WASHINGTON: The US Justice Department and 11 states filed an antitrust lawsuit against Alphabet Inc’s Google on Tuesday for allegedly breaking the law in using its market power to fend off rivals.
The lawsuit marks the biggest antitrust case in a generation, comparable to the lawsuit against Microsoft Corp filed in 1998 and the 1974 case against AT&T, which led to the breakup of the Bell System.
Google, whose search engine is so ubiquitous that its name has become a verb, did not immediately respond to a request for comment. The company had revenue of $162 billion in 2019, more than the nation of Hungary.
Republican Senator Josh Hawley, a vociferous Google critic, accused the company of keeping power through “illegal means” and called the lawsuit “the most important antitrust case in a generation”.
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The Microsoft lawsuit was credited with clearing the way for the explosive growth of the internet since the antitrust scrutiny prevented the company from attempting to thwart competitors.
Tuesday’s federal lawsuit marks a rare moment of agreement between the Trump administration and progressive Democrats. US Senator Elizabeth Warren tweeted on September 10, using the hash tag #BreakUpBigTech, that she wanted “swift, aggressive action”.
Coming just days before the US presidential election, the filing’s timing could be seen as a political gesture since it fulfils a promise made by President Donald Trump to his supporters to hold certain companies to account for allegedly stifling conservative voices.
Republicans often complain that social media companies including Google take action to reduce the spread of conservative viewpoints on their platforms. Lawmakers have sought, without explaining how, to use antitrust laws to compel Big Tech to stop these alleged limitations.
Taking action
Shares of Alphabet rose nearly 1% after news the government lawsuit was imminent. There was some doubt in the markets that Washington lawmakers will actually come together and take action, according to Neil Campling, head of tech media and telecom research at Mirabaud Securities in London.
“It’s like locking the proverbial door after the horse has bolted. Google has already got the monopolistic position, has invested billions in infrastructure, AI, technologies, software, engineering and talent. You can’t simply unwind a decade of significant progress.”
The 11 states that joined the lawsuit all have Republican attorneys general.
More lawsuits could be in the offing since probes by state attorneys general into Google’s broader businesses are under way, as well as an investigation of its broader digital advertising businesses. A group of attorneys general led by Texas is expected to file a separate lawsuit focused on digital advertising as soon as November, while a group led by Colorado is contemplating a more expansive lawsuit against Google.
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The lawsuit comes more than a year after the Justice Department and Federal Trade Commission began antitrust investigations into four big tech companies: Amazon.com, Apple, Facebook and Google.
Seven years ago, the FTC settled an antitrust probe into Google over alleged bias in its search function to favour its products, among other issues. The settlement came over the objections of some FTC staff attorneys.
Google has faced similar legal challenges overseas.
The European Union fined Google $1.7 billion in 2019 for stopping websites from using Google’s rivals to find advertisers, $2.6bn in 2017 for favouring its own shopping business in search, and $4.9bn in 2018 for blocking rivals on its wireless Android operating system.
Comments
KIM FORREST, CHIEF INVESTMENT OFFICER, BOKEH CAPITAL PARTNERS, PITTSBURGH
“It feels like 1998 all over again, with Google replacing Microsoft. It really does feel like the same kind of structure of the lawsuit that Microsoft went through in the 90s.
“I don’t think anybody wanted to select their own browser. Ultimately they could. This is stuff people weren’t paying for.
“What we’re talking about in this new Google lawsuit is the advertisers being hurt. It’s going to raise the price of advertising if you have a monopoly. In the browser wars and even in this you have to ask yourself is a monopoly better serving the participants of the market in the long run? Regardless, governments see monopoly and jump into action.
“On the plus side, as an advertiser you want to get your ads to the right people. Having a monopoly that understands the people you want to reach is better than you calling every tiny newspaper in America . sometimes you can’t stuff the genie back in the bottle.
“I love magazines and newspapers … Advertising has been killed by Google and social networks because that’s where the eyeballs are.”
“In the short term it doesn’t mean anything to investors. In the longer term this is just one more shot at the tech oriented media platforms . this is just one more arrow legislators and regulators are going to be able to throw at electronic or internet advertising platforms. Are advertisers going to elsewhere? I say no because that’s where the eyeballs are for better or worse.”
NEIL CAMPLING, HEAD OF TMT RESEARCH, MIRABAUD SECURITIES, LONDON
“It’s like locking the proverbial door after the horse has bolted! Google has already got the monopolistic position, has invested billions in infrastructure, AI, technologies, software, engineering and talent. You can’t simply unwind a decade of significant progress, or create new alternative powerhouses or tech ecosystems out of thin air.”
ROBERT PAVLIK, CHIEF INVESTMENT STRATEGIST, SENIOR PORTFOLIO MANAGER, SLATESTONE WEALTH LLC, NEW YORK
“(The DOJ) can charge them all they want but these companies probably have more money than the Treasury. In order for anything to have real bite, you need Congress and they want to break them up.”
“But given the fact there’s so much animosity, even though they agree something needs to be done with big tech it’s going to take a long time push through. But you’ll probably see pressure on the stocks.”
“(Big tech’s) leadership role would change but their parts are worth more than the whole. As a shareholder I’d say ‘break them up.’ I’ll probably make more money.”
- Reuters
