US DOJ Says Google Squelches Competition

The shoe dropped.

Tuesday, Oct. 20, in a move that surprised maybe no one, the Justice Department filed an antitrust lawsuit in Washington, D.C. against Google, joined by 11 states attorneys general, alleging the tech giant has used its dominant position in the online search market unfairly against competitors.

The suit does not offer up recommendations about how to address its allegations that Google used anticompetitive strategies to carve out its position as a monopoly in the online search industry, violating the Sherman Act.

But the issues raised by the lawsuit hint at where regulators and lawmakers will aim to restrain the tech giant — perhaps even, down the line, refashion the company itself.

“The Google of today is a monopoly gatekeeper for the internet, and one of the wealthiest companies on the planet, with a market value of $1 trillion and annual revenue exceeding $160 billion. For many years, 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 cornerstones of its empire,” opens the DOJ suit.

The company, according to the DOJ in materials provided to PYMNTS, has crafted a series of “interlocking contracts” that has helped fashion monopolies in search services, search advertising, and search text advertising. Those monopolies are durable and self-sustaining, said the DOJ. Google, said the complaint, “shares” monopoly  profits with distributors in order to secure prime status as the per-set default across browsers and mobile devices — to the exclusion of competitors.

“Without antitrust enforcement, Google will continue to insulate itself from competition. This in turn will continue to impede innovation and harm internet users, advertisers, small businesses, and technology entrepreneurs,” according to the DOJ.

And in terms of market share and reach, “largely as a result of Google’s exclusionary agreements and anticompetitive conduct, Google in recent years has accounted for nearly 90 percent of all general-search-engine queries in the United States, and almost 95 percent of queries on mobile devices.”

Foreclosing On Competition? 

With such dominance in search, the suit alleges, Google effectively has “foreclosed” competitors from gaining scale in the industry — and as a result, consumers suffer because they have less choice. Advertisers suffer from a lack of competitive pricing in the field, maintained the suit — and pay Google as much as $40 billion annually to place ads on Google’s search engine results.

Against a larger backdrop, the suit had been  pretty much expected, and comes in the wake of a Justice Department investigation that dates back to 2019. It also comes on the heels of a report from the House Judiciary subcommittee that, within a broader indictment of Big Tech names, said that Google has a monopoly in the online search industry.

Among the recommendations proposed by the subcommittee: Limitations on the markets and verticals in which Google (and its Big Tech brethren) can compete. We note that the Tuesday antitrust suit focuses on search, and thus leaves other businesses like YouTube (at least for now) aside.

The DOJ is asking in the filing for “structural relief” but does not define what that relief might be.

One never knows just how the case may go, and it may (likely will) stretch out over years. But the DOJ filing, we contend, marks the most visible threat to Google here in the U.S. — while the company is grappling with its own legal challenges abroad.

As has been documented in this space in recent weeks, in the European Union (where roughly $9 billion in fines have been levied against Google through the past three years), regulators have lodged antitrust complaints against Google. And there have been hints that watchdogs on the Continent can and will use injunctions as a way to limit certain business practices as cases wend their way through the courts.

For Google, for DOJ, the battle is officially joined.