California Joins Antitrust Lawsuit Against Google
There is no question that Google has impacted the world in numerous significant ways. The massive company is the go-to source for information online and transformed how we seek answers to important questions. Google engages in other groundbreaking innovations and is among the corporations making driverless cars a reality. While Google might be spearheading development in technological feats that seemed impossible just a few years ago, the company's massive success has also spurred an antitrust lawsuit. California, the home state of Google, recently joined the antitrust case against the information giant. The addition of California to the lawsuit is reportedly unlikely to lead to major changes or delays in the litigation as the state does not plan to alter the complaint.
The case, filed by the U.S. Department of Justice, might take years to play out in the court system. Google, which has ample resources to mount a long-lasting and robust defense to the claims, denies any wrongdoing or legal violations. According to Google, its market dominance is the result of its superior product. While the DOJ and many parts of the federal government are likely to undergo substantial changes in the months to come, the litigation against Google is one thing that experts suspect will continue into the Biden Administration.
What is the Legal Basis of the Antitrust Lawsuit?
The lawsuit alleges that Google engages in anti-competitive practices. According to the complaint, the tech giant violates the Sherman Act, which is the legislation that prohibits companies from becoming monopolies. Monopolies are harmful to the economy, as a large company can squash smaller competition and end up with far too much economic and even political power.
The DOJ states that Google's practices prevent the growth of other search engines, and contracts that Google entered with other companies serve to ensure that Google maintains its overwhelming dominance. For instance, Google negotiated agreements with phone manufacturers that make Google the default search engine on mobile devices. iPhone owners will find that their search engine is automatically set to Google. While consumers can switch to other search engines, people rarely take that step. As a result, Google rakes in advertising dollars that continue to build the corporation's massive wealth.
Concerns over monopolies often surround price gouging. If a company is the only provider of a product or service, that company can essentially set the prices as high as they like. In the case of the Google lawsuit, the concern is less about the cost to consumers and more about product quality and privacy. After all, Google's privacy practices are considered controversial. Still, without a major search engine competitor, consumers are pressured into accepting Google's terms to use a product that most people rely on countless times every day. Bing and other search engines struggle to gain footing in a world where more than ninety percent of searches occur on Google. As a result, advertisers, who pay search engines, face pressure to pay Google rather than other companies. The system only serves to create further growth for Google leading to further dominance by the company.
Of course, Google states that more people use Google not because they must, but because they prefer it to competitors. Furthermore, when it comes to concerns over privacy, it is not clear that the majority of Americans truly fear Google's information gathering.
Politics and the Antitrust Case Against Google
The fact that the DOJ under the outgoing Trump administration filed the lawsuit so close to the end of President Trump's term might seem to indicate partisan politics surrounding the Google antitrust lawsuit. Certainly, the Trump administration and President Trump have not indicated a love for big tech companies. Conservatives partly take issue with such corporations because they believe that they spread biased information that favors liberal ideals and policies. Google is not alone in experiencing the President's wrath as Facebook, Twitter, and Amazon have all been subject to attacks based on perceived biases.
While the lawsuit might first appear as a partisan move drenched in politics and doomed to fail when President-Elect Biden takes office, such is not the case. Democrats have bemoaned the growing power of tech giants and monopolies for their impact on consumers and small businesses. Although the legal challenges to Google might change, the shifting political environment will not spare Google from antitrust challenges.
States are Filing Second Antitrust Lawsuit Against Google
California added its name to the DOJ lawsuit, but now other states are joining together to file a separate lawsuit against Google based on antitrust claims. Some of the states involved may join onto both the DOJ case and the new lawsuit.
The second case will include additional allegations based on Google's specialized search practices. According to the bipartisan lawsuit, the company prioritizes its businesses above others in search results, giving its holdings a significant competitive edge. Therefore, the businesses that appear below Google's must pay Google to post advertisements to gain visibility in searches. This new lawsuit's scope is wider than that of the DOJ claim, which could gain additional states' support.
Have Similar Lawsuits Impacted Other Large Companies in the United States?
The case that is most often compared to the Google antitrust lawsuit is the one that the DOJ filed against Microsoft in 1998. The Microsoft case involved the company's selling of software bundles with its operating system. According to the government, Microsoft damaged competitors by giving away software for free and making it difficult for consumers to use programs other than its own. That lawsuit eventually settled, with Microsoft avoiding an earlier requirement to split up. Instead, Microsoft shared its interfaces with competitors.
Like the Google case, Microsoft argued that its market dominance did not come from wrongful conduct but resulted from customer preference for its superior product.
It is not yet clear how similar the Google lawsuit results will be to the Microsoft case. The litigation will likely take years to play out, and Google may prevail. Alternatively, Google could end up having to split up, sell certain assets, or agree to comply with certain restrictions on its business practices.
Google is Not the Only Tech Giant
Google might be a tech powerhouse, but it is not the only mega tech corporation that wields massive power in the United States. Apple could face challenges for its mobile app store, which faces accusations of favoring its own apps over those of competitors. A recent House Report states that Amazon is a gatekeeper to the online marketplace that causes competitors, even those referred to as "internal competitors" who sell on the platform, to fear its power. Facebook, which is facing an antitrust lawsuit of its own, is another concern based on the House Report. The absence of competition is also one reason critics say that the platform's quality is deficient. The lack of privacy and the spread of disinformation are symptoms of Facebook's dominance as a social network.
The pending Google lawsuit relies on a law that is well over one hundred years old. The Sherman Act may fail to account for the impact of giant tech companies. Some experts say that to reign in the power and potential damage caused by tech monopolies, legislators will have to draft modern statutes.
