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Google, the U.S. government prepares to compete for market power

The U.S. Department of Justice is expected to file a lawsuit against Alphabet’s Google as soon as next week to initiate a long-term legal dispute over whether online search and advertising companies have unfairly used their excessive market power.

What are the allegations against Google?

One set of allegations is related to Google’s search engine. Google is accused of looking for unfavorable competitors, such as Microsoft’s Bing, which deprived them of scale, and therefore of user preferences and user data they need to improve and advertise to users.

Google has also been accused of using its popular search function to favor its products (such as YouTube) and large advertisers (such as eBay). For example, after a recent search for “Saturday Night Live” video, Google YouTube, which appeared before NBC, made several choices. Companies such as Yelp argue that they are better than Google in helping consumers find certain services, but they often appear under the Google suggestion box, resulting in fewer clicks.

Another allegation is related to advertising. When it comes to advertising, Google dominates interconnected businesses that connect advertisers with newspapers, websites, and other companies that want to host them. Google is accused of being opaque in disclosing its trading revenue, using “bundling” products to the detriment of smaller competitors and manipulating auctions.

Of particular interest are “search ads”, which are ads that appear below the search box when users search for consumer products such as “dishwashers.” Google controls the space sold by these searches and the tools for selling them.

Allegedly, relying on its smartphone operating system Android, requiring mobile phone manufacturers to pre-install Google’s Chrome browser and search whether they want to visit Google’s Play Store, thus abusing its dominant position.

What does Google say about these allegations?

Google has repeatedly denied any wrongdoing.

Regarding search, Google said that users can access other sources of information, such as Twitter news and Amazon products. It said that people use Google to get quick answers, which prompted the company to develop new ways of organizing results.

In terms of advertising, it believes it competes with many companies including giants such as Oracle and Verizon. It believes that online advertising prices have been steadily falling over the past decade.

As for Android, Google has said that mobile phone manufacturers using its smartphone system do not have to include Google apps and can pre-install competing apps.

What will the Ministry of Justice allege in the lawsuit?

The Justice Department’s lawsuit is expected to focus on allegations related to search, but it may also highlight complaints about advertising and Android.

What is the role of the State Attorney General?

A large number of attorney generals are also investigating Google. The team led by Texas focuses on Google’s advertising business, while other states are studying search and Android. These can also lead to litigation.

What remedial measures can the Justice Department require the judge to take?

The Ministry of Justice has a lot of leeway in requesting remedies. It can ask the court to ask Google to sell or split its assets, including all or part of its advertising business, or simply to stop illegal activities.

How long does the trial and appeal take?

It is in Google’s interest to withdraw from the proceedings. Antitrust experts said that it will take at least 6 to 9 months for the trial to proceed, and the decision will be made several months after the trial. It may be subject to appeal.

Are the charges against Google politically motivated?

Separate from antitrust laws, President Donald Trump’s administration is angry with several Silicon Valley companies that have allegedly silenced conservatives.

Having said that, Democrats such as Senator Elizabeth Warren have expressed support for Google’s investigation.

© Thomson Reuters 2020


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