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Google is in US antitrust sights as DOJ gears up for probe

The US Justice Department is preparing to open an antitrust investigation into Alphabet Inc's Google.

By: Bloomberg |
June 1, 2019 6:27:39 pm
A pedestrian walks past signage at Google Inc headquarters in Mountain View, California. (Image source: Bloomberg)

The US Justice Department is preparing to open an antitrust investigation into Alphabet Inc’s Google, according to a person familiar with the matter, marking the Trump administration’s first major step to scrutinize the potentially anti-competitive conduct of a giant technology firm.

The move comes after the Justice Department reached an agreement with the Federal Trade Commission that scrutiny of the company’s conduct would fall to the department’s antitrust division, according to two people who declined to be identified discussing a confidential matter.

Representatives of Google didn’t immediately respond to a request for comment late Friday. The Justice Department declined to comment.

American antitrust officials are under increasing pressure from both Democratic and Republican lawmakers and advocates of tougher enforcement to step up scrutiny of technology giants like Google and Facebook Inc While European officials have aggressively pursued antitrust cases against American tech firms, including Google, the US has been mostly hands-off.

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Lax Enforcement

That may be changing amid continuing criticism that lax enforcement in the US has allowed tech platforms to dominate their markets. The FTC earlier this year set up a task force to examine the conduct of tech companies and their past mergers. President Donald Trump and many Republicans have complained that Facebook, Google and Twitter Inc suppress conservative views.

Last year, then-Attorney General Jeff Sessions met with state officials about technology companies. His replacement, William Barr, said at his Senate confirmation hearing that he wanted to learn more about about how “huge behemoths” in Silicon Valley “have taken shape under the nose of the antitrust enforcers.”

The Justice Department inquiry would be run by Makan Delrahim, the head of the antitrust division. In a speech delivered earlier this year at a technology conference, Delrahim cheered the success of large technology platforms. Without mentioning Google, he said the companies have grown because of “innovative and disruptive services.”

“In my view, it’s no accident, and a point of pride, that a majority of these leading platforms are American companies,” he said at the time.

One area of potential scrutiny in a Google investigation is the company’s control over the digital advertising market. Google has about 37% of the US digital ad market, with Facebook in the No. 2 position with 22%, according to eMarketer.

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Google controls much of the technology used by advertisers and publishers to buy and sell ads online. Its middleman role has long been a source of complaint for publishers, including News Corp, which publishes the Wall Street Journal and other newspapers.

Oracle Corp, which competes with Google in the digital advertising market, has also called on American enforcers to examine Google’s conduct.

“Google is very clearly dominant in that market,” Ken Glueck, an executive vice president at Oracle, said in an interview in April. “There is conduct that is exclusionary in the market and there are harms in that market.”

Another longtime foe is Yelp Inc, which says Google unfairly promotes its own products, such as business listings, over other companies’ services.

Google in Crosshairs

An investigation by the Justice Department would put Google in the crosshairs of US officials after years contending with multiple inquiries by the European Union. The company has been fined 8.2 billion euros (about $9.2 billion) in those cases, with the latest penalty stemming from its role as an advertising broker online.

As the EU stepped up enforcement, the US was dialing back. Yet the history of American antitrust enforcement has been marked by a string of blockbuster monopoly cases against companies like Standard Oil Co, AT&T Inc and Microsoft Corp.

During the Obama administration, the FTC investigated Google for skewing search results. The agency decided to close that case in 2013 without taking action, a decision criticized by those who said the search giant was using it’s dominance to harm competition.

The Wall Street Journal earlier reported on the Justice Department plan to open an investigation.

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