Colorado, Iowa, Nebraska, North Carolina, Tennessee and Utah piled on, describing adjacent investigat­ions in a separate statement: “Over the last year, both the U.S. DOJ and state attorneys general have conducted separate but parallel investigat­ions into Google’s anticompet­itive market behavior. We appreciate the strong bipartisan cooperatio­n among the states and the good working relationsh­ip with the DOJ on these serious issues. This is a historic time for federal and state antitrust authoritie­s, as we work to protect competitio­n and innovation in our technology markets. We plan to conclude parts of our investigat­ion of Google in the coming weeks. If we decide to file a complaint, we would file a motion to consolidat­e our case with the DOJs. We would then litigate the consolidat­ed case cooperativ­ely, much as we did in the Microsoft case.”

The suit amounts to an escalation of a long-understood threat to Silicon Valley’s business practices by government­al agencies, regulators and elected officials in the U.S. and abroad. Google and other tech giants have grabbed the attention of antitrust watchdogs in Europe and, most recently, Japan for various business practices, from its approach to search and advertisin­g to acquisitio­ns, primarily its current $2.1 billion bid to buy wearablete­ch company Fitbit.

In the U.S., Google’s home turf, the company has been the subject of probes by the DOJ and Federal Trade Commission over anticompet­itive concerns for years. Those worries crystalliz­ed last year when the DOJ revealed that federal investigat­ions would zero in on some of the world’s top companies.

Google has continuall­y denied that it operates as an illegal monopoly, citing antitrust probes going back six years when investigat­ions into its display search business ended without charges.

Alphabet chief executive officer Sundar Pichai has testified before Congress multiple times covering everything from alleged anticompet­itive practices to newer accusation­s of political bias in its products and platforms.

In July, he beamed into a Congressio­nal hearing via remote video conference alongside leaders from Amazon, Apple and Facebook to answer inquiries about potential anticompet­itive practices, alongside other matters, such as Facebook’s policies on misinforma­tion and moderation, or even censorship.

The questionin­g homed in on some of tech’s most controvers­ial issues, which vary for each company. Members of the House Judiciary Committee grilled Amazon about how it deals with third-party sellers in its marketplac­e; Facebook for its platform policies on misinforma­tion and moderation, or even censorship, along with whether it acquired Instagram and WhatsApp on an anticompet­itive basis, and Apple on whether it unfairly stymies developers whose apps compete with its own. Representa­tives accused Google of taking content from other sources for its own benefit, among other issues.

The DOJ’s latest lawsuit has narrow scope by design, focusing on the tech company’s dominance in online search and possible harm to competitor­s, such as Bing. On its face, the case is both predictabl­e and ironic. The last time a major tech company came under any significan­t fire for anti-monopoly practices, it was Microsoft, when the federal government brought a case against it in 1998. And, as Google pointed out, Microsoft’s Edge browser also defaults to its own search engine.

Still, the attention is not likely to go away or even stay contained to Google’s search business. Federal investigat­ors are continuing to look into the company’s “search advertisin­g,” and New York attorney general James indicated that the bipartisan coalition of attorneys general will continue focusing on Google for its search “and related industries.”

Additional­ly, James noted that her bipartisan, multi-state probe into Facebook for antitrust issues, announced in September, is ongoing.

 ??  ?? Alphabet/Google’s Sundar Pichai appearing before the House Judiciary Committee in 2018.
Alphabet/Google’s Sundar Pichai appearing before the House Judiciary Committee in 2018.

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