Compass Money: DOJ Sues Google Over Antitrust Violations
The DOJ filed suit against Google for anti competitive practices in the search industry. (Creative Commons)
The U.S. Department of Justice filed an antitrust lawsuit against Google on October 20, accusing the company of using exclusionary practices to preserve its monopoly over the search engine industry. This is the first major antitrust case against a technology giant since the DOJ filed a suit against Microsoft in 1998.
Dr. Hal Singer, Managing Director of Econ One and adjunct professor at Georgetown’s McDonough School of Business, explains that this case is “long overdue.” The premise that larger firms generate efficiency and lower prices has led to a decades-long decline in antitrust enforcement. Nowadays, judges typically only consider whether prices rise or fall instead of assessing the larger competitive landscape. As a result, Dr. Singer explains that private enforcers cannot be relied on to challenge Google because its search browsers are free. Only the DOJ has the power and resources to bring forward such a case, which is why Singer finds the case so important.
To win, the government must prove that Google has a monopoly in the search industry and that its exclusionary tactics are anti-competitive. The suit claims that Google owns or controls 80 percent of search queries in the U.S., leaving little room for competition.
The government then alleges that Google uses exclusionary agreements with distributors like Apple that shuts out other firms. The lawsuit claims that Google pays Apple between $8-$12 billion for Google to remain the default search engine on Apple devices. The lawsuit also targets Google’s agreements with Android manufacturers because Google’s search application is pre-installed in Android devices and cannot be deleted. However, the lawsuit does not provide concrete data for these tying agreements.
The government alleges that these exclusionary tactics erode competition and innovation. Deputy U.S. Attorney General Jeffrey Rosen explained that “if the government does not enforce its antitrust laws to enable competition… Americans may never get to see the next Google.”
While the suit may seem grand, the accusations are narrow. The charges only cover text search, and does not cover allegations of abusing its monopoly power abuse in digital advertising or specialized searches like travel, images, or video. The narrow focus, however, gives the government the best chance of winning because Google is less dominant in digital advertising and product-specific search. The lawsuit is likely to take years to resolve, and could end up in an “unremarkable settlement” where Google makes symbolic changes and pays a fine.
Even though the settlement may be inconsequential, Dr. Singer explains that it is incredibly important for the DOJ to bring forward this case. He says that the lack of antitrust enforcement over the past twenty years means the lawsuit will finally “put all other monopolists on notice” so that they can no longer “flout the laws” like they have been the past two decades.