Updated: October 28, 2020 8:42:31 am
The United States Department of Justice (DoJ) sued Google on Tuesday, alleging that the company had abused its dominant position in a way that had harmed its competitors as well as customers. Eleven US states have joined the DoJ in the anti-trust lawsuit against Google “for unlawfully maintaining a monopoly in general search services and search advertising”.
What is the lawsuit about?
In his statement announcing the initiation of the lawsuit, Deputy Attorney General of the DoJ Jeffrey A Rosen said the main concerns are business practices that may have led to “massive concentrations of economic power” in a few companies such as Google. The lawsuit will focus on Google as it “is the gateway to the Internet and a search advertising behemoth”.
“Google achieved some success in its early years, and no one begrudges that, but, as the antitrust complaint filed today explains, it has maintained its monopoly power through exclusionary practices that harm competition. So the Justice Department has determined that an antitrust response is necessary to benefit consumers,” Rosen said in his statement.
What led to the lawsuit?
Earlier this month, a US House of Representatives panel submitted the report of a bipartisan investigation into the working of Amazon, Apple, Google and Facebook. The probe had started in July 2019. These companies have been on the radar of governments in many countries for being big spenders and trying to steamroll competition by either buying out their rivals or pushing vendors to avoid working with these rivals. The US Congress wanted to know, for example, if Apple had, in order to promote an app that enables parents to limit screen time for children, thrown out a rival app on the pretence that it was not safe.
The panel said each of these companies was now acting as a “gatekeeper” over a key channel of distribution, which meant that they had full control over what went on in their respective domains. The report called for the big technology companies to be broken up and for a “presumptive prohibition against future mergers and acquisitions by the dominant platform”.
Why is the lawsuit important?
The lawsuit marks the first time there has been a bipartisan effort — involving both the Democratic and the Republican parties — to look into the monopolistic powers of Google.
The challenge for Google, experts said, would be continued scrutiny into its biggest revenue generating segment, which is advertising gained from its search engine and affiliate websites. In the April-June quarter, the company had earned nearly $38 billion, mainly from advertisements.
Apart from increased federal scrutiny, big tech companies are also likely to face more questions and probes from states in the US, which have in the recent past hauled these firms up for not doing more to control their influence on day-to-day aspects of life.
The last time Google faced legal action for allegedly abusing its dominance in the search market was almost a decade ago — in 2011 — when the Federal Trade Commission (FTC) was acting on a complaint filed by a Washington-based non-profit research agency, Electronic Privacy Information Center. Although the five commissioners eventually voted not to pursue a case against Google, the company had to, as a part of a settlement process, implement a strict user data security policy and agree to independent privacy audits for the next 20 years.
“Google is a global market player. This (lawsuit) would have a worldwide impact where Google’s practices could potentially be looked at. But having said that, the CCI (Competition Commission of India) is already looking into such practices and has already fined Google previously. This is very much under the CCI radar to keep these practices under check,” competition law expert and partner at L&L Partners Kanika Chaudhary Nayar said.📣 Follow Express Explained on Telegram
What are the allegations that Google faces in India?
Over the last three years, Google has had multiple run-ins with the CCI for alleged abuse of its dominant position in the search engine market, the Android smartphone and television market, as well as the Google Flights service.
In 2019, India’s antitrust body had held Google guilty of misuse of its dominant position in the mobile Android market and said the company had imposed “unfair conditions” on device manufacturers to prevent them from using other operating systems.
And in February 2018, the CCI had fined Google Rs 136 crore for unfair business practices in the online search market. It said that Google had “allocated disproportionate real estate” for its affiliates, to the disadvantage of other companies that were trying to gain market access.
“Besides, it was also found that Google has provided a further link in such commercial units which leads users to its specialised search result page (Google Flight) resulting into unfair imposition upon the users of general search services as well,” the CCI said.
Google has challenged the CCI findings in forums such as the National Company Law Appellate Tribunal and the Supreme Court.
What could the US Justice Department action mean for Google?
Although the lawsuit is the first of its kind, it is unlikely that there will be any swift action on the company in the near term, experts said.
“The lawsuit is just the beginning of something formal, after the House panel report. Going ahead, Google may argue before the courts that it is being singled out from amongst the other companies, or try to explain why it does not really abuse its dominance in any market segment,” said a legal expert who had advised some companies against Google’s 2018 case in CCI.
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“Yes, there can be a spiralling effect but every country will have to conduct its own separate investigation if the same conduct has been done there. Regulators will definitely have a sense of looking into the practices of Google. But will they be guilty of the same issues all over the world? That will have to be assessed independently,” Nayar said.
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