- Google now faces several antitrust challenges around the world, including three government lawsuits filed in the United States in just the past two months.
- Google’s review has long preceded these cases, with the European Commission preventing the search giant long before US regulators catch up.
- Google also faces some notable antitrust challenges from private applicants.
Sundar Pichai, CEO of Alphabet Inc., gestures during a discussion on artificial intelligence at the European Economic Focus Group Bruegel in Brussels, Belgium, on Monday, January 20, 2020. Pichai called on the US and the European Union to coordinate regulatory approaches to intelligence artificial, calling their alignment critical.
Geert Vanden Wijngaert | Bloomberg | Getty Images
Google now faces several antitrust challenges around the world, including three government lawsuits filed in the United States in just the past two months.
Government agencies have been examining the company for years, but the European Commission is taking action against the search giant before US regulators catch up. The Commission has already charged billions of dollars in fines against Google in three separate competition cases, which Google has attacked.
Regulators in other countries have also faced Google’s competitive practices, such as in Australia, where top critic Google News Corp has a major presence.
Google also faces some notable antitrust challenges from private applicants. Fortnite-maker Epic Games has sued both Apple and Google separately for alleged anti-competitive practices, including charging “exorbitant” sales taxes on their mobile app markets. Online publishers Genius Media and The Nation filed a lawsuit on Wednesday, claiming that Google hurt its business by suppressing advertising competition. They seek the status of collective action.
In each major case, Google denied involvement in anti-competitive conduct. Google maintains its choices for the benefit of consumers.
These are the main competition cases against Google that need to be pursued in the US and Europe:
The Justice Department’s lawsuit closely follows the previous lawsuit against Microsoft in the late 1990s, at least on the surface. Both discuss efforts to maintain monopoly power by linking key distribution channels to competitors and by using alleged exclusionary contracts to ensure the default status of its technology on manufacturers’ devices.
The DOJ trial, filed in October with 11 Republican attorneys general, details the alleged exclusionary contracts used by Google to block distribution. One such example in the lawsuit is Google’s contract with Apple to give its search engine default status on Apple devices.
Since the initial filing, California, Michigan and Wisconsin have asked to join the case.
Republican state AG
Texas led a group of nine other Republican attorneys general in a lawsuit focused on Google’s advertising technology business and an alleged anti-competitive deal with Facebook.
The lawsuit, filed Wednesday, claims that Google used its market power to push advertisers and publishers to use their tools at every stage of the ad buying process, to the detriment of consumers.
He also claims that Google struck a deal with Facebook when it learned of its plans to create an ad exchange that could rival its own. The states claim that the agreement involved bids to manipulate Google to benefit Facebook in exchange for maintaining the remote competitive threat. A Google spokesman told CNBC that the claim was inaccurate and that Facebook was involved in exchanges outside of Google.
The bipartisan state coalition
A bipartisan group of attorneys general from 38 states and territories, including Colorado, Iowa, Nebraska and New York, launched a third lawsuit against Google on Thursday. Part of the process reflects the DOJ’s claims regarding exclusionary contracts, but the complaint also goes beyond the initial process.
The state’s grievances deepen Google’s alleged efforts to block emerging distribution channels, such as smart speakers. It also claims that Google limits the ability of vertical search providers, such as Yelp and Tripadvisor, to reach consumers using “discriminatory behavior on its search results page.”
The complaint also concerns Google’s advertising tools, claiming that it unfairly disadvantages advertisers by denying them the ability to interoperate between their own advertising tools and those of competitors.
Antitrust Chamber Judiciary Subcommittee
While Congress has no enforcement powers, the House Antitrust Subcommittee on Justice released a lengthy report in October, which its authors hope will result in lasting changes to the law. The report followed an investigation over a year into Amazon, Apple, Facebook and Google, finding that each of the companies had monopoly power in their respective markets.
The majority report found that Google’s dominance functioned “as an ecosystem of interconnected monopolies”, which was strengthened by linking various services to extensive user data. Like some of the recent lawsuits, the report found that Google maintains its search monopoly through alleged anti-competitive contracts.
The subcommittee is working on new bills that aim to update antitrust laws in a variety of ways to make them more capable of dealing with modern business issues. The report by Democratic staff found that “the courts have significantly weakened” antitrust laws since their enactment, leaving it to Congress to legislate to bring them back to their original intent.
The European Commission fined Google 2.4 billion euros ($ 2.7 billion) in 2017 after finding that the company violated antitrust rules by abusing its dominant position in pursuit of its own comparative shopping advantage over its competitors. At the time, the fine was the largest ever issued by regulators in a monopoly abuse case.
Google is currently challenging the fine. The European Competition Authority may issue a decision before the subject has a chance to challenge the decision in court. In the US, this process is essentially reversed: regulators need to ask the court to approve their solutions or involve them in lawsuits when filing antitrust lawsuits.
In July 2018, the European Commission surpassed the previous record fine against Google in a second antitrust decision targeting Google’s Android mobile operating system. The Commission claimed that Google did this in part, forcing smartphone manufacturers to pre-install only its applications.
Google has been appealing ever since.
The third European investigation into Google led to a fine of about $ 1.7 billion against the company in March 2019 for allegedly stifling competition in online advertising.
The Commission’s complaints focused in part on exclusive contracts that Google allegedly had with publishers using its AdSense tool, which restricted them from displaying ads from its competitors.
Google also appealed this ruling.
While Google faces the threat of potential crashes in the future, it will probably be years before any significant resolution is reached. Once the new cases are settled in the courts, there is still a long way to go before there is a guarantee that a judge would grant anything so drastic, even if it is on the government’s side. Probably at least some of the cases against Google will be consolidated, with the bipartisan coalition already indicating that it will file a motion to do so with the DOJ case.
While new laws that could make the courts more favorable to the government in such cases are looming on the horizon, they are far from an immediate threat.
Probably because of this, these new processes had little impact on Google’s share price. The shares of its parent company Alphabet have increased by almost 30% in 2020 and by almost 20% in the last three months alone. Investors have become accustomed to controlling the company for billions of dollars and the threat is already at a price.
However, as long as these processes last, Google will remain under the microscope for every move and acquisition it attempts to make. Just as many believe that the Justice Department’s case against Microsoft in the late 1990s to early 2000s diverted attention from Google’s growing threat, a growing competitor could thrive again in these conditions.
Subscribe to CNBC on YouTube.
SEE: Watch Alphabet CEO Sundar Pichai’s initial testimony at Congress