What we know about the DOJ’s antitrust case against Google so far

BY Mojgan October 23, 2020 Google ، Technology 6 views
If the company got broken up, maybe each business would take a different color with them when they go. JHVEPhoto | Getty Images

The Justice Department today filed a landmark antitrust case against Google. The hotly anticipated, long-awaited lawsuit accuses Google of using its market dominance to force unfair contract terms on suppliers and competitors to the detriment of competition and the marketplace.

The suit might just be the biggest thing in antitrust since the DOJ sued Microsoft in the 1990s… or it might not. Even though the investigation that led here has been going on for 16 months, a suit like this is the beginning, not the end, of the process. So here’s everything we know—and more importantly, everything we still don’t—about what this blockbuster case really means.

What does the suit allege?

The complaint (PDF) lays out the case that Google used “exclusionary agreements and anticompetitive conduct” to become dominant in the search marketplace, and then kept abusing that market dominance to prevent nascent rivals from gaining enough of a toehold potentially to become real competition.

The suit is focused on Google’s search business, including search advertising and “general search text advertising,” which the DOJ alleges the company has “monopolized” for more than a decade.

“For years, Google has entered into exclusionary agreements, including tying arrangements, and engaged in anticompetitive conduct to lock up distribution channels and block rivals,” the DOJ writes in the suit. It goes on:

Google pays billions of dollars each year to distributors—including popular-device manufacturers such as Apple, LG, Motorola, and Samsung; major U.S. wireless carriers such as AT&T, T-Mobile, and Verizon; and browser developers such as Mozilla, Opera, and UCWeb—to secure default status for its general search engine and, in many cases, to specifically prohibit Google’s counterparties from dealing with Google’s competitors. Some of these agreements also require distributors to take a bundle of Google apps, including its search apps, and feature them on devices in prime positions where consumers are most likely to start their internet searches.

Although there are alternative search engines in the world, such as DuckDuckGo or Bing, the DOJ argues that Google’s scale and anticompetitive behaviors have at this point made its dominance insurmountable without intervention.

Google’s full response claims that the DOJ filed “a deeply flawed lawsuit that would do nothing to help consumers.” Consumers, however, aren’t the major target of the complaint. Competitors are. The complaint does not particularly address potential harms we, the end consumers, may experience as a result of this monopoly. Instead, it focuses on all the harms Google has allegedly done to other businesses in the digital supply chain.

Just search, though? That’s it, really?

That’s it, really. The DOJ’s lawsuit is pretty narrow at this time and mainly focuses on just one of Google’s sprawling business ventures. There are, however, plenty of other Google behaviors to complain about.

For example, a blockbuster report released earlier this month by a House Judiciary subcommittee found not only that Google was abusing its power in the search market but also that it was abusing its control over the digital advertising market. Google achieved its dominance through a series of acquisitions it lied about, the House alleged, and also through illegally tying other apps, products, and services into the Android platform. The House report also cited the intertwining of Chrome, Google Maps, and Gmail into each other and into other Google services as anticompetitive behavior.

Previous probes into Google’s behavior have also taken issue with a much wider array of anticompetitive behaviors. In 2013, the company reached a settlement with the Federal Trade Commission in which it agreed to “change its business practices” across several segments of its sprawling business to avoid being sued for antitrust violations.

Two years later, however, The Wall Street Journal obtained a 160-page internal FTC document from the investigation leading to that settlement. The document showed that the agency’s competition bureau found Google “used anticompetitive tactics and abused its monopoly power in ways that harmed Internet users and rivals.” Agency staff recommended taking stronger antitrust action against Google at the time, but the commissioners decided that asking Google to behave better, instead of going to litigation, would result in faster change and less harm to competition and consumers.

DOJ officials declined to tell press in a call if they plan to add additional allegations to the existing suit or even file additional suits down the line. But they did confirm several times that their investigations into Google and other major digital platforms are still ongoing, implying that there’s room for additional complaints if the DOJ decides the evidence merits it.

