Washington versus Google: The Biggest Antitrust Showdown In Decades
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On Tuesday the 20th of October, following an investigation that started over a year ago, the US Department of Justice (DoJ) and 11 states filed one of the most significant antitrust lawsuits against Google. They claim the company is using anti-competitive tactics to maintain an illegal monopoly over internet search and search advertising.
The lawsuit
The 57-page long complaint by the DoJ contends that Google is “a monopoly gatekeeper for the internet”, using questionable practices to knock down potential rivals. This includes business deals with Android to make sure Google stays the preloaded search app on phones running the Android OS, and paying Apple roughly $10 billion a year to feed it search traffic and make Google the search engine the default on Safari.
This self-reinforcing cycle of dominance is different from traditional monopolies. Its services have been offered at little to no cost. Google asserts that people use its search engine “because they choose to - not because they’re forced to, or because they can’t find alternatives.” Yet, it cannot be understated that most consumers never change their defaults, and Google has been seen to take advantage of this.
Washington is looking to end anti-competitive contractual restrictions and break-up parts of Google’s business that have a conflict of interest.
Same same, but different
The complaint against Google seems similar to the 1998 Microsoft case, with the government claiming that Microsoft’s anti-competitiveness led to its browser Internet Explorer to dominate internet access, instead of rival Netscape Navigator. It seems that the DoJ is mirroring the Microsoft case, and there is a reason for that - the government won. However, the break-up was overturned on appeal, though Microsoft’s guilty verdict remained.
Why is this such a big deal?
A significant indicator of Google’s dominance in the search business is seen in the fact that ‘Google’ is now a common verb to describe ‘to search for something on the internet’. Today, Google controls roughly 80% of global search and 94% of smartphone search in the US. It is worth over $1 trillion and has $160 billion of revenue.
“Google has thus foreclosed competition for internet search,” the suit asserts. “General search engine competitors are denied vital distribution, scale, and product recognition - ensuring they have no real chance to challenge Google.”
More to follow
The tech behemoth envisages a successful lawsuit could lead to lower-quality alternatives, higher phone prices, and difficulty for consumers to get the search services they want. Though prepared for the lawsuit that could last years, it is probable that search engine rivals will take this time to invest in gaining greater distribution. This includes Microsoft’s search engine, Bing.
“Markets work better when firms know there is a sheriff in town,” Cleveland State law professor Chris Sagers commented. But they are up against one of the most dominant players in the global economy.
On the other hand, other legal action on tech giants looms. It is not the first time Google and fellow Big Tech firms have faced antitrust criticism from the American Government - earlier this year, a 16-month investigation conducted by the House antitrust subcommittee threatened to break up Google, Apple, Amazon, and Facebook.
Enforcement of anti-monopoly laws has not been strict in the last two decades, and this case is likely to last years, but the DoJ has taken a very important step in confronting this behaviour. Not only can this cause big changes to be made with Google, but it also opens up the possibility of other lawsuits against Big Tech.
By: Nicole Woo