Justice Department likely to file Google antitrust suit without Dem support

Google is a search monopoly, Justice Department says in landmark antitrust lawsuit

Justice Department likely to file Google antitrust suit without Dem support

The federal government filed an antitrust lawsuit against Google.

Angela Lang/CNET

The US Department of Justice on Tuesday filed a landmark lawsuit against Google that accuses the tech giant of illegally holding monopolies in search and search advertising, the culmination of a more than yearlong investigation into alleged anticompetitive practices at the company, and the first such antitrust case in the tech world in decades. 

The federal government alleges that Google violated antitrust laws to act as a “gatekeeper” to the internet.

The complaint says the company unlawfully blocked out competitors by reaching deals with phone makers including Apple and Samsung to be the preset, default search engine on devices.

Google also abused the dominance of its Android operating system to strong-arm manufacturers to preload Google's apps onto phones, the lawsuit alleges.

“As the antitrust complaint filed today explains, [Google] has maintained its monopoly power through exclusionary practices that are harmful to competition,” Jeff Rosen, US deputy attorney general, told reporters on a conference call. “If the government does not enforce the antitrust laws to enable competition, we could lose the next wave of innovation. If that happens, Americans may never get to see the next Google.”

Eleven states, all with Republican attorneys general, are joining the lawsuit as plaintiffs: Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina and Texas.

The lawsuit marks the latest in a series of moves by the US government to put big tech under a more intense microscope. It also represents a reversal from the attitude of Silicon Valley companies from just a few years ago, when the s of Google and were hailed as American success stories and darlings on Wall Street. Now, that dominance has turned against these companies. 

Google's power stems from its massive digital ad business, a juggernaut that brings in about 85% of the company's roughly $160 billion in annual sales. That operation is fueled by the namesake search engine, which processes around 90% of searches done online around the world and is considered some of the most prime real estate on the internet.

“[Google] has maintained its monopoly power through exclusionary practices that are harmful to competition.” Jeff Rosen, US deputy attorney general

The tech giant denied it has engaged in anticompetitive behavior. “Today's lawsuit by the Department of Justice is deeply flawed,” Kent Walker, Google's senior vice president of global affairs, said in a blog post. “People use Google because they choose to, not because they're forced to, or because they can't find alternatives.”

The DOJ said it's exploring several different remedies. “Nothing is off the table,” Ryan Shores, an associate deputy attorney general, said on the conference call.

Google's antitrust legal woes may be just beginning. Separate from the DOJ announcement, seven states including New York and Colorado said they plan to conclude parts of their own investigations into Google in the “coming weeks.” If they file a complaint, they'll file a motion to consolidate it with the Justice Department case, they said.

A 'Code Red' scenario

Tuesday's suit against Google is the highest-profile case the US has brought against a tech company since the 1990s, when the Justice Department and a collection of states accused Microsoft of a monopoly in the PC software market. The two sides settled in 2001. 

The DOJ lawsuit comes as tech giants face a reckoning over their size and influence. Legislators and regulators are concerned over how that power might ultimately harm consumers, especially by choking off competition from smaller players in Silicon Valley.

Aside from Google, rivals Apple, Amazon and are also under investigation by federal regulators and lawmakers.

In July, Google CEO Sundar Pichai appeared virtually at a hearing before the House Judiciary Antitrust Subcommittee, alongside CEO Mark Zuckerberg, Amazon CEO Jeff Bezos and Apple CEO Tim Cook. 

Now playing: Watch this: US DOJ sues Google

The subcommittee released its findings in a 449-page report earlier this month, accusing the tech giants of “abuses of monopoly power.

” For Google, much of the scrutiny was directed at the company's alleged promotion of its own products over those of rivals.

“Evidence shows that once Google built out its vertical offerings, it introduced various changes that had the effect of privileging Google's own inferior services while demoting competitors' offerings,” the report says. 

Google has faced scrutiny from federal regulators in the past. In 2013, the Federal Trade Commission wrapped up a two-year investigation into Google after allegations of biased search results. The agency, however, decided unanimously that Google wasn't violating antitrust laws. 

Tuesday's lawsuit, though, heavily criticizes Google's business contracts with outside partners. The complaint says the tech giant “locks up” search distribution on Android, which powers almost nine every 10 smartphones shipped globally.

