The U.S. Justice Department along with the attorneys general of 11 states brought a massive anti-trust lawsuit against Google on Tuesday, accusing the tech giant of maintaining illegal monopolies over search and search advertising on the internet.
The widely expected lawsuit, the most significant anti-trust case since the Justice Department sued Microsoft for its monopoly of the software market in 1998, stemmed from a yearlong investigation into Google and three other tech giants — Apple, Amazon and Facebook.
Attorney General William Barr called the lawsuit a monumental case “both for the Department of Justice and for the American people.”
“This lawsuit strikes at the heart of Google’s grip over the internet for millions of American consumers, advertisers, small businesses and entrepreneurs beholden to an unlawful monopolist,” Barr said.
Barr said the lawsuit, filed in federal court in Washington, D.C., is not tied to conservative concern over content moderation and censorship by online platforms.
In recent years, President Donald Trump and Republicans have accused Google and other online platforms of silencing conservative viewpoints. In May, Trump signed an executive order targeting a law that shields social media companies from liability lawsuits. Last month, the Justice Department proposed legislation to reform the law.
In a statement, Google chief legal officer Kent Walker called the lawsuit “deeply flawed.”
“People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives,” Walker wrote in a blog post. “This lawsuit would do nothing to help consumers. To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use.”
Google's parent company, Alphabet Inc, is a trillion-dollar company based in California, with revenues of $162 billion last year. Google accounts for nearly 90% of all search queries in the United States, making it by far the largest internet search engine. The rest of the market is shared by engines such as Microsoft's Bing and DuckDuckGo.
For years, the 64-page lawsuit alleges, Google "has used anticompetitive tactics to maintain and extend its monopolies in the markets for general search services, search advertising, and general search text advertising—the cornerstones of its empire.”
Specifically, the lawsuit alleges that Google pays manufacturers like Apple and U.S. wireless carriers, such as AT&T, billions of dollars each year to secure default status for its search engine on billions of devices and computers around the world. Users rarely change the default, effectively blocking rival search engines, the lawsuit alleges.
Google uses this search monopoly to sell “search advertising” and “general search text advertising,” according to the lawsuit. Search ads pop up when a user searches a product or service. Text ads appear above or below search results.
Advertisers pay Google $40 billion a year for these search ads, according to the lawsuit. The company then “shares” a portion of the revenue with distributors and carriers who agree to keep Google as their default search engine, the lawsuit says.
“Google has foreclosed any meaningful search competitor from gaining vital distribution and scale, eliminating competition for a majority of search queries in the United States,” the complaint says.
U.S. lawmakers and consumer advocates have long accused Google of exploiting its market clout to suppress competition, increase profits and hurt consumers.
A recent House Judiciary subcommittee report concluded after a yearlong investigation into Silicon Valley’s market dominance that Google has monopolized the search market. The report said Google established its dominant position through acquisition in several markets, buying about 260 companies that other businesses had developed over a 20-year span.
The state attorneys general participating in the lawsuit represent Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina, and Texas. All are Republican. A separate group of states is expected to file a lawsuit against Google later this year.
In recent years, Google has faced hefty fines over its business practices in Europe. The European Union fined Google $1.7 billion in 2019 for stopping websites from using Google's rivals to find advertisers, $2.6 billion in 2017 for favoring its own shopping business in search, and $4.9 billion in 2018 for blocking rivals on its wireless Android operating system, the Reuters news agency reported.