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Thursday, January 28, 2021

Google and Facebook’s antitrust pileup: A Reader’s guide

After a burst of antitrust lawsuits from the US and nearly every state in the country in recent months, Alphabet Inc’s Google and Facebook Inc are in the fight of their lives.

By: Bloomberg | December 23, 2020 12:39:11 pm
Google antitrust, Facebook antitrust, New York v Facebook, Colorado v Google, Google news, Facebook news, Facebook Google antitrust, US v Google,The complaints level the same basic allegation against the companies, that they used their far-reaching power to squelch competition and preserve their dominance(image source: Bloomberg)

After a burst of antitrust lawsuits from the US and nearly every state in the country in recent months, Alphabet Inc’s Google and Facebook Inc are in the fight of their lives.

The complaints level the same basic allegation against the companies — that they used their far-reaching power to squelch competition and preserve their dominance.

Now starts the long slog to determine whether US authorities can rein in the companies. If they succeed, Google and Facebook could lose their lucrative grip on digital advertising and consumer data. There’s even a risk that one of these companies could be broken up. Whatever the outcome, it will take years to sort out.

More cases may be in the pipeline, Bloomberg has reported. Here’s a guide to the lawsuits so far:

US v Google

  • Who’s suing: The US Justice Department and 11 Republican state attorneys general sued Google on October 20. Since then, three other states have joined, including the Democratic attorney general in California, where Google is based.
  • Key allegations: Google’s exclusive deals to distribute search on browsers and phones, including Apple Inc’s iPhones, constituted a violation of the Sherman Act’s prohibition on monopolisation.
  • Company defense: Google says its deals don’t prevent consumers from switching and Google’s success rests on its superior search engine.
  • Why the case matters: It’s the most significant US monopoly case since the one against Microsoft Corp more than 20 years ago, and resembles that previous complaint. The case was the first to be filed this year against Google and is led by the heavyweights at the Justice Department.
  • What’s next: The leaders of a broader case filed Thursday by 38 attorneys general will seek to consolidate with the federal case. Under a scheduled approved by the judge, the case will go to trial in September 2023.
  • Key takeaway: “If we let Google continue its anticompetitive ways, we will lose the next wave of innovators, and Americans may never get to benefit from the ‘next Google,’” Attorney General William Barr said in announcing the case.

Colorado v Google

  • Who’s suing: A bipartisan group of 38 attorneys general sued Google on Dec 17 Leaders include Colorado, Iowa, Nebraska, Tennessee and New York.
  • Main allegations: Google signed illegal deals for distribution on phones and smart devices. It also choked off competition from specialised search engines such as Yelp Inc and discriminated against rivals who wanted access to its technology for placing digital ads.
  • Company defense: Google says the suit would roll back innovations it’s made in search, and would hurt consumers and small businesses.
  • Why the case matters: The case takes the broadest view of Google’s marquee business and future on connected devices. It also brings the most states into a complaint against the company.
  • What’s next: The states are moving to consolidate with US v. Google, which is before Judge Amit Mehta in Washington.
  • Key takeaway: “Fines are just like kicking the gorilla in the shins,” Doug Peterson, Nebraska’s Attorney General, told reporters when explaining why he wants more serious remedies.

Texas v Google

  • Who’s suing: 10 Republican state attorneys general led by Texas sued Google on Dec. 16.
  • Main allegations: Google came to an illegal deal with Facebook to stop the latter’s effort to compete more in a key part of the online ad market known as header bidding. In return, Facebook received a leg up in placing mobile ads through Google. The move allegedly violated the Sherman Act’s ban on agreements to restrain trade.
  • Company defense: The details are inaccurate, and partnerships were common for both companies, as well as smaller players.
  • Why the case matters: It alleges a secret deal between the two largest digital advertising companies.
  • What’s next: The court is known for speedier handling of cases.
  • Key takeaway: “If the AGs can back up those kinds of claims, well, this is a hell of a case,” said Chris Sagers, a law professor at Cleveland State University.

FTC v. Facebook

  • Who’s suing: The US Federal Trade Commission sued Facebook on Dec 9.
  • Main allegations: The company acquired promising rivals and squashed those that wouldn’t sell by cutting them off from Facebook tools and distribution in violation of the Sherman Act’s broad monopolization provisions.
  • Company defense: The FTC already approved the major deals — for Instagram and WhatsApp — when they were proposed because the regulator didn’t see the takeovers as threats to competition at the time.
  • Why the case matters: The complaint explicitly seeks to break up the company by splitting off the two apps. It’s an ambitious remedy that courts have generally resisted, but may take up if convinced of the allegations.
  • What’s next: The FTC’s own past decisions, while not legally binding, raise questions about its latest assessment. Breakups can be difficult even if they are granted. Some legal scholars have said the FTC should stick to challenging allegedly anticompetitive deals under traditional provisions governing mergers in the Clayton Act, rather than through the Sherman Act.
  • Key takeaway: “I don’t think we’ll ever escape the wrath of Mark,” Instagram’s then-Chief Executive Officer Kevin Systrom wrote to an investor when discussing Mark Zuckerberg’s acquisition overtures, and the possibility the Facebook CEO would go into “destroy mode” if rebuffed.

New York v Facebook

  • Who’s suing: A bipartisan group of 48 attorneys general led by New York sued Facebook on Dec. 9.
  • Main allegations: Facebook bought up would-be competitors and killed off upstarts in violation of the Sherman Act’s statute on monopolization and the Clayton Act’s directives on mergers.
  • Company defense: The company faces robust competition from ByteDance Ltd’s TikTok, Snap Inc and others.
  • Why the case matters: Almost every state signed on to the case against Facebook, which explores potential theories about the intersection of privacy and antitrust.
  • What’s next: It will likely get consolidated with FTC v Facebook.
  • Key takeaway: Emails and texts from 2012 revealed during a congressional hearing that Facebook was worried about Instagram “eating our lunch.” Zuckerberg agreed his motive for the acquisitions in part was to “neutralize a potential competitor.”

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