So is Google going to get broken up?

It’s definitely possible—but also definitely not at all guaranteed. DOJ officials did not say they were looking for a breakup, but they also didn’t rule it out. “Nothing is off the table” is all they would say.

The suit is very vague about what specific relief the government seeks. As a start, the DOJ asks the court to rule that Google broke the law and to order Google not to do anticompetitive things anymore. It then also asks the court to “enter structural relief as needed to cure any anticompetitive harm” as well as any relief “necessary and appropriate to restore competitive conditions in the markets affected by Google’s unlawful conduct.”

In general, “structural remedies” tend to imply divestments or breakups—you’re literally changing the structure of the company to fix the problem. (In contrast, “behavioral remedies” imply requirements for or against specific behavior, as often seen with merger conditions.) The case is likely to be extremely long and complicated, and by the end of it, the court may determine that, yes, Google needs to be broken up to restore competitive conditions… or it may not. At this point, guessing that outcome is Magic 8 Ball territory.

What other outcomes might we see?

While this is a new kind of case for US antitrust enforcement, regulators on the other side of the Atlantic have been busily probing Google for most of the last decade. They have perhaps left us some guideposts for potential outcomes.

Google has faced several antitrust investigations in Europe as well. The EU fined Google for violation of antitrust law three separate times in recent years: €2.4 billion ($2.7 billion) in 2017, related to search; €4.3 billion ($5 billion) in 2018, related to Android; and €1.5 billion ($1.7 billion) in 2019, related to AdSense.

In the wake of those cases, Google had to make some changes to the way it operates inside the EU. In 2018, Google confirmed that Android device manufacturers would be allowed to unbundle the Android app package—for a fee. At the time, access to a license could run between $2.50 and $40 per device depending on country and on quality of device.

Google also now allows European Android users to select an additional preferred search engine and Web browser at device setup, rather than installing only Google and Chrome by default.

Those changes, however, do not appear to have altered the landscape in any significant way, in part because the slots allotted for competitors are doled out through an auction process. In short, as privacy-focused search engine DuckDuckGo complained in September, “The long-term result is that the participating Google alternatives must give most of their preference menu profits to Google!”

The various successes and failures of the EU approach are likely to come up from at least one side during the US legal process. But guessing whether a US court would choose to go the same way is, again, Magic 8 Ball territory.

Is this a big deal? It seems like a big deal.

The suit certainly has the potential to be a big deal. Google has thoroughly cemented its status as one of the biggest companies in the world by making its services utterly integral to the lives of billions of people. Stronger regulatory and legal action could have a profound effect on basically everyone, including a huge swath of businesses.

It’s also now shockingly rare for the DOJ to pursue antitrust cases of this type anymore. Antitrust enforcement in the United States has declined enormously since the late 1970s, and both civil and criminal antitrust filings have contracted even more in the first two decades of this century. There have been two (2) previous major tech antitrust cases pursued in the last 50 years, and DOJ officials are leaning in hard to the idea that this could be a third to add to that tiny collection.

“As with its historic antitrust actions against AT&T in 1974 and Microsoft in 1998, the Department is again enforcing the Sherman Act to restore the role of competition and open the door to the next wave of innovation—this time in vital digital markets,” Deputy Attorney General Jeffrey Rosen said of the suit.

“Decades ago the [DOJ’s] case against Microsoft recognized that the antitrust laws forbid anticompetitive agreements by high-technology monopolists to require preinstalled default status, to shut off distribution channels to rivals, and to make software undeletable,” a DOJ press release added. “The complaint alleges that Google is using similar agreements itself to maintain and extend its own dominance.”

What about the other investigations into Google?

Google—along with its fellow Big Tech firms Apple, Amazon, and Facebook—has for the last year been under a veritable bevy of probes, and we still only know the outcomes of half of them at most.

Congress finished up with its investigation and released its report earlier this month, and today’s DOJ lawsuit is clearly a milestone in that investigation. That leaves at least two major outstanding probes.

