How did it all start?
In a highly anticipated lawsuit, the government accused Google of making deals with
According to the antitrust authority, the transactionsGoogle with Apple, mobile operators and other mobile phone manufacturers to make its search engine the default option for users accounts for much of its dominant share of the search market. In total, this figure is about 80%.
“For many years,” the joint"Google has used anticompetitive tactics to maintain and expand its monopoly in general search, search advertising, and general search text advertising — cornerstones of its empire,” in a statement from the Department of Justice, Antitrust and the US Attorney General's Office.
A lawsuit that can take yearscould trigger a cascade of other antitrust lawsuits from state attorneys general. About four dozen states and jurisdictions, including New York and Texas, have conducted parallel investigations. Some of them are expected to file separate complaints about the company's control over online advertising technologies. Eleven state attorneys general, all Republicans, signed in support of the federal lawsuit.
Attorney General William P. Barr has spoken publicly about the upcoming investigation for several months. He called on the antitrust office to file a lawsuit by the end of September. It is worth noting that this caused resistance from some of his lawyers. They demanded more preparation time and complained about the political motives of the case.
Google became a favorite two decades agoSilicon Valley as a humble start-up with an innovative way to search the emerging internet. That Google is long gone. Today's Google is the monopoly gatekeeper to the Internet and one of the richest companies on the planet.
excerpt from the statement of the US Department of Justice
What exactly is Google accused of?
The core of the complaint is that Google allegedlyused his monopoly power to link content distribution channels for online search and related markets. The Justice Department claims that Google has "eliminated competition for Internet search" through exclusion agreements. They, in turn, deprive competitors of the opportunity to grow to the necessary scale to dare to challenge the dominance of the IT giant.
The Justice Department claims that Googleoccupies 88% of the US search market. At the same time, 94% of search queries from mobile devices are performed on its services. The department said that Google's monopolization strategy harmed consumers by reducing the quality of search services and limiting choice altogether.
Authorities also claim that Google owns more70% of the search advertising market and uses its monopoly power to charge more for lower quality services than would otherwise be possible under normal competition.
For example, according to the lawsuit, Google used itsmonopoly power to prevent competitors from accessing the distribution channels through the search results they need to expand and grow. Authorities say Google has "blocked" the dissemination of information through exclusive contracts with Apple and distributors of its Android mobile operating system. As a result, according to the lawsuit, Google suppressed innovation in the search engine market.
The government said that one examplesuch a contract is the one that Google requires from Android device manufacturers. According to the lawsuit, Google is requiring manufacturers of phones using its operating system to agree to strict restrictions on the sale of Android devices that "do not meet Google's standards." The company then gives manufacturers access to their "vital proprietary apps" in exchange for agreeing to use several other Google apps and preventing users from deleting some of them.
In addition, in the United States, according to the lawsuit, more than halfsearch terms “are subject to Google exclusion agreements” - 60% overall and 80% on mobile. According to the US Department of Justice, nearly half of the searches not covered by these contracts are performed on Google-owned "hotspots" such as its Chrome browser and Pixel phones. This gives the company effective control over roughly 80% of total US searches.
How did Google answer?
In a lengthy blog post following the announcement of the new lawsuit, Google's chief legal officer Kent Walker outlined a rebuttal of all of the Justice Department's claims.
“Today's Justice Department lawsuit is deeplyerroneous, "Walked said in his post. “People use Google because they want to, not because they have to. Or because they cannot find alternatives ... This lawsuit will do nothing to help consumers. On the contrary, it will artificially support lower quality search alternatives, raise telephone prices and make it difficult for people to access the search services they themselves want to use. ”
According to Walker, the lawsuit missed"the main thing". Namely, that consumers prefer to use Google services because they want to, because it is very easy to change the default settings. He also stated that consumers are using a variety of specialized search engines such as Expedia for travel and OpenTable for restaurant reservations, and even platforms such as Twitter to find information outside of Google's services.
Walker added that Google's competitors are “easily accessible, too” to users and that the company's contracts are not unusual in the industry.
