On Tuesday, the Justice Department and 11 state attorney generals filed an antitrust lawsuit accusing Google of preserving its monopolies in search and search advertising with anticompetitive behavior. The suit, filed in a Washington, D.C., federal court, is the most significant antitrust action targeting a tech company in decades.
The case alleges that Google, an Alphabet subsidiary, has maintained its central role in search and advertising through anticompetitive contracts which allowed Google to establish itself as a gatekeeper to the digital world and its economy, giving it even greater latitude to deal with any potential competitors.
The lawsuit also focuses on how Google uses its Android OS to further preserve its search monopoly, preloading the search engine and preventing its deletion. At the same time, Google persuades other competitors from preloading their own search engines on phones. For example, Google used billions of dollars from its advertising empire to pay Apple to keep Google as its default search engine.
These business practices, and others, have allowed Google to control nearly 80 percent of all U.S. search queries and to dominate digital advertising—44 percent of the U.S.’s $54.7 billion market is Google's share. This means competitors are not only unable to grab a sufficient share of search to build scale, but neither can they meaningfully compete with Google's ability to leverage its position in one sector of its empire to shore up its dominance in another.
The lawsuit argues that this leaves consumers with less choice and innovation, and leaves advertisers with less competitive prices.
On a call with the press, DOJ officials called Google an “unchecked monopolist,” warning that its conduct was "illegal" and "must be stopped."
Since the investigation was launched last summer, a series of hearings have made clear regulators are seriously scrutinizing Google and other tech giants for antitrust concerns, among others. Deputy Attorney General Rosen also added that the DOJ was planning to "continue our review of competitive practices by [other] market leading online platforms."
Google has long argued that it is not in violation of antitrust law despite losing multiple fights in Europe, and despite enjoying a $120 billion cash reserve hoard and a $1 trillion valuation of its parent company, Alphabet.
One well-worn argument that Google is likely to lean on insists that the tech giant’s alleged monopolies actually face fierce competition—namely advertising. There are reasons to doubt this, however. The issue here is not the number of competitors, but the fact that Google dominates each part of the digital advertising ecosystem and Google forces advertisers to use its tools, limiting their options to buy ads on Youtube.
Another defense Google typically relies on is that it can’t possibly pose any harm to the consumer because it offers its services at near-zero cost. This is a familiar refrain from today’s tech monopolists (and their defenders), but as antitrust scholars have long established, most of these services provide loss-leading products precisely because it allows them to engage in the anticompetitive behavior necessary to quickly achieve a monopoly and to perpetually defend it.
While the European Union has argued for years that such agreements breach its own antitrust laws and fined Google billions of dollars, multiple times, for antitrust violations, this has done little to deter Google’s practices.
The lawsuit may take years to resolve—the investigation itself took well over a year—but will likely spawn a multitude of other antitrust lawsuits from state attorney generals, not to mention the dozens of currently ongoing investigations by states and localities into Google's anticompetitive behavior.