A coalition of 38 state attorneys general is behind a new lawsuit accusing Google of holding illegal “monopoly” power in the online search market as well as in online advertising. New York Attorney General Letitia James, one of the leaders of the action, said Google has long used its size and related influence in various sectors of the digital economy “to illegally squash competitors, monitor nearly every aspect of our digital lives, and profit to the tune of billions.”
“For decades now, Google has served as the gatekeeper of the internet and has weaponized our data to kill off competitors and control our decision making — resulting in all of us paying more for the services we use every day,” she added.
Other states taking a lead role in the lawsuit are Arizona, Colorado, Iowa, Nebraska, North Carolina, Tennessee, and Utah.
The states are asking a federal court in Washington D.C. to order a number of things to rectify Google’s allegedly anticompetitive business, including divesting certain assets within its search and advertising groups and to end contracts it employs to ensure its search engine is used while forbidding such conduct in the future.
“As the gateway to the internet, Google has systematically degraded the ability of other companies to access consumers,” the lawsuit reads. “Google enjoys virtually untrammeled power over internet search traffic that extends to every state, district, and territory in the United States, and, indeed, into nearly every home and onto nearly every smartphone used in the United States.”
The lawsuit comes just a day after Texas led a smaller coalition of eight Republican states in a similar lawsuit, also accusing Google of holding a monopoly in online search and advertising. And in October, the department of Justice and 11 state Attorneys General filed an antitrust suit but focused on Google’s dominance of online search. And many of the same states behind today’s new suit against Google are also behind one launched last week against Facebook, claiming that company is also a monopoly in social media and demanding that it unwind its past acquisitions of Instagram and WhatsApp.
Broadly, the newest lawsuit positions Google as a one time start-up that has become a “web-ecosystem behemoth” that not only has monopoly power, but uses “multiple forms of anticompetitive conduct in the general search and search advertising-related markets.”
It repeatedly compares Google’s position to that of Microsoft in the Nineties, when the U.S. Government successfully argued that the company constituted a monopoly in the PC market. It was eventually ordered to break up into two operations, one handling the production of operating systems, the other software. On appeal however, the ruling was overturned, and as part of a settlement, Microsoft was only required to share its software interface with rivals.
But Google’s alleged anticompetitive conduct seems to be wider than that of Microsoft. About 90 percent of all online searches in the U.S. happen through Google, with no other realistic competitor. Such dominance is maintained through “exclusionary agreements,” the AGs claim, like the one Google has with Apple, in which Apple makes Google the default search engine on all of its tens of millions of devices. Google also allegedly discriminates against “specialized search sites, like Expedia and Yelp, as they threaten advertising revenue.”
And when it comes to advertising revenue, Google maintains a firm grip there as well through allegedly illegal and anticompetitive means. The states claim that Google “rigs the game” by driving advertising spending to itself by surfacing advertising more often and making it look as though another search engine, like Bing, sees worse ad performance than it actually does. It has further fortified its monopoly power in advertising by collecting massive amounts of user data, due in large part to a lack of choice for consumers, and utilizing it.
“More competition in the general search engine market would benefit consumers, for example, though improved privacy protections and more targeted results and opportunities for consumers,” the officials said. “Competitive general search engines also could offer better quality advertising and lower prices to advertisers, which would be expected to flow through to consumers.”
In response to the lawsuit, Adam Cohen, Google’s director of economic policy, argued that the company has done nothing but respond to consumer and business needs in building out its search capabilities over the years. He spun the allegations in the new lawsuit “…suggest we shouldn’t have worked to make search better and that we should, in fact, be less useful to you.”
He also claimed that Amazon, Expedia and TripAdvisor were all valid competitors to Google’s business.
“This lawsuit demands changes to the design of Google Search, requiring us to prominently feature online middlemen in place of direct connections to businesses,” Coen said. “Redesigning Google Search this way would harm the quality of your search results. And it would come at the expense of businesses like retailers, restaurants, repair shops, airlines and hotels whose listings in Google help them get discovered, and connect directly with customers.”
“We look forward to making that case in court,” he added.
Meanwhile, Cohen did not directly address the lawsuits claims around its dominance in the online ad market. Instead, he directed within his statement to a previous blog post on the October DOJ lawsuit, that also does not mention advertising, and to Google’s main page for its various positions on competition in the U.S.
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