Washington D.C. – Last week, the Department of Justice (DOJ) along with 11 state attorneys general filed a civil antitrust lawsuit against Google. The DOJ suit against Google – how will this impact the future of the internet?
Google is one of the wealthiest companies, with a market value of $1 trillion and annual revenue exceeding $160 billion. The DOJ wants to stop Google from maintaining monopolies. The agency is highlighting anticompetitive and exclusionary practices in the search engine market. The Justice Department intends to remedy competitive harms through this lawsuit.
A noteworthy allegation against Google is search bias where Google favors its services over other competitive search engines like Yahoo. Obviously, rivals are whining about being unable to compete with Google. The DOJ lawsuit marks the beginning of a new chapter for Google.
Google, an Online Gatekeeper?
Google, a company formed in a San Francisco garage in 1998, now rules the internet. Alphabet, Google’s parent company invented an innovative mechanism to help people search the emerging internet. Today, millions of people rely on online platforms in their daily lives. For some, Google is their bread and butter.
Competition is vital, making this a monumental case. U.S. Attorney General William Barr, in a press statement, said, “I have prioritized the Department’s review of online market-leading platforms to ensure that technology industries remain competitive. Moreover, this lawsuit strikes at the heart of Google’s grip over the internet for millions of Americans.”
The Federal Trade Commission (FTC) shares antitrust authority with the DOJ. In 2012, the FTC spent six months investigating Google but decided against bringing a case. What’s more, industry buzz is focusing on FTC investigations of other “big fish”— including Facebook. In an email to Current Affairs Times, FTC neither denies nor confirms the existence of new investigations.
The DOJ’s Complaint
Additionally, the DOJ is enforcing the Sherman Act which restores the role of competition in the marketplace. That’s why the DOJ’s lawsuit against Google can alter the future of the internet. In the past, companies like AT&T and Microsoft were under investigation for violations of this act. According to the Deputy U.S. Attorney General Jeff A. Rosen, this lawsuit opens the door to the next wave of innovation.” Although, the DOJ does not clarify exactly how that door is opened by restricting Google. Google does, in fact, give people access to a globalized world.
Allegedly, Google enters into exclusivity agreements with companies that forbid the preinstallation of competing search services on their devices. First, on Google-owned Android devices, Google mandates the pre-installation of its search applications. Second, once installed, these applications are unable to be deleted due to their prime locations on mobile devices. The equally important question is — are these pre-installations forced upon consumers?
Purportedly, Google’s exclusionary agreements cover just under 60 percent of all general search queries. On the other hand, remaining queries are funneled through Google’s owned-and-operated properties, like Chrome.
Further, Google effectively owns or controls search distribution channels accounting for nearly 80 percent of general search queries. Interestingly, “google” is not only a noun but also a verb. The company’s very name means “to search the internet.” Given this dominance, other search engines don’t stand a chance against Google. Besides, do they even have a competitive edge?
The DOJ claims that Google’s practices create a continuous and self-reinforcing cycle of monopolization. Nonetheless, the DOJ fails to explain how its lawsuit aids consumers and stops Google from reinforcing monopolization.
Impact on Apple
Google and Apple are parties to a long-term, multibillion-dollar deal. This deal requires Google to be the de facto general search engine on Apple’s browser, Safari.
For Apple, this deal is beyond valuable. It gives Apple’s one billion users easy access to Google on Apple mobile devices. Finally, if the outcome of the DOJ lawsuit goes against Google, Apple will lose this deal. This loss would be a sizable blow to Apple because Google’s payments account for up to one-fifth of Apple’s profits.
Google’s competitor, Newscorp, led by CFO Robert Thompson, emphasized to the Current Affairs Times that “when you combine these deals, they are having a significant impact on our revenue and our profitability.”
Google denies making giant profits to block out competition. Kent Walker, Google’s chief legal officer, said that “people use Google because they choose to — not because they’re forced to or because they can’t find alternatives.” Google, in an email to Current Affairs Times, calls the lawsuit “dubious.” Walker says “So, we negotiate agreements with many of those companies (like Apple) for eye-level shelf space, but let’s be clear — our competitors are readily available too if you want to use them.”
Lastly, the whole point is that the DOJ’s case doesn’t focus on a search-bias theory. What opportunities will open up for rivals?
Thumbnail Credit: Jeff Roberson/Ken20/Getty Images
- Google Media Office
- Current Affairs Times obtained an original copy of the Google Antitrust Case Complaint.
- FTC and Newscorp Media Office