The first is in Europe. The EU is again actively investigating if Google broke antitrust law in that region. This time, the focus of the investigation is on Google’s collection and use of user data, including across search services, online advertising, login services, Web browsers, and other platforms.

A bipartisan coalition of attorneys general representing 50 states and territories also opened a joint probe into Google last year. The group included attorneys general from 48 states, Puerto Rico, and the District of Columbia. (Alabama and California are the two states not participating.)

Teaming up

Several of those states have since thrown in their lot with the feds and signed on to the DOJ lawsuit today as plaintiffs. However, that still leaves almost 40 attorneys general working on the state probe. DOJ officials in a press call said they “have a line of communication” with all the states and that “we’ve seen general support as to the issues” among all the states. But they also indicated that other jurisdictions “just want to take a different path.”

New York Attorney General Letitia James confirmed today that at least seven states—Colorado, Iowa, Nebraska, North Carolina, Tennessee, and Utah, in addition to New York—are continuing to work together on their own probe. “We plan to conclude parts of our investigation of Google in the coming weeks,” James said. “If we decide to file a complaint, we would file a motion to consolidate our case with the DOJ’s. We would then litigate the consolidated case cooperatively, much as we did in the Microsoft case.”

The remaining 30 or so states not accounted for in either group may ultimately choose to do nothing, to sign on to the federal case, or to bring another additional legal challenge or challenges.

So is this somehow… political?

Of course it is, at least in part. There are plenty of complaints about Google from both sides of the aisle, but reports indicate that political motives are all over the timing and specifics of the lawsuit.

The New York Times reported last month that a partisan schism had formed inside the DOJ. Attorney General Bill Barr was reportedly pushing for the antitrust division to finish its investigation quickly so the department could file a lawsuit as soon as possible, preferably in September—obviously a deadline the department didn’t quite meet. According to the NYT, though, most of the 40 or so lawyers who were working on the investigation opposed the deadline and left during the summer in opposition.

“Disagreement persisted among the team over how broad the complaint should be and what Google could do to resolve the problems the government uncovered,” the NYT reported. “The lawyers viewed the deadline as arbitrary.”

A few days later, Politico reported a similar story. Cracks had formed in the coalition as lawyers tried to decide whether to focus on search, the ad market, or both, Politico wrote. “Some Democratic attorneys general,” Politico continued, “believe that a case largely focused on advertising would be too narrow—that suing Google without going after search would be like suing Standard Oil without focusing on oil.”

Judging by the partisan split in the states’ positions today, those cracks have persisted. All 11 of the states that signed on to the DOJ’s suits—Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina, and Texas—have Republican attorneys general. The attorneys general signed on to James’ statement, however, do represent a roughly bipartisan mix. (Four are Democrats, and three are Republicans.)

Some critics outside any state or federal administration also decried the suit as an empty political move rather than a serious attempt at antitrust enforcement. Public Citizen, for example, decried the suit as “a thinly veiled political stunt… driven by politics” that, instead of leading to change, will be “a missed opportunity to bring about a structural reckoning with one of the most powerful and wealthy companies in the world so that Trump and Barr can score political points.”

Speaking of 2020, what happens after the election?

This is the real trillion-dollar question. Election Day—as much a deadline as an event this year, given that 35 million voters have already cast ballots—is exactly two weeks from today. If President Donald Trump wins re-election, then obviously the DOJ can keep on keeping on as it has been.

If Democratic challenger Joe Biden wins, however, then come January there will be new leadership not only inside the White House but also at Justice. It’s impossible to guess who might be in charge at that point and how, specifically, they would prefer to proceed. A new attorney general could pursue the existing case as is, reframe it with a new strategy, or walk away from it entirely. Most experts seem to view that last option as the least likely, but it’s not impossible.

The Biden campaign has been comparatively quiet on tech issues, as opposed to some other high-profile Democrats, and seems unlikely to strike out a position on the case at this time. That said, we reached out to the Biden campaign for comment and will update if we hear back.

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