U.S. Sues Google for Abusing Its Position Against Competitors

Dec 04, 2020 · 4 mins read
U.S. Sues Google for Abusing Its Position Against Competitors
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The U.S. Justice Department on Tuesday filed an antitrust suit against Alphabet Inc, Google’s parent company, which it accuses of violating the law by abusing its dominant market position over its competitors. This is the most important legal offensive against a technological giant in at least two decades, and represents the culmination of a year-long investigation that concludes that the company took advantage of its dominant position in the search and advertising market to the detriment of competitors and consumers.

The legal action against Google, which opens a process that may take years, marks a milestone in Washington’s fight against Silicon Valley. At the heart of the debate is the growing power of the technology giants, which have come under intense scrutiny in recent years. More investigations are underway, at the Justice Department itself and at the Federal Trade Commission, against Apple, Amazon and Facebook. More than forty states and local governments have also opened investigations into Google’s alleged abuse of its control of technology for digital advertising.

Concern about the concentration of power, money and data in the hands of a few companies is something that unites conservatives like President Trump and more progressive lawmakers. Just two weeks ago, Democratic congressmen in the House of Representatives released an extensive report on the technology giants in which they accuse Google, as well as Apple, Amazon and Facebook, of abusing their dominant market position.

The legislators, as well as the federal government and different consumer associations, have been accusing Google, owned by Alphabet Inc, which has a market value of more than one billion dollars, of abusing its dominance in Internet searches, of which it monopolizes nearly 90% of the activity in the United States, and in the advertising market to suppress free competition and to increase its profits. In the lawsuit, the Department of Justice argues that by signing agreements with cell phone manufacturers that use Alphabet’s operating system (Android) to download its search engine by default, Google strengthens its monopoly and harms competition and innovation. It also refers to contracts such as the one reached by the company with Apple, by which, in exchange for billions of dollars, Cupertino’s company incorporates Google’s search engine by default in its iPhones. Thanks to the massive reach of its product, defends the Government, Google was enriched with lucrative ads associated with search results.

The Department of Justice does not expressly ask the court to chop up the company, as some legislators have been demanding. Instead, it is asking for a “structural release,” which could be a requirement to divest itself of a portion of its business or abandon some of its alleged practices. “For the sake of American consumers, advertisers and all companies that depend on the Internet economy, the time has come to stop Google’s behavior and restore competition,” the lawsuit says.

Founded in 1998 by two Stanford University students, Larry Page and Sergey Brin, Google has become a dominant player in the communications, commerce and media sectors. The company has repeatedly denied allegations of monopolistic practices. It claims to have strong competition in the Internet search market from companies such as Amazon, and defends that its services help numerous small businesses.

Beyond the realm of competition law, on which the lawsuit is based, President Trump’s accusations of the technology giants focus on an alleged political bias. The President and his allies have long attacked Google, which also owns the video platform YouTube, for silencing conservative voices. This has allowed the company to criticize the legal offensive that it considers part of a political crusade.

The 64-page lawsuit, filed in a federal court in Washington DC, is the most important anti-monopoly action taken by the federal government since the set of legal actions taken against Microsoft in May 1998. On that occasion, Bill Gates’ company was accused of abusing its monopolistic position by commercializing in the same package its operating system (Windows) and its Internet browser (Explorer), restricting the competition of other browsers. That case took more than ten years to close. It is more than likely, then, that this action against Google will continue beyond the Trump Administration, even if the President is re-elected in the November 3 elections.

The legal basis for the lawsuit is legislation, known as the Sherman Act, which is nearly a century old and was used in the past against tobacco, oil and telecommunications giants. Eleven Attorneys General from Republican states, including Louisiana, Florida, and Texas have joined the Justice Department’s lawsuit, and other states that are investigating the company’s alleged monopolistic practices may join in the future.