Justice Department Files Antitrust Case Against Google Claiming Monopolization of the Search and Search Advertising Markets (Part I of III)
The Department of Justice and eleven state Attorneys General filed an antitrust case against Google in the United States Court for the District of Columbia. DOJ’s filing was hurried at the behest of the Attorney General Bill Barr, and reflects DOJ’s growing focus on high-tech businesses and monopolization conduct. DOJ’s case joins a long list of high-profile monopolization cases, including Microsoft, AT&T and IBM. DOJ’s filing represents the most significant antitrust enforcement action against big technology companies since DOJ’s 1998 filing against Microsoft.
The case was assigned to District Judge Amit Mehta, who was nominated to the bench by President Obama, Judge Mehta has handled a high-profile antitrust case before, and issued an injunction blocking the proposed merger between the two largest food distributors, Sysco Corp. and US Foods. Judge Mehta has set a status conference for November 18, 2020.
DOJ’s complaint alleges violation of Section 2 of the Sherman Act by unlawfully maintaining monopolies in the markets for internet searches and search advertising. As set out in the complaint, DOJ contends that Google accounts for roughly 90 percent of all search queries in the United States, and has leveraged its control of the search market to maintain and extend its monopolies to search advertising.
Under Section 2 of the Sherman Act, not all exclusionary conduct is unlawful. Assuming that the government can establish that a company maintains monopoly power in a relevant product and geographic market, a court must determine if the anticompetitive effects outweigh the procompetitive effects.
At the heart of the Justice Department’s case, the government claims that Google has used a series of exclusionary agreements to control the primary means by which users access search engines. These tactics include requirements that Google distributors (e.g. mobile phone manufacturers, mobile carriers, web developers and computers) include Google as a preset default search engine. These agreements prohibit the distributors from dealing with Google’s search engine competitors. Some agreements require Android devices to include a non-deletable Google search application and prominent display of the Google application on the device’s home screen.
DOJ’s complaint alleges similar antitrust violations to those raised over 20 years ago in its monopolization suit against Microsoft. As in the Microsoft case, DOJ is claiming that a high-tech company was using anti-competitive agreements to require pre-installed default status and preventing deletion of the Google application in order to foreclose competitive alternatives.
As set forth in the complaint, DOJ claims that Google has entered into a variety of exclusionary agreements, including:
- Entering into exclusivity agreements that prevent pre-installation of competing search services.
- Entering into tying arrangements that force pre-installation of its search application in prime locations on mobile devices and make them undeletable;
- Entering into long-term agreements with Apple that require Google be set as the de facto exclusive search engine on Apple’s Safari browser and other Apple search tools.
- Using monopoly profits to purchase preferential treatmentfor its search engine on devices, web browsers and other search access points.
DOJ alleges that Google’s anticompetitive conduct has harmed consumers by foreclosing competition in the search market by restricting access to distributors, precluding operations of scale, and eliminating competition for search queries.
At the core, DOJ claims that Google has reduced the quality of searches, reducing search choices, and frustrating innovation. Further. DOJ alleges that reducing competition in advertising, Google has the ability to charge advertisers higher prices than it could in a competitive market.