United States v. Google

About the Author: Ayana Anderson is a second year law student at American University- Washington College of Law. Ayana graduated from Drake University and hopes to work on antitrust and healthcare issues after graduating law school.

 

On Tuesday, October 20, 2020, the Department of Justice (“DOJ”) along with eleven states filed a complaint against Google, LLC.[1] Some economists, antitrust lawyers, and tech gurus had been waiting on this announcement. It has been almost forty years since the 1982 AT&T case, [2] the last time the DOJ succeeded in breaking up a tech monopoly. This case was long awaited.

Previously in 2013, the Federal Trade Commission (“FTC”) conducted an in-depth investigation into Google’s business practices particularly looking into whether the tech giant restricted advertisers’ access to other search engines and excluded its competitors from the market. [3] Although eventually the FTC abandoned its investigation and declined suit[4], internationally Google has faced scrutiny from the European Commission (“EC”). In the last three years, on three separate occasions the EC has fined Google for conducting unfair preferential treatment in Google Shopping, exclusive dealing and tying with Android, and exclusive dealing with AdSense.

Now, the government may finally have Google within its grasps. The 64-page complaint alleges that Google has unlawfully maintained monopolies in search and search advertising violating Section 2 of the Sherman Act 1890.[5] The famous AT&T case also centered around the company’s violation of Section 2 of the Sherman Act.[6] Specifically, in the Complaint the government asserts that Google “[e]nter[ed] into exclusivity agreements that for[bade] preinstallation of any competing search service;”[7] “[e]nter[ed] into trying and other agreements that force[d] preinstallation of its search application in prime locations on mobile devices and make them undeletable;”[8] “[e]nter[ed[ into long-term agreements with Apple that require Google to be the default general search engine;”[9] and continued monopolizing by “using monopoly profits to buy preferential treatment for its search engines on devices, web browsers, and other search access points.”[10] Essentially, the government is challenging Google’s control of about 80% of distribution channels for search inquiries in the US.[11] Possessing 80% of distribution channels for search inquiries may be proof that Google possesses monopoly power, but the government will also need to prove that Google engaged in unlawful exclusionary conduct to achieve and maintain 80% of the distribution channel. In the spirit of free market competition, the court is not inclined to stifle companies conduct without proof that a company’s conduct somehow inhibited entry into the market, predatory pricing, tying, or exclusive dealing. The Complaint also describes the outcome of these anticompetitive effects as restricting competition, foreclosing search competitors, reducing the quality of search, limiting choice to consumers, and impeding innovation.[12] These anticompetitive effects will serve as a rebuttal to any justifications offered by Google.

On the same day the Complaint was issued, Google informally responded to the government’s complaint with a blog post titled “A Deeply Flawed Lawsuit That Would do Nothing to Help Consumers.”[13] The bones of the response can be boiled down to “[p]eople use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.”[14] The blog post also noted that Apple features Google in Safari because it a high-quality product not from any agreements made by the company.[15] It seems, by the looks of the blog post, that Google will attempt to expand the market definition by including non-general search engines such as Twitter, Expedia, Instagram, and Amazon.[16] If Google’s response to the Complaint is anything like this blog post, it will probable fail to persuade the court. The ‘companies know what’s best for consumers’ argument has not been widely accepted as justification by the court. This case, even if does not result in a conviction, may generate antitrust waves against other tech companies.

This complaint follows a congressional report that not only names Google as a potential monopolist, but also other tech companies such as Amazon, Apple, and Facebook.[17] The congressional report, spanning 449 pages, was a detailed review of the anticompetitive conduct of Facebook, Google, Amazon, and Apple.[18] The congressional report assessed that all four companies had significant market power and there was potential for anticompetitive conduct.[19] The congressional report made recommendations pertaining to restoring competition in the digital economy and implementing rules to prevent discrimination, favoritism, and self-preferencing. Since the release of this report, it seems this suit will have bipartisan support.[20]

If the government is successful, we will most likely see future suits against other tech companies such as Amazon, Apple, and Facebook.[21] Antitrust enforcement since the 1970s has declined significantly. With only two other major actions,[22] if the government is successful, we might see an uptick in antitrust enforcement in the technology sector.

As technology has become ingrained in society, it will become imperative that all technology companies are monitored closely. Where antitrust enforcement is weak, competition will be severely restricted, and consumer will suffer. One of the benefits to come out of this case might be that we get more memes of Marc Zuckerberg at the House of Representatives, but we might have to do away with the saying, “Google it.”

 

[1] United States v. Google LLC, Compl. at 2 (Oct. 20, 2020).

[2] United States v. American Tel. and Tel. Co., 552 F. Supp. 131 (D.D.C. 1983).

[3] FTC, Statement of the Federal Trade Commission Regarding Google’s Search Practices, 1 (2013)

[4]  Id.

[5]  United States v. Google LLC, Compl. at 2 (Oct. 20, 2020).

[6] United States v. American Tel. and Tel. Co., 552 F. Supp. 131 (D.D.C. 1983).

[7] Press Release, DOJ, Justice Department Sues Monopolist google for Violating Antitrust Laws (Oct 20, 2020) (on file with author).

[8] Id.

[9] Id.

[10] Id.

[11] United States v. Google LLC, Compl. at 2 (Oct. 20, 2020).

[12] Id.

[13] Kent Walker, A Deeply Flawed Lawsuit That Would do Nothing to Help Consumers, Google Blog (Oct. 20, 2020) https://blog.google/outreach-initiatives/public-policy/response-doj/.

[14] Id.

[15] Id.

[16] Id.

[17] Staff of H.R. Comm. on the Judiciary, 116th Cong., Investigation of Competition in Digital Markets (Comm., Print 2020).

[18] Id. at 6.

[19] Id. at 10-17.

[20] Cristiano Lima, DOj’s Google suit meets bipartisan praise, but questions arise on its motives, Politico (Oct. 20, 2020, 3:04 PM), https://www.politico.com/news/2020/10/20/justice-department-google-antitrust-lawsuit-bipartisan-430367.

[21] Shannon Bond, Alina Selyukh, & Bobby Allyn, How are Apple, Amazon, Facebook, Good Monopolies? House Report Counts the Ways, NPR (Oct. 6, 2020), https://www.npr.org/2020/10/06/920882893/how-are-apple-amazon-facebook-google-monopolies-house-report-counts-the-ways.

[22] United States v. American Tel. and Tel. Co., 552 F. Supp. 131 (D.D.C. 1983); Unite States v. Microsoft Co., 253 F.3d 34 (D.C. Cir. 2001).

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