Google, U.S. government prepare for battle over market power
By Diane Bartz
WASHINGTON (Reuters) – The U.S. Justice Department is expected to file a lawsuit against Alphabet’s Google <GOOGL.O> as soon as next week, kicking off a long legal slog over whether the online search and advertising company uses its outsized market power unfairly.
WHAT ARE THE ALLEGATIONS AGAINST GOOGLE?
One set of allegations has to do with Google’s search engine. Google is accused of looking to disadvantage rivals such as Microsoft’s Bing, depriving them of the scale, and thus the data about user preferences and users themselves, that they need to improve and to advertise to users.
Google is also accused of using its popular search function to favor its products, like YouTube, as well as big advertisers, like eBay. For example, a recent search for a “Saturday Night Live” video resulted in several choices from Google’s YouTube before NBC, which makes the show. Companies such as Yelp have argued they are better than Google at helping consumers find certain services but that they often appear below a box of Google recommendations, resulting in fewer clicks.
Another allegation has to do with advertising. In advertising, Google dominates the interlocking businesses which connect advertisers with newspapers, websites and other firms looking to host them. Google has been accused of being opaque in revealing its revenues from transactions, using “bundles” of products to disadvantage smaller rivals and of rigging auctions.
Of particular interest is “search advertising,” the ads that show up under a search box if a person searches for a consumer item like “dishwasher.” Google controls the sale of the space under these searches, as well as the tools to make those sales.
With its smartphone operating system Android, Google is alleged to have abused its dominance by requiring mobile phone makers to pre-install Google’s Chrome and search if they wanted access to Google’s Play Store, among other steps.
WHAT DOES GOOGLE SAY ABOUT THESE ALLEGATIONS?
Google has repeatedly denied any wrongdoing.
Regarding search, Google has said that users have access to other information sources, like Twitter for news and Amazon for products. And it says that people use Google for quick answers, which has spurred the company to develop new ways to organize results.
In terms of advertising, it argues that it competes with a large array of companies, including giants like Oracle and Verizon. And it argues that online advertising prices have steadily declined over the past decade.
As for Android, Google has said that phone makers that use its smartphone system do not have to include Google apps and may pre-install competing apps.
WHAT WILL THE JUSTICE DEPARTMENT ALLEGE IN ITS LAWSUIT?
The Justice Department lawsuit is expected to focus on allegations regarding search but may also highlight complaints about advertising and Android.
WHAT ROLE DO STATE ATTORNEYS GENERAL HAVE?
A large group of attorneys general are also investigating Google. A group headed by Texas is focused on Google’s advertising practices, while other states are looking at search and Android. These may also result in lawsuits.
WHAT REMEDIES MIGHT THE JUSTICE DEPARTMENT REQUEST THE JUDGE IMPOSE?
The Justice Department has broad leeway in requesting a remedy. It can ask the court to require that Google sell or break up its assets, including all or part of its advertising business, or simply ask for illegal behavior to be stopped.
HOW LONG WOULD A TRIAL AND APPEALS TAKE?
It’s in Google’s interest to drag out the legal fight, and antitrust experts say that it would take at least six to nine months to get to trial, with a decision coming several months after the trial’s end. It would likely be appealed.
ARE THE ALLEGATIONS AGAINST GOOGLE POLITICALLY MOTIVATED?
Separately from antitrust, President Donald Trump’s administration has been angry with several Silicon Valley companies for allegedly silencing conservatives.
That said, Democrats such as Senator Elizabeth Warren have expressed support for the Google probes.
(Reporting by Diane Bartz; Editing by Paul Simao)