On Tuesday, the U.S. Department of Justice along with eleven states that include Florida, Texas and Arkansas filed a civil action against Google in the U.S. District Court for the District of Columbia alleging that the company unlawfully maintained “a monopoly in general search services and search advertising,” in violation of Section 2 of the Sherman Act.
The result of an investigation into “online market-leading platforms” that began in July of last year, in a statement, U.S. Attorney General William Bar cited government concerns about business practices “leading to massive concentrations of economic power in our digital economy,” capable of depriving technology markets of “free, fair and open competition.”
Specifically as to Google, the DOJ claims that it has collected convincing evidence that it “no longer competes only on the merits but instead uses its monopoly power … to lock up key pathways on mobile phones, browsers, and next generation devices, depriving rivals of distribution and scale,” collecting $40 billion annually from advertisers and having close to 60% of all general search queries.
Going so far as to call the company the ‘monopoly gatekeeper of the internet,’ the DOJ’s Complaint focused on Google’s use of exclusionary agreements, which it claims has allowed it to maintain ‘continuous and self-reinforcing monopolies.’ As examples, it lists a search agreement between Google and Apple, which includes mobile devices and several types of agreements centered around the Android operating system that include anti-forking, preinstallation and revenue sharing agreements.
According to the Complaint, such agreements involve ‘enormous payments,’ which are derived from Google’s search advertising revenues in exchange for ‘commitments to favor Google’s search engine,’ that create a strong disincentive for distributors to switch search engine providers and effectively raise the barrier of entry for competitors, especially small and innovative companies in the same space. The DOJ’s action also includes mention of next generation search platforms that include voice assistants, smart speakers, home appliances and automobiles.
Concluding that Google has ‘foreclosed competition for internet search,’ and risks that involve losing the ‘next wave of innovators’ the Complaint seeks the following relief:
- Structural relief as needed to cure anti-competitive harm
- Enjoining Google from continuing to engage in anti-competitive practices; and
- Relief to restore competitive conditions in the market.