Google’s lawsuit with the US government, explained

Big tech is under fire around the world and these attacks do not appear to be slowing down.

Alphabet Inc’s Google LLC has been hit by an antitrust lawsuit from the United States Department of Justice (DOJ), which is already being described as “the most aggressive action the U.S. government has taken in decades” against big tech.

The lawsuit, which has been in the works for some time, arrives on the eve of the US Presidential Election, leading some to argue that its timing is politically motivated.

The DOJ’s suit argues that Google has “maintained its monopoly power through exclusionary practices that are harmful to competition,” according to Deputy US Attorney General Jeffrey Rosen.

The lawsuit also surfaces at a time of heightened scrutiny of big tech, not just in the US, but worldwide. Big tech companies more broadly have been accused of maintaining “monopolies” by a US congressional investigation and have faced intense oversight into their role in the coming election.

Around the world, too, US tech companies, including Google, have faced rising pressure from competitors over allegedly anti-competitive practices.

Yet the DOJ’s lawsuit could take years to reach a settlement and there is no guarantee that Google won’t use its resources to fight its case to the very end.

The case

The Justice Department’s recent lawsuit comes on the back of a two-year-long investigation into Google, specifically targeting its search engine business.

Google holds a 92% share of the search engine market worldwide, making it far and away the dominant player in the market.

The DOJ’s lawsuit argues that this dominant position has been achieved and maintained by a string of anti-competitive practices undertaken by Google.

The lawsuit argues that Google uses “a web of exclusionary business agreements to shut out competitors.” This includes multibillion-dollar contracts with phone carriers and developers, such as Apple Inc., which Google pays more than US$7 billion a year to make Google’s search engine the default option for users.

By acquiring contracts that secure Google’s services as a default option, the DOJ’s suit claims that “American consumers are forced to accept Google’s policies, privacy practices, and use of personal data.” Alongside this, “new companies with innovative business models cannot emerge from Google’s long shadow,” which is propped up by billion dollar deals ensuring its dominance.

With Google’s dominance of the search engine market, too, comes the opportunity to gather significantly more user data for advertising than Google’s competitors. With more fine-tuned advertising, Google can also pinpoint and target users more effectively than competitors with a much less dominant market share.

In its response to the DOJ’s accusations, Google has rejected the claims that it uses exclusionary practices, including said contracts, to shut out competitors.

Google’s Chief Legal Officer, Kent Walker, rebuked the accusations, calling the Justice Department’s case “deeply flawed,” in a blog post that aimed to show the ease with which users could opt out of Google’s default search engine in favor of services provided by competitors.

Implications

The Justice Department’s lawsuit against Google has already received much attention, with some comparing it to the landmark US lawsuit against Microsoft Corp. in the 1990s.

In that case, Microsoft faced an antitrust lawsuit from the US government beginning in 1998 for bundling its software programs with its Windows operating system, effectively shutting out competitors in a similar way to the present accusations against Google. Microsoft settled the case with the government in 2001.

Google itself has already faced similar antitrust challenges in recent years. In Europe, Google was sued by antitrust regulators in the European Union (EU) in 2015, with the case only settled in 2018.

As The Times’ Shira Ovide argues, “this legal case is going to be loud, confusing and will most likely drag on for years.”

Even so, the very fact that the DOJ has filed a lawsuit against Google has been seen by some to represent a landmark moment. Tim Wu, professor at Columbia Law School, believes the filing of “the complaint marks the return of the U.S. government to a role that many of us long feared it had abandoned,” even if its full implications are yet to be revealed.

But Google is well equipped to fight the lawsuit. According to The Times’ Greg Bensinger, not only has the DOJ appeared to have “rushed the suit in a quixotic attempt to make it an Election Day issue,” thus potentially lacking in evidence to back the suit, but the department itself is “outgunned by Google’s legion of attorneys and [a] mountain of cash.”

With US$17.7 billion in cash on hand, against a budget of US$167 million for the Justice Department’s antitrust division, it is clear to see how Google could successfully put up a fight against the DOJ’s lawsuit.

But in what is potentially bad news for Google, the government’s lawsuit is likely not alone in challenging Google’s alleged “anti-competitive” practices and “monopoly.” Observers expect a slew of private class-action lawsuits to target Google as the government’s case drags on.

More lawsuits are also expected to come from state governments across the US, which would be freer to take a harsher line against Google should any ruling in the DOJ’s case appear to be too lenient on the company.

All this comes at a time of heightened scrutiny not just for Google, but for big tech in general. American big tech companies are under fire from congressional investigations and Google itself is being challenged by startups and competitors in markets around the world, as recent events in India show.

While the DOJ’s lawsuit has just begun, meaning it could be years before any conclusion is reached, the fact remains that big tech is under fire around the world and these attacks do not appear to be slowing down.

Have a tip or story? Get in touch with our reporters at tips@themilsource.com