The commanding search engine Google is currently engaged in a civil lawsuit in Washington, where it is facing its greatest legal challenge yet. It is accused of breaking American antitrust laws. The tech business which is synonymous with online information searching, has used its enormously effective search engine to create a large industry encompassing cloud computing, advertising, and YouTube. The Alphabet-owned business grew up when antitrust regulation was less strict. This is especially against IT companies who create creative and frequently free methods for people to browse and utilize the internet.
The Department of Justice’s (DOJ) complaint focuses on two allegations: Google Search and whether the business utilized illegal agreements to oust competitors and harm customers and advertisers in the process. Google pays businesses billions of dollars to be the browser’s default search engine. In recent years, attempts to regulate Google and other digital titans have fallen short. In the absence of regulations, the government is attempting to regulate web competition and restrain internet gatekeepers using antitrust laws that date back 113 years. The trial’s verdict is expected to have effects that far beyond Google’s operations. It will reveal whether US regulators’ attempts to put Google’s practices on the radar and control the market will be successful.
Why is Google facing an antitrust lawsuit?
In a lawsuit filed more than three years ago, the DOJ and 38 states accused Google of illegally maintaining a monopoly in the online search and advertising sectors. In terms of market share, Google holds around 90%. The government further asserts that it upholds its supremacy by entering into limited contracts with phone and browser manufacturers including Apple, Mozilla, Samsung, and Verizon. The majority of American phones now come pre-installed with Google’s search engine, which the government claims is unlawful. Pre-installing or marketing competing search engines is prohibited per Google’s distinct contracts with Android-based mobile partners.
The DOJ claims that Google excludes competing search engines through these arrangements. Additionally, the government claims that Google’s billions of dollars in payments to partners have prevented rival search engines like Microsoft Bing and DuckDuckGo from gaining sizable market share. According to the DOJ, Google’s strategy of forcibly preloading its services onto smartphones running its Android software assisted the internet giant in keeping a monopoly. The states also contend that Google did not fully integrate Microsoft’s Bing into its well-known advertising engine, Search Ads 360. They contend, however, that Google favors advertising on its own platform and directs advertisers’ money there. This is accomplished by forcibly denying marketers the chance to promote choices that would best aid them.
What harm do Google’s agreements bring?
According to the Department of Justice, Google’s exclusive agreements with Apple and other parties restrict competitors from successfully vying for search market share or enhancing their products. Other businesses, like Microsoft, are unable to conduct enough searches to enhance their goods since Google freezes up all browsers and receives all inquiries. According to the authorities, it offers Google an unfair competitive edge. Due to Google’s agreements, innovation is further stifled because the firm is not required to enhance its search engine in order to retain market share. The DOJ also claims that Google increased the cost of advertising on its search sites by abusing its monopoly power.
How is Google countering the allegations?
Google claims that by giving browser providers what they want—a single default search choice for users—through its agreements with Apple and other parties, it fosters competition. Google claims that its commercial tactics are accepted and legal. It claims that the arrangement is comparable to a cereal manufacturer paying retailers to stick their cartons at eye level when it charges to appear in Mozilla’s Firefox or Apple’s Safari. Both businesses select Google because it consistently outperforms competitors rather than under the influence of revenue sharing or other inducements. Because consumers can alter their settings to change the default search engine, Google argues that the agreements do not preclude its partners from giving other search engines.
Google claims that users of Android smartphones can choose another search engine instead of the one that comes preloaded on their device. But because so few users do so, it cannot be interpreted as evidence of exclusive practices but rather as customers sticking with the better product. The leading search engine has additionally asserted time and time again that it faces many successful rivals in online search. The business cites TikTok and Amazon as thriving competitors. Google claims that despite the fact that they do not run general-purpose search engines, users go to these competing websites to find goods and content instead of using Google. The California-based business has added that the government is using faulty logic to single out the business due to its notoriety. The business thinks its success is a result of producing the best search engine.
Kent Walker, Google’s chief legal officer said,
We look forward to showing at trial that promoting and distributing our services is both legal and pro-competitive.
What does the government need to prove to prevail in the trial?
The government must demonstrate that Google controls the economic sectors at the center of the case through monopoly power. They will attempt to persuade the judge to adopt a definition of a search engine that is rather rigid. They will also attempt to persuade the judge to disagree with Google’s claim that the search engine market is occupied by websites like Amazon and social media platforms like TikTok. The more competitive the market, the simpler it is for Google to claim that it lacks monopoly strength.
Additionally, the government must demonstrate that Google’s business relationships significantly lower competition between search engines. They must demonstrate that it prevented them from striking comparable agreements with device manufacturers and acquiring new clients. The DOJ will likely need to demonstrate how these company activities directly or indirectly affected consumers. This is highly likely to influence the judge’s decision to hear antitrust complaints.
What is the future for Google if it loses?
The decision might diminish Google’s importance and impact in the technology sector if it loses this case. There can be substantial repercussions for the business. It might restrict Google’s ability to contend in the market and reorganize the balance of power in Silicon Valley. The U.S. and its state partners are not seeking a monetary fine. Instead, they are asking for an injunction that would prevent Google from carrying on with the allegedly anticompetitive tactics. The firm could be disbanded by the court as a remedy. However, another trial will determine Google’s fate if the court finds that the firm violated the law. The DOJ could also request that Google be prohibited from entering into exclusive distribution deals. In doing so, it will allow competing search engines a greater presence on consumer electronics.
Paul Gallant, a tech-policy analyst at Cowen Washington Research Group stated,
Breaking up the company over unlawful payments to equipment manufacturers seems unlikely relative to the harm.
What does U.S. antitrust law say?
It is not against the law for a business to enter into an agreement with one client that excludes others. Such exclusive agreements are typical and receive little regulatory attention. When a firm lacks market power, it is unable to significantly impact the competition. However, if a large and strong business stops competitors from entering the market, exclusive agreements may be illegal under antitrust laws.
The U.S. – Microsoft Antitrust Trial
In 1998, the government filed a lawsuit against Microsoft. The company was acquitted of attempting to monopolize the market for internet browsers for Windows systems. In the court case, the DOJ won. It opened the door for competitors like Google and Facebook to succeed in the future. The trial court held that Microsoft had combined Internet Explorer with Windows OS and illegally attempted to obstruct Netscape Navigator. According to the DOJ, Google imitated Microsoft’s strategy from the 1990s. They state that it was in order to establish and preserve its own dominance in internet search and advertising. The comparison, according to Google, is incorrect.