“People use Google because they choose to, not because they're forced to.” Kent Walker, senior vice president of global affairs, Google

The lucrative contracts have even spurred Google and Apple, two bitter rivals, to work in harmony.

Google's biggest smartphone deal is with Apple, paying the iPhone maker $8 billion to $12 billion in ad revenue a year to make Google search the default on Apple devices.

In 2018, Pichai and Cook met to discuss how they could work together to drive revenue, the lawsuit said. After the meeting, an Apple employee wrote to a Google employee, “Our vision is that we work as if we are one company.”

The deal extremely is beneficial to both companies: The lawsuit says the agreement accounts for 15% to 20% of Apple's annual profits. The suit also says almost half of Google's search traffic last year came from Apple devices. The deal is so important that Google views losing it as a “Code Red” scenario, according to the DOJ's complaint.

In a lengthy blog post, Google's Walker denied any wrongdoing when it comes to the search deals it makes with other companies. Google, which spends billions of dollars a year on those deals, compared the practice to a cereal brand paying for “eye level” placement on a grocery store shelf, instead of having the product stocked on a lower shelf.

“On mobile, that shelf is controlled by Apple, as well as companies AT&T, Verizon, Samsung and LG,” Walker wrote. “On desktop computers, that shelf space is overwhelmingly controlled by Microsoft.” 

A 'nonpartisan' fight 

Inside the DOJ, the timing of Tuesday's lawsuit had reportedly become the source of in-fighting.

Most of the lawyers on the probe argued they needed more time to build a strong case against Google, but Attorney General William Barr is said to have overruled their guidance, according to The New York Times.

Some of the attorneys were concerned the aggressive timeline, with work completed before the election, was to ensure the Trump administration gets credit for taking on a big tech company.

Lawmakers on both sides of the aisle applauded the DOJ complaint, though Sen. Amy Klobuchar, a Democrat from Minnesota, scrutinized its timing.

“For years we have heard complaints that Google has used its dominance in online search markets to undermine rivals and limit competition,” Klobuchar said in a statement.

“I am pleased that the Justice Department is finally taking action, but I hope the questionable timing of the suit so close to the election doesn't undercut the work that must be done for American consumers in the weeks and months ahead.”  

Sen. Josh Hawley, a Republican from Missouri, also praised the case. “Today's lawsuit is the most important antitrust case in a generation,” he said in a statement. “Google and its fellow Big Tech monopolists exercise unprecedented power over the lives of ordinary Americans, controlling everything from the news we read to the security of our most personal information.”

The DOJ's Rosen said the lawsuit is “nonpartisan” and strictly about antitrust — not about the “skew” or “bias” of social media platforms. Alleged anti-conservative censorship has been a familiar refrain among Republicans.

Pichai, as well as Zuckerberg and Dorsey, are expected to appear at a Senate hearing later this month about Section 230 of the Communications Decency Act, a rule that shields tech companies from legal liability for content on their platforms.

Google's antitrust issues aren't limited to the US. Last March, the search giant was hit with a $1.7 billion fine from the European Commission for “abusive” online ad practices. The Commission said Google exploited its dominance by restricting its rivals from placing their search ads on third-party websites. 

Two years ago, the EU's executive arm fined Google a record $5 billion for unfair business practices around Android, its mobile operating system. the DOJ's complaint on Tuesday, the investigation zeroed in on Google's deals with phone manufacturers, requiring them to preload specific Google apps and services onto Android phones.

CNET's Carrie Mihalcik contributed to this report. 

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Источник: https://www.cnet.com/news/google-is-a-search-monopoly-justice-department-says-in-landmark-antitrust-lawsuit/

Why the US government is suing Google

Justice Department likely to file Google antitrust suit without Dem support
Google’s UK Headquarters in London, England. Dan Kitwood/Getty Images

After a 14-month investigation, the United States government filed a landmark lawsuit against Google on Tuesday, arguing that the search giant used unfair practices to preserve its search and search advertising monopoly.

The Department of Justice and 11 states filed the lawsuit against Google in a federal court, accusing Google of using money it makes from its dominant position in search to pay other companies to help maintain its lead and block out competitors. Google pays Apple billions each year to be the default browser on Safari, for example, and search comes preloaded on devices using Google’s Android operating system.

