Google’s Legal Peril Grows in Face of Third Antitrust Suit
More than 30 states contributed to Google’s growing legal troubles on Thursday, accusing the Silicon Valley titans of illegally arranging their search results in order to crowd out smaller competitors.
A day after 10 other states accused Google of abusing its advertising dominance and overwhelming publishers, and two months after the Justice Department announced that the company’s dealings with other tech giants were curbing competition, the bipartisan group shared Prosecutors in a lawsuit on Thursday alleged that Google downplayed websites where users can search for information in specialized areas like repair services and travel reports. Prosecutors also accused the company of entering into exclusive contracts with phone manufacturers like Apple to prioritize Google’s search service over competitors like Firefox and DuckDuckGo.
This suppression, so the states in their lawsuit, has secured Google’s almost 90 percent dominance in search and has made it impossible for the smaller companies to develop into excellent competitors. Google has been trying to extend that dominance to new venues like home voice assistants, according to prosecutors from states like Colorado, Nebraska, New York, and Utah.
The cascade of lawsuits against Google that the company will fight in court hints at the mounting backlash against the biggest tech companies. This movement seems to be initiating increasingly big changes for some of the world’s most popular digital services.
Critics have argued for years that Google, Apple, Facebook and Amazon built sprawling empires over trade, communication and culture and then abused their growing power. But just recently, federal or state regulators have filed major cases against them.
The Federal Trade Commission and 40 attorneys general last week accused Facebook of buying smaller competitors like Instagram and WhatsApp to maintain their dominance in a case that threatens to break up the company. Regulators in Washington and across the country are also investigating Amazon and Apple.
In addition, Democratic and Republican political leaders have taken far more aggressive stances towards the industry, including calling for changes to a once sacrosanct law that protects websites from liability for the content posted by their users.
“Our economy is more focused than ever and consumers are under pressure when they are deprived of their choice of valued products and services,” said Phil Weiser, Colorado attorney general. “Google’s anticompetitive measures have protected general search monopolies and excluded competitors, deprived consumers of the benefits of competitive choices, prevented innovation and undermined new entries or expansions.”
The prosecution filed the lawsuit in the US District Court of the District of Columbia, asking the court to combine it with a Justice Department lawsuit in October containing similar allegations. If the court combines the suits, it will expand the scope of the federal proceeding to include a much wider range of allegations about Google’s search business. The resolution of the multiple cases can take years.
Adam Cohen, director of economic policy at Google, said in a blog post that the lawsuit “seeks to redesign search so that Americans can no longer get helpful information and reduce the ability of companies to interact directly with customers. “
“We look forward to taking this case to court and continuing to focus on delivering a quality search experience to our users,” he said.
The company has long denied allegations of antitrust violations and is expected to use its global network of lawyers, economists, and lobbyists to combat the multiple allegations against the company. The company has a market value of $ 1.18 trillion and cash reserves of over $ 120 billion.
Taken together, the three lawsuits make Google a ruthless corporate giant deterring competition across a wide range of companies. It’s a far cry from how Google has portrayed itself in the past (made famous in a company-approved movie, “The Internship”): a good-natured and conscientious organization full of playful nerds.
Google has grown from a start-up in a garage to a technology conglomerate with 130,000 employees. The company that once stated that “Don’t Be Angry” was its corporate motto and was seen as a counterbalance to Microsoft and other industry bullies of the past is now seen as the dominant force of Silicon Valley and one of the companies that carve the tech landscape .
“Overall, this will be a comprehensive study of Google’s rise to power over the past 25 years,” said William Kovacic, former chairman of the Federal Trade Commission. “These are tremendous threats to the company.”
The Justice Department and attorneys general have inquired into how Google maintained its dominance in search and advertising technology by entering into deals with other tech heavyweights like Apple and Facebook to seal the markets off to competition.
The lawsuit filed on Thursday focuses on how Google has maintained online search. While Google has long strived to make a directory for the entire web, other companies over the years have developed search engines that specialize in a specific area. Yelp provides reviews for local businesses. Tripadvisor offers hotel reviews. Angie’s list directs users to reliable home repair services.
Prosecutors said Google methodically downplayed these websites in its own search results, often prominently displaying its own competing reviews or services. This prevented any company from creating a broader grouping of specialized services that could challenge Google’s search engine.
More recently, the company has used illegal tactics to expand its dominance to new vehicles for online search, including connected cars and home voice assistants, prosecutors said.
Mr. Weiser said in an interview that they will not be intimidated by Google’s expected army of litigants and will stand up for their defense.
“We have done a thorough investigation and are confident about our case,” he said. At a press conference earlier in the day, he said it was “premature” to discuss certain outcomes for the case, such as how the company could be wound up.
States began their search investigation in late summer 2019, part of a tidal wave of new investigations into the power of big tech that has not been seen since the antitrust proceedings against Microsoft two decades ago.
The Google investigation progressed faster than the other investigations at Amazon and Apple, as rivals like Microsoft and Yelp made years of allegations of anti-competitive practices by Google and publishers like News Corp. European cases against Google and an FTC investigation into Google’s search practices ended in 2013 have created volumes of records and theories of harm. The agency’s investigation closed with no action.
States said they worked closely with the Justice Department in their investigation. They interviewed hundreds of witnesses from Google and other companies and collected more than 45,000 private documents as evidence.
Thursday’s announcement reflects the deep interest of regulators around the world in Google’s signature search product.
In Europe, regulators fined Google around $ 2.7 billion for privileging their own comparison shopping tool over those of independent websites. The European Union authorities also fined Google for bundling its services with its Android mobile operating system. Google has agreed that competing search engines may bid for the default place on some devices.
Gene Munster, longtime technology analyst and managing partner at Loup Ventures, a Minneapolis venture capital company, said he doesn’t expect consumers to give up Google products, but rather that the Google brand will thrive as a company.
“It’s a black eye for the public perception of Google. You are no longer able to present yourself as the company “Don’t be angry”, ”said Mr. Münster. “I think they’re right in the warehouse of a tech company that consumers are more suspicious of today than they were five years ago.”
Tom Miller, the Democratic attorney general of Iowa, who signed Thursday’s lawsuit, reflected the similarities of the case with the federal and state lawsuits against Microsoft. Mr. Miller was a prosecutor who led the states’ prosecution against Microsoft.
Although Microsoft settled the charges, years of litigation from the late 1980s to the early 1990s clearly forced the company to rectify its anti-competitive business practices. He said antitrust proceedings, which could stretch for years in court, could help encourage more competition, regardless of the outcome of litigation.
“Some people argue that if we hadn’t brought the case against Microsoft,” Miller said, “there wouldn’t have been Google.”