The U.S. Department of Justice (DoJ) has recently filed an antitrust lawsuit against Google for unlawful monopolization. The division says the company’s conduct harms both competition and consumers and decreases the ability of new startups to develop and compete.
Google’s Monopoly Power
Google’s economic power is well known. Regulators worldwide are investigating the company’s conduct and bringing actions under competition, privacy and consumer laws.
U.S. Attorney General William Barr said the new DoJ action: “[…] strikes at the heart of Google’s grip over the internet for millions of American consumers, advertisers, small businesses and entrepreneurs beholden to an unlawful monopolist.”
More precisely, the DoJ says Google is illegally monopolizing the market for online search and also search advertising – ads that appear alongside search results. Google’s U.S. market share is around 80 percent in the market for general search services and 70 percent in the search advertising market.
The thing is, having a dominant position is not against the law, as long as it doesn’t do so by unlawful means. So what has Google done wrong?
Some of Google’s Unlawful Acts
The DoJ’s main protest is Google has secured numerous exclusionary agreements that maintain its monopoly power by blocking competition from rivals. Exclusionary agreements are deals that obstruct the ability of at least one party to compete against other players.
Google spends billions of dollars every year on:
- Long-term deals with Apple that make Google the native search engine on Apple‘s Safari browser
- Exclusivity agreements that outlaw pre-installation of other search services by specific mobile device manufacturers and distributors
- Arrangements that oblige certain mobile device producers and distributors to pre-install Google search apps in main locations on mobile devices and make them undeletable, irrelevant of consumer preference
- Using monopoly profits to purchase preferential treatment for its search engine on devices, web browsers and other search access sites.
According to the DoJ, these deals have created a ‘continuous and self-reinforcing cycle of monopolization’ in the market for online search and search advertising.
Google has responded by saying that people don’t use Google because they are forced to, but because they choose to. Still, even if that’s technically true, Google’s unlawful deals on pre-installation, default settings and preferential treatment give it a massive advantage over other options.
Why Should This Matter When Google is ‘Free’?
Google offers services that are valued over the world, and with no direct financial cost to the consumer. However, ‘free’ services can still cause harm.
As per the DoJ, by limiting competition, Google has endangered search users, mainly by ‘reducing the quality of search (including on dimensions such as privacy, data protection, and use of consumer data).’ This is a crucial recognition that price is not all that matters.
The reason behind this is that other search engines with better monitor records on privacy, such as DuckDuckGo, might be more successful than Google if allowed to spread. Or, to put it the other way, Google might need to compete strenuously on privacy, rather than to impose privacy-degrading terms on its customers.
What Might Happen if the Action Succeeds?
If Google is found to have violated the prohibition against monopolization under the US Sherman Act, it could face massive fines and damage claims. It could also cost it of its various businesses, which provide services such as Google Search, Google Chrome, and Android OS.
The action won’t be having a massive impact any time soon, however. Google’s lawyers believe the case would only come before the U.S. District Court for the District of Columbia in a year from now.