“Two decades ago, Google became the darling of Silicon Valley as a scrappy startup with an innovative way to search the emerging internet,” states the suit. “That Google is long gone. The Google of today is a monopoly gatekeeper for the internet.”

In a press briefing, Justice Department officials said the government is stepping in to protect access to a free market for customers and Google’s competitors. They argue that Google hasillegally maintained its monopoly through exclusive business deals that put its own search and browser on phones and keep out competitors.

“If the government does not enforce the antitrust laws to enable competition, we could lose the next wave of innovation,” Justice Department spokesperson Marc Raimondi said in a press briefing. “If that happens, Americans may never get to see the next Google.”

The case argues that Google’s anticompetitive practices are harming three key groups: American consumers, who “are forced to accept” its often-controversial privacy practices; advertisers, who have to pay a “toll” to Google to reach their customers; and competing tech companies, who “cannot emerge from Google’s long shadow.”

The announcement unveils the biggest antitrust case against a tech company since the Microsoft antitrust case in 1998. “Google’s practices are anticompetitive under long-established antitrust law,” the new complaint reads. The DOJ ned the situation to Microsoft, which made its internet browser the default on Windows operating systems and made it impossible to delete.

The Justice Department’s suit poses a potential existential threat to Google’s business if it results in breaking off Google’s search engine — which accounted for about $21 billion last quarter, or more than half of its total revenue — from its other lines of business, such as cloud computing and video.

Google rebutted the basis of the lawsuit, calling it a “dubious complaint” and arguing that consumers can easily use other products besides its own.

“Today’s lawsuit by the Department of Justice is deeply flawed,” a Google spokesperson said in a statement. “People use Google because they choose to — not because they’re forced to or because they can’t find alternatives.”

The suit was filed amid heavy political tension between major tech companies and the US government, with Attorney General Bill Barr reportedly speeding up the timing of the lawsuit so that it would be filed before the presidential election in November.

Here’s a breakdown of the case, its political consequences, and the complicated path ahead for Google and the DOJ.

The case against Google

The DOJ considers Google search to be a monopoly in the US, where nearly 90 percent of internet searches are through Google. The complaint says that Google is illegally trying to maintain its dominance through anticompetitive practices.

In its lawsuit, the Justice department claims that Google has used exclusive business contracts to limit rival companies’ ability to put their products on Google’s Android mobile devices, and incentivizes device manufacturers Apple and carriers Verizon to use Google search instead of other search engines.

The suit argues these practices violate the century-old Sherman Antitrust Act, which outlaws companies from “every contract, combination, or conspiracy” to monopolize.

And the suit says Google uses its profits from its massive hold on the search industry to maintain that grip by paying companies Apple, LG, and AT&T to make it the default search engine on their devices, thus making it harder for potential rivals to compete.

“For many years, Google has used anti competitive tactics to maintain and extend its monopolies in the markets for general search services, search advertising, and general search text advertising—the cornerstones of its empire,” the report reads.

Google said its contracts are similar to how other companies promote their products.

“[L]ike countless other businesses, we pay to promote our services, just a cereal brand might pay a supermarket to stock its products at the end of a row or on a shelf at eye level,” the company wrote in a response to the DOJ complaint.

The DOJ said that Google’s contracts help Google maintain its search monopoly because its scale contributes to its effectiveness: The more user data it has, the better its search results are. Additionally, the more people use Google search, the more advertisers will pay Google to reach them.

“Google deprives rivals of the quality, reach, and financial position necessary to mount any meaningful competition to Google’s longstanding monopolies,” the report reads. “By foreclosing competition from rivals, Google harms consumers and advertisers.”

The DOJ complaint is also notable because rather than focusing on how Google’s monopoly could raise prices, it focuses on how lack of competition could lower quality, according to Thomas Campbell, former director of the FTC’s antitrust arm and a professor of antitrust law at Chapman University.

“Normally in antitrust cases the argument is that because of exclusionary conduct, a market is monopolized and the price to the consumer is higher,” Campbell told Recode. In this case, “the main point is the benefit of having a search engine that protects your privacy is lost.”

The lawsuit is more narrow than a report earlier this month from Congress’s House Judiciary Subcommittee on Antitrust, which also discussed how Google allegedly prioritizes its own search results over competing search platforms, restaurant reviews on Yelp or flight queries on Expedia.

