Written by Chika Amene
Tech giants like Google, Amazon, and Facebook dominate their respective industries with little to no competition? The reason lies in antitrust law, a set of laws and regulations that promote fair competition and preclude “unfair and deceptive acts or practices” in the marketplace.[1] Recently, these companies have faced severe scrutiny for violating these antitrust laws. In 2020, the US Department of Justice (“DOJ”) filed a lawsuit accusing Google of engaging in anticompetitive conduct that harms consumers and stifles innovation.[2] The lawsuit has significant implications for Google and the tech industry in general, posing important questions about the role of government in promoting competition and innovation through antitrust laws.
Background:
Congress’s objective when enacting antitrust law was to preserve competition by “making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up” for consumer benefits.[3] This objective has remained the same from when Congress passed the first antitrust law in the late 1800s to the current digital age.[4] In the tech industry, Google has been the leading force in digital search advertising for a considerable amount of time controlling about 30% of all digital ad revenue.[5] Some attribute this to Google’s search dominance as Google remains the leading search engine.[6]
In their suit, the DOJ accused Google of paying companies like Apple and Samsung billions of dollars to illegally monopolize Google’s default search engine position.[7] Additionally, with its advanced technologies, Google now possesses full control over the digital tool that almost all website publishers use to sell ads on their website and the tool that helps “millions of large and small advertisers buy ad inventory.”[8] By leveraging these tools, Google can reach a wider audience, which provides them with a distinct advantage over their competitors.[9] In essence, Google is behind all things digital advertising.
Lawsuit:
In October of 2020, the DOJ filed a formal complaint alleging Google violated Sections 1 and 2 of the Sherman Act,[10] a set of antitrust laws regulating interstate commerce.[11] The complaint alleges that Google unlawfully maintained monopolies in search advertising, stifled competition, and harmed consumers.[12] Attorney General Merrick B. Garland states that, “Google has used anticompetitive, exclusionary, and unlawful conduct to eliminate or severely diminish any threat to its dominance over digital advertising technologies.”[13]
The DOJ remains steadfast in their position that Google is violating Antitrust Laws and is harming consumers and the economy.[14] Google denies any violation of the Sherman Act arguing that its complex algorithm is only designed to benefit its consumer and consumers have free-will to choose between using Google or its competitors.[15] The DOJ believes that holding Google accountable in court will restore competition to the marketplace.[16]
Implications:
The outcome of this case has the potential to change the future of the tech industry. If the DOJ is successful in its case, it could ultimately lead to a more competitive and innovative marketplace as consumers have greater choice in products and services.[17] On the contrary, Google believes that a loss would result in phone price increases and “lower-quality search alternatives.”[18] As far as the tech industry at large, other big tech companies may become vulnerable to lawsuits as well as the federal government would ramp up its efforts to regulate the industry.[19] However, if Google is successful, the company would continue to conduct business as usual with some fearing that the company would gain full control over the market establishing regulations that effectively exclude its competitors.[20]
Personally, I, a frequent Google consumer, gravitate towards its services for simplicity and convenience. Therefore, even with more options available, I’m likely to continue using the company’s services, and this sentiment may be shared by other users of Google’s services as well. On the other hand, the benefits that come with increased competition, such as lower prices and improved quality of services, would certainly be appreciated by any consumer. Stay tuned to see how this plays out as litigation is scheduled for trial in September of 2023!
[1] Federal Trade Commission, Guide to Antitrust Laws, https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws.
[2] United States v. Google LLC, No. 20-CV-03010 (D.D.C. filed Oct. 20, 2020).
[3] Federal Trade Commission, Guide to Antitrust Laws, https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws.
[4] Id.
[5] Megan Graham & Jennifer Elias, How Google’s $150 Billion Advertising Business Works, CNBC (May 18, 2021, 8:30 AM), https://www.cnbc.com/2021/05/18/how-googles-advertising-business-works.html.
[6] Leah Nylen, Google Pays ‘Enormous’ to Maintain Search-Engine Dominance, DOJ Says, Bloomberg (Sept. 8, 2022, 5:51 PM), https://www.bloomberg.com/news/articles/2022-09-08/google-pays-enormous-to-maintain-search-engine-dominance-doj-says.
[7] Id.
[8] Press Release, U.S. Department of Justice, Justice Department Sues Google For Monopolizing Digital Advertising Technologies (Oct. 20, 2020), https://www.justice.gov/opa/pr/justice-department-sues-google-monopolizing-digital-advertising-technologies.
[9] Jeffrey Levine, Google and Digital Advertising, American Action Forum (Feb. 23, 2023), https://www.americanactionforum.org/insight/google-and-digital-advertising/.
[10] Press Release, U.S. Department of Justice, Justice Department Sues Google For Monopolizing Digital Advertising Technologies (Oct. 20, 2020), https://www.justice.gov/opa/pr/justice-department-sues-google-monopolizing-digital-advertising-technologies.
[11] Sherman Antitrust Act of 1890, 15 U.S.C §§ 1-38 (2018), in National Archives, https://www.archives.gov/historical-docs/todays-doc/?dod-date=715.
[12] Press Release, U.S. Department of Justice, Justice Department Sues Google For Monopolizing Digital Advertising Technologies (Oct. 20, 2020), https://www.justice.gov/opa/pr/justice-department-sues-google-monopolizing-digital-advertising-technologies.
[13] Id.
[14] Id.
[15] Kent Walker, A Deeply Flawed Lawsuit that Would Do Nothing to Help Consumers, Google Keyword Blog (Oct. 20, 2020), https://blog.google/products/search/flawed-antitrust-lawsuit-would-do-nothing-help-consumers/.
[16] Press Release, U.S. Department of Justice, Justice Department Sues Google For Monopolizing Digital Advertising Technologies (Oct. 20, 2020), https://www.justice.gov/opa/pr/justice-department-sues-google-monopolizing-digital-advertising-technologies.
[17] United States v. Google LLC, No. 20-CV-03010 (D.D.C. filed Oct. 20, 2020).
[18] Kent Walker, A Deeply Flawed Lawsuit that Would Do Nothing to Help Consumers, Google Keyword Blog (Oct. 20, 2020), https://blog.google/products/search/flawed-antitrust-lawsuit-would-do-nothing-help-consumers/.
[19] Lauren Feiner, DOJ files second antitrust suit against Google, seeks to break up its ad business, CNBC (Jan. 24, 2023, 12:32 PM), https://www.cnbc.com/2023/01/24/doj-files-second-antitrust-suit-against-google-seeks-to-break-up-its-ad-business.html.
[20] Id.
