US Files Antitrust Lawsuit Against Google Over Search Engine Practices

(Reuters) – The U.S. Justice Department and a coalition of state attorneys general will launch a successful antitrust trial in Washington on Tuesday, alleging that Alphabet’s Google illegally abused its dominant position in the search engine market to maintain its monopoly.

WHAT IS GOVERNMENT’S LEGAL THEORY?

The United States and its state allies allege that Google illegally stifled competition by paying billions of dollars to Apple and other business partners to ensure that its search engine would be the default on most phones and web browsers.

The government’s 2020 lawsuit, filed in federal court, alleges that Google intended these deals to be “foreclosure,” denying competitors access to search queries and clicks and allowing Google to strengthen its market position.

Google has gained a 90 percent market share in search in the United States in recent years, according to government estimates. The government said the browser contracts — which drive billions of web queries to Google every day — have led to less consumer choice and less innovation.

WHAT DOES GOOGLE SAY IN DEFENSE?

Google sees things much differently. The company, which insists it has not violated competition law, said in a court filing in January that its browser deals were “legitimate competition” and not “illegal exclusion.”

Google argues that the agreements did not prevent competitors from developing their own search engines or prevent companies such as Apple and Mozilla from promoting them.

Instead, phone and web browser makers made Google search the default because they wanted to provide their customers with the “highest quality” experience, Google argued in its January filing.

Google also claims that mobile users can easily switch if they want to use a different search engine.

WHAT DOES THE LAW PENALTIES?

Generally, it is not illegal for a company to make an arrangement with one customer that excludes others. Indeed, such exclusive agreements are common and do not garner much regulatory scrutiny when a firm without market power cannot significantly influence competition.

But exclusive agreements can violate competition law if a company is so large or powerful that it prevents competitors from entering the market and cannot prove that its restrictions on competition in the industry outweigh the positive effect on consumers.

The Department of Justice has the burden of proving that Google’s business deals harmed search competition. Google will have its own chance at a non-jury trial after the government made its case that its deals benefit consumers.

WHAT HAPPENS IF GOOGLE GOES?

The United States and state allies are not seeking a monetary penalty, but rather an injunction to prevent Google from continuing the alleged anti-competitive practices.

Such an order could have significant business implications for Google. For example, the government said in its lawsuit that the court could dissolve the company as a remedy.

More broadly, the Justice Department may argue that it wants to prevent Google from using its alleged search monopoly for exclusive deals in new emerging markets, including artificial intelligence.

The case is widely considered one of the biggest challenges in the technology industry since the DOJ sued Microsoft in 1998 over its dominance of the personal computer market. The district court found that Microsoft illegally tried to block the competing browser Netscape Navigator. Microsoft later reached a settlement that left the company intact.

Google’s trial in the US District Court of Columbia is expected to last about 10 weeks. The judge is not expected to rule until sometime in 2024.