Rani Molla/Vox

The DOJ case also limits its focus to search, rather than discussing other industries where Google is dominant, including online advertising, smartphone operating systems, and web browsers. Critics say it uses that dominance in each to reinforce its other business lines.

Democratic state attorneys general may address these other issues in future lawsuits. The DOJ could also expand the scope of its lawsuit as the case proceeds.

The complicated bipartisan politics behind Big Tech regulation

The lawsuit against Google comes at a time when there’s unprecedented public and political opposition to the financial and political power of major tech companies. Lawmakers on both sides of the aisle want to regulate Big Tech, though they disagree on why and how to regulate these giants.

President Trump, as well as many Republican and Democrat lawmakers, have argued with increasing urgency that major tech companies Google have amassed far too much market power. They say the companies stifle competition and leave consumers with no choice but to use their services when they go online.

This is a departure from the decades-long prevailing legal attitude in the US government. Historically, the idea was that to break up a company, you have to prove not just that it’s a monopoly but that it’s charging customers more for its products than it would with greater competition.

That makes it harder to go after Google on antitrust grounds because its most popular products — search, email, browser, maps — are all free.

But in the past several years, there’s been a shift in that thinking, thanks in part to the scholarship of a new wave of influential legal academics dubbed the “hipster antitrust” movement, as well as rising bipartisan political opposition to Big Tech’s influence over the American public.

“It’s a major, major change in the government’s orientation toward monopoly power,” said Sally Hubbard, director of enforcement strategy at the Open Markets Institute, an antitrust nonprofit.

Earlier this month, the Democrat-led House Judiciary Committee concluded its year-long investigation into major tech companies, concluding that not just Google, but also Amazon, , and Apple, use monopoly power to protect their dominant positions in the industry. This investigation has set the stage for lawmakers to introduce new laws regulating the tech giants in the future.

The progressive flank of the Democratic party, such as Sen. Elizabeth Warren (D-MA) and Sen. Bernie Sanders (D-VT), have long argued that the US needs new laws to break up big tech companies, which they say have amassed too much market power and are hurting the American people and economy.

At the same time, Republicans have been ramping up their attacks on tech for a more specific reason: alleged and unproven “anti-conservative” bias. ’s and ’s recent efforts to fact-check and even block unsubstantiated claims made by Republican politicians and some conservative-leaning news outlets have further fueled these complaints.

Some conservatives, including Trump, are increasingly calling for Congress to repeal Section 230, a landmark internet law that protects social media companies from being sued for what people say on their platforms. Some Democrats, including presidential candidate Joe Biden, have also called for Section 230 reform, although not in the same manner Republicans are demanding.

On a press call with reporters announcing the case on Tuesday, DOJ’s Shores was clear in saying that the lawsuit does not address concerns about Section 230.

“The antitrust case is very separate from the questions about social media and some other technology issues that are out there about skew or bias that have been the subject, at least for us, with regard to the Section 230 of the Communications Decency Act,” said Shores.

But it’s impossible to separate the timing of its release from these larger talks of tech reform.

In fact, some have questioned whether the DOJ has rushed out its case against Google in order to file the suit before the election to please Trump, who has long been calling for this suit to move forward as part of his administrations’ larger confrontational policy against Big Tech.

If Biden wins the presidency, his administration’s Department of Justice could pursue the current case, refine the charges, or drop it altogether. Several legal experts told Recode that it’s ly that a potential Biden administration would pursue the case in some form given the bipartisan support for going after tech.

And the American public has also increasingly come to question Big Tech’s power, with roughly half thinking major technology companies should be regulated more than they are now, according to a June poll by Pew Research.

As Recode previously reported, even some Google employees (often anonymously, for fear of punishment by their employer) have argued that the company should be broken up to help Google return to its small, scrappy startup ethos — which they think it needs in order to continue innovating.

What this means for Google’s future

Google and the DOJ have a long and complicated road ahead before we see any meaningful resolution to this suit.

The case could take several years to play out in court; remember that Microsoft’s DOJ case took several years to come to a settlement.

Similarly, the Google case is expected to drag on for years — and of course there’s the real possibility that Google may eventually win, or settle with the US government to avoid a breakup, as Microsoft did.