He noted that Apple prefers to useGoogle search in your desktop browser because it is "the best". In his statement, he refers to a 2018 article in which Apple CEO Tim Cook praised the service. Walker said the Google deal is not exclusive and competitors are also paying to appear on Apple's Safari.
Walker also noted that Microsoft had previouslydownloads its own services to Windows devices, not Google products. On Android devices, advertising agreements allow Google to distribute its technology for free, reducing phone call costs for consumers, Walker said. He explained that carriers and device manufacturers continue to download competing apps to app stores on smartphones "in line with all agreements."
Lawsuit against Microsoft. History repeats itself
It is estimated that Google controls the online search market between 80 percent and 90 percent, generating tens of billions of dollars in annual revenue.
The parallels between this case and what wasfiled against Microsoft in 1998 are clear: both question the use of presets and exclusive contracts to promote the product.
"This is very similar to the case against Microsoft" -Sarah Miller, co-director of the American Economic Freedoms Project, said in an interview with The Hill. In that case, the court ruled to split Microsoft into two separate companies, but the tech giant escaped that fate after a successful appeal.
The specifics of the actions of the Ministry of Justice onAccording to legal experts, in many ways echoes the latest major antitrust lawsuit against, again, a large technology company Microsoft. That lawsuit, filed in 1998, alleged that Microsoft used its privileges as the owner of the dominant operating system for personal computers, Windows.
The Justice Department accused Microsoft ofusing restrictive contracts with PC manufacturers and other parties to prevent the distribution of software from Netscape Communications, a pioneer in the commercial browser market. As a result, you probably haven't even heard of him, have you?
And it worked. After lengthy litigation, it emerged that Microsoft had repeatedly violated the country's antitrust laws.
“This was the last major victory forgovernment, so it makes sense to chart a similar path, ”said Sam Weinstein, a former Justice Department antitrust officer and professor at Cardoso Law School.
Microsoft case also helps the governmentargue for harm to the consumer in the case of Google. In antitrust law, consumer welfare is often associated with a monopolist exercising power by raising the prices of products to maximize profits.
However, the Google search service is free forconsumers. This means that the government cannot use price increases as an argument. But in the case of Microsoft, prices were not taken into account. The company then built its web browser into the dominant Windows operating system for free.
So what harm did the authorities appeal to?then and now? The point is that less competition in the market means less innovation and less choice for the consumer in the long run. In the case of Google, in theory, this could close the market for competitors that collect less data for targeted advertising than the IT giant.
“Competition is hurt and the consumer loses as a result,” explains Tim Wu, professor at Columbia Law School.
However, Microsoft's case is alsoinstructive example. It took years, but on November 1, 2002, Federal Judge Colleen Collar-Coatley issued an order in which she approved the main provisions of an earlier agreement to resolve the dispute between Microsoft and the US Department of Justice. Two years earlier, in the summer of 2000, Judge Thomas Jackson recognized the corporation as a monopoly and ordered it to be divided into two companies. Microsoft protested the decision and reached a compromise with the Department of Justice. Judge Kollar-Cotley upheld the terms of this agreement.
Its influence is debated to this day. Without a lawsuit and years of research, according to some observers, Microsoft could simply stifle Google's rise.
Others insisted that technologicalThe shift towards the Internet and the ditching of personal computers means that Microsoft has lost the power it once had. Technology, not antitrust laws, opened the doors to competition, they said.
What will the claim lead to?
In fact, the actions of the antitrust servicesushered in a new era for the tech sector. The lawsuit reflects subdued dissatisfaction, both Democrats and Republicans, with a handful of companies - notably Google, Amazon, Apple and Facebook - that have evolved from small and disparate organizations to global centers of power with enormous influence over trade, media and advertising. Conservatives like President Trump and liberals like Senator Elizabeth Warren have called for more restrictions on their influence.
Lawsuit filed with the U.S. District Court for the DistrictColombia will also be a major test of antitrust laws. Many Democrats argue that laws need to be adjusted to reflect the digital age. Now that many products are free, it is much more difficult to prove the harm done to consumers by the company's firm grip on the market.
In turn, a government victory canremake one of America's most recognizable companies since it was founded by two graduate students at Stanford University in 1998. Basically, like the Internet economy in general, which the company helped define and, to some extent, create.
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