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The U.S. Justice Department on Tuesday sued Google, claiming the company illegally maintained monopoly over search and search-related activities.
In one of the biggest lawsuits against a tech company in over two decades, the legal department accused Google of partnering with Apple, and other companies, to ward off competition by striking exclusive business contracts with them.
What is the Justice Department’s claim?
The Justice department claimed Google’s 80% market share in search engine business was made possible by the deals it struck with smartphone makers, which helped it put its search service as default for users.
The department further said Google spent billions of dollars from its advertising revenue to pay for mobile manufacturers, carriers and browsers to make Google as their pre-set search engine.
This meant that Google held top position in search of millions of devices, making it difficult for other search engines to establish themselves.
The lawsuit accused Apple and Google of being reliant on each other, and edging out rivals from the market. The department noted that almost half of Google’s search traffic in 2019 came from Apple’s devices, while about a fifth of Apple’s annual profit came from Google.
The complaint also alleged Google of restraining innovation, reducing choice and degrading the service quality such as privacy data.
“Google has used anticompetitive tactics to maintain and extend its monopolies in the markets for general search services, search advertising, and general search text advertising-the cornerstone of its empire,” the lawsuit read.
The lawsuit has been filed amid a wider questioning of big tech companies’ dominance, and comes after more than an year of investigation by the Justice Department. Albeit the agency has not suggested any remedies.
The Justice Department also investigated other areas including web display and video ads, and spoke to Google’s rivals in technology and media to collect documents in order to build a case.
However, the case related to search seems to be the strongest where the agency needs to show that Google is dominant in the search and its deals with smart phone makers have dented the competition in the market.
Other states and jurisdictions are also expected to file separate complaints against the company.
What is Google’s defence?
Google’s chief legal officer Kent Walker called the lawsuit ‘deeply flawed’.
“People use Google because they choose to, not because they’re forced to or because they can’t find alternatives,” he said in a statement on Tuesday.
He added that the lawsuit would, in turn, harm the consumers as it would artificially prop-up lower quality search alternatives and raise phone prices.
He argued that the company pays to promote its business with Apple, other phone manufacturers and carriers to grab the eye-level shelf space on their devices, and that there was nothing wrong in doing so.
“But let’s be clear- our competitors are readily available too, if you want to use them,” Walker added.
Walker noted that the American antitrust law is not designed to tilt the playing field in favour of particular competitor and Google believes the Court will conclude that the suit doesn’t square with either the facts or the law.
Google’s defence stems from the fact that its services are offered to customers with little or no cost, eliminating the potential price harm in the antitrust argument.
Expected Outcome of the case
It is unlikely that the tech giant would refrain from a legal fight as it has fought similar antitrust lawsuits in Europe.
A loss for the Mountain-view based company could revamp one of the biggest tech firms that helped revolutionise the internet, while a win could lead to a huge blow in overall scrutiny of big tech companies.
Such cases run for years and the new government formed after November 3 elections will have to bear the responsibility of managing the suit. The lawsuit will also be a test for antitrust laws as Democrats have long argued that the regulations need to be adjusted according to the current digital era.
The last similar antitrust case in 1998 against Microsoft Corp. eventually resulted in a settlement.
Published - October 21, 2020 02:58 pm IST