But in the meantime, the mere threat of antitrust action is ly to loom over Google, putting the company in a defensive crouch, potentially slowing down its growth and preventing it from continuing the types of business practices that made it successful — such as buying up companies , Android, and DoubleClick.

“When the Microsoft suit came down, we saw them change their behavior and it sent shockwaves through the industry,” said Open Market’s Hubbard, who said that, similarly, this suit could prevent not just Google, but the other tech giants Amazon, , and Apple, from being as brazen in buying up competitors or enforcing questionable business contracts that reinforce their market power.

There could also be more force behind the DOJ’s suit if more state attorneys general sign on.

No Democratic state attorneys general have signed on to the case now, but some, such as New York State AG Letitia James, have said they may sign on to the DOJ’s case at a later time after they’ve finished their own independent investigations.

The DOJ, or states, may also file more lawsuits against Amazon, , and Apple. And as the case unfolds in court, Congress could pass new legislation.

Regardless of the DOJ’s suit’s eventual outcome, its filing marks a clear turning point for Big Tech.

Giant companies Google can no longer expect to continue skirting outdated regulations with impunity as they expand their empires; instead, they will face growing scrutiny and enforcement now that they’re increasingly seen as potentially harmful institutions whose powers need to be checked by the government.

Related

Bill Barr and Elizabeth Warren find a common enemy: Google

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Источник: https://www.vox.com/recode/21524710/google-antitrust-lawsuit-doj-search-trump-bill-barr

The Google antitrust lawsuit: Five key takeaways

Justice Department likely to file Google antitrust suit without Dem support

Google's offices in downtown Manhattan. The Justice Department and 11 states filed an antitrust case against Google on Tuesday.

(Spencer Platt/Getty Images)Posted October 21, 2020 at 8:59am

The lawsuit filed by the Justice Department against Google on Tuesday marks the first major antitrust enforcement case against a technology company since a case against Microsoft began in 1998 and ended in a settlement with the government in 2002.

The Justice Department is accusing Google of using anti-competitive business practices to maintain monopolies over its competitors in the online search and advertising industry, and Google is vowing to fight back, arguing that its success does not mean it did anything wrong.

Here are five key takeaways from Tuesday’s action:

1. The Justice Department lawsuit has bipartisan support in Congress

Un so many high-profile actions undertaken by President Donald Trump’s Justice Department in the past four years, the Google lawsuit quickly won the support of Republican and Democratic lawmakers a, including key antitrust hawks.

Some of the loudest praise came from Republican Sen. Josh Hawley of Missouri, who investigated Google when he was the Show-Me State’s attorney general.

Hawley said the case could be the most significant antitrust suit “in a generation” and that if the government wins, it would be even more significant than the Microsoft case “because Google is really a more powerful company than Microsoft was even at the height of Microsoft’s power.”

[House Democrats back antitrust overhaul of Google, , Amazon, Apple]

Rep. David Cicilline, the chairman of the House Judiciary antitrust subcommittee, called the lawsuit “long overdue.

” The Rhode Island Democrat recently wrapped up a 16-month investigation of Google and other large technology companies and has leveled accusations similar to the Justice Department’s.

He urged the department to probe other areas of Google’s business empire, including its Maps service, Chrome browser and video platform.

Both lawmakers have said they plan to pursue antitrust legislation targeting Big Tech companies and believe Congress has an ongoing role to play on antitrust issues while the Justice Department proceeds with its case against Google.

2. There’s disagreement over the strength of the Justice Department’s case

Depending on who you ask, the Justice Department’s lawsuit is either a thin case that fails to prove that Google’s market dominance hurts consumers, or it’s a strong one that demonstrates that Google stifles competition and innovation by using exclusionary business tactics to ensure that its search engine is the default feature on millions of mobile devices in the United States.

Mark Jamison, a visiting antitrust scholar at the conservative American Enterprise Institute, believes the Justice Department faces an uphill battle to prove that Google’s business practices hurt consumers “because everyone who participates with Google — the advertisers, the people who use search — is doing that willingly, they’re doing that voluntarily.”

“It’s hard to argue that they are choosing to make themselves worse off,” Jamison said of users and advertisers. “Absent being able to show that Google has, in some untoward way, gained control of a system, and is therefore able to force people to do things they would not want to do, I think it’s going to be really hard to make an antitrust case that makes good economic sense.”

