Google hits out at 'deeply flawed' DoJ lawsuit

The US Department of Justice (DoJ) is suing internet giant Google for anticompetitive practices relating to search and search advertising.

Unsurprisingly, Google is not happy about it, with Kent Walker, the company’s SVP of global affairs, describing the lawsuit as “deeply flawed” in a blog post on Tuesday. “People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives,” he said. “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.”

The DoJ, along with 11 state attorneys general (full list below), this week accused Google of illegally exploiting its status as ‘gatekeeper of the Internet’ by striking exclusivity deals with OEMs that require its search engine to be preinstalled and set as the default service on mobile devices and browsers. It also alleges that Google uses its profits to pay for preferential treatment for search, thereby protecting its monopoly position.

“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,” said attorney general William Barr, in a statement.

Google’s practices, the DoJ and attorneys general claim, have closed the door to any budding rivals, impeding choice and innovation. The lack of alternatives also means that Google can charge higher rates for advertising.

The lawsuit has echoes of the complaint filed by the European Commission in 2016. That one alleged that Google was abusing its dominance of the market for Android devices by requiring OEMs to preinstall its Chrome browser and search engine to the exclusion of all others. That culminated in a €4.3 billion fine in 2018.

Based on Google parent Alphabet’s most recent quarterly figures, that penalty equates to a little less than two months of net income. Of course, the far greater risk for Google is that these lawsuits hobble its ability to stop other search engines from eating into its market share, something it won’t take lying down.

Google’s Walker said that paying OEMs to put Google search front on centre on their devices is the equivalent of brands paying supermarkets for favourable shelf placement.

“On mobile, that shelf is controlled by Apple, as well as companies like AT&T, Verizon, Samsung and LG. On desktop computers, that shelf space is overwhelmingly controlled by Microsoft,” Walker explained. “So, we negotiate agreements with many of those companies for eye-level shelf space. But let’s be clear – our competitors are readily available too, if you want to use them.”

Walker also included screenshots showing how alternative search engines are promoted on Apple’s Safari browser, and how device makers routinely include other search services on their devices. He also illustrated how easy it is to download a rival search engine from an app store, and also pointed out how prominently Microsoft promotes its Bing search engine on its own Edge browser.

On that note, this week’s lawsuit is also reminiscent of that which was brought against Microsoft in the late 1990s. It alleged that the software giant had abused its dominant position in the PC OS market by bundling its Internet Explorer browser with Windows, thereby making it harder for alternatives to compete. The DoJ – which sought to break up Microsoft – won the case, but Microsoft successfully appealed and the two sides eventually reached a settlement.

Crucially, the case did not establish the legal precedent that Microsoft acted illegally by bundling Internet Explorer freely with Windows. And we also know that today, Microsoft is by no means the dominant force in the browser market, which shows that competition ultimately won out. I’m no lawyer, but Google looks to be on pretty solid ground.

Nonetheless the lawsuit comes in the wake of a damning US government report on alleged monopolistic practices by tech giants, including Google, so in the current climate, a lack of precedent might not do the company any favours.

“We understand that with our success comes scrutiny, but we stand by our position,” said Walker.

“American antitrust law is designed to promote innovation and help consumers, not tilt the playing field in favour of particular competitors or make it harder for people to get the services they want,” he said. “We’re confident that a court will conclude that this suit doesn’t square with either the facts or the law.”