But Sarah Miller, executive director of the American Economic Liberties Project, which favors greater antitrust enforcement, called the consumer welfare standard “largely discredited” and said the Justice Department has clear authorization under the Sherman Antitrust Act of 1890 to take measures that would seek to ensure competition in the marketplace.

“Google maintains a 90 to 95 percent market share in online search,” Miller said. “It isn’t able to do that through designing a better product, it’s doing it by controlling the distribution channels and using monopoly profits to do so. So from a commonsense perspective, if you want competition in a market, the easiest way to do that is create more competitors.”

3. Google is standing firm

No one expected Google to roll over and play dead, but the extent of the defense it mounted Tuesday morning was nonetheless impressive. The company’s initial response to DOJ’s “deeply flawed” lawsuit was simple: “People use Google because they choose to, not because they’re forced to or because they can’t find alternatives.”

On Tuesday, Google executives argued that the government lacks evidence of any harm to consumers at Google’s hands. They invoked statements from government officials who investigated the company in the past and said they found no evidence of anti-competitive conduct. And they provided a laundry list of competitors in the advertising and search markets.

The company also defended its contracts with Apple and other companies and noted that while Google is the default search engine in Apple’s Safari browser, it is not the only option, as users can also choose to use Bing or Yahoo. It demonstrated the ease with which users can switch their default search engines on Android and in the Chrome browser app.

“We understand that with our success comes scrutiny, but we stand by our position,” Kent Walker, the company’s chief legal officer, wrote in a blog post. “American antitrust law is designed to promote innovation and help consumers, not tilt the playing field in favor of particular competitors or make it harder for people to get the services they want.”

4. State attorneys general are still on the hunt

More interesting than the 11 state attorneys general who signed on to the Justice Department’s case were those who didn’t: Democrats. A bipartisan coalition of state law enforcement officials had been investigating Google for antitrust violations and coordinating with Justice since last year, but only Republican states were co-plaintiffs when the case was filed.

That led to questions about whether politics, specifically Attorney General William Barr’s reported desire to announce the case prior to the Nov. 3 presidential election, had cost the Justice Department a shot at a bipartisan case. But DOJ officials dismissed those concerns, calling the case “a matter of bipartisan, nonpartisan, across-the-board interest.”

Soon after, New York Attorney General Letitia James, a Democrat, issued a statement that she and a bipartisan group of attorneys general from Colorado, Iowa, Nebraska, North Carolina, Tennessee and Utah would be concluding aspects of their own investigation of Google in the coming weeks and would continue coordinating with the federal government.

“If we decide to file a complaint, we would file a motion to consolidate our case with the Justice Department’s,” James said. “We would then litigate the consolidated case cooperatively, much as we did in the Microsoft case.”

5. What would a President Joe Biden do?

The timing of the case, filed exactly two weeks before the presidential election, means that should Trump be defeated by former Vice President Joe Biden, the Democratic nominee, the case would become the jurisdiction of Biden’s new attorney general. Whether Biden’s Justice Department would continue pursuing the case is unclear.

Biden has called for greater scrutiny of Big Tech companies but declined to call for them to be broken up, distancing himself from more liberal members of his party, such as Massachusetts Sen. Elizabeth Warren. Silicon Valley also has a longtime ally in California Sen. Kamala Harris, Biden’s running mate, who has taken campaign donations from technology executives.

The Biden campaign did not respond to questions about the Justice Department’s lawsuit and whether the former vice president agrees with the findings of Cicilline and other Democrats who have investigated market dominance in Silicon Valley.

There is perhaps no better demonstration of the tough spot in which Biden finds himself than a pair of fundraisers scheduled by his campaign. The first, which took place last month, was hosted by Eric Schmidt, Google’s former chief executive officer. The second, scheduled for Oct. 27, will be hosted by Warren and will feature Cicilline, James and other prominent Big Tech critics.

CQ Roll Call is a part of FiscalNote, the leading technology innovator at the intersection of global business and government. Copyright 2021 CQ Roll Call. All rights reserved.

Источник: https://www.rollcall.com/2020/10/21/the-google-antitrust-lawsuit-five-key-takeaways/

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