The Trump administration has sued Google in what is now the largest antitrust case against a technology company in more than two decades.
In the government’s complaint, the Justice Department makes allegations that Google (GOOG) has stifled competition to maintain its powerful position in the marketplace for online search and search advertising.
Eleven states joined the Justice department in the suit, namely:– Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina and Texas.
According to the complaint Google performed actions that harmed competition and prevented rivals from gaining a meaningful audience.
Allegations include that Google pays billions of dollars a year to device manufacturers like Apple, LG, Motorola, and Samsung and browser developers like Mozilla and Opera to be their default search engine and in many cases to prohibit them from dealing with Google’s competitors.
The suit says; “Google effectively owns or controls search distribution channels accounting for roughly 80 percent of the general search queries in the United States.”
Justice Department officials even warn that Google could be broken up.
“Nothing is off the table,” said Deputy Attorney General Jeffrey Rosen, who warned that if DOJ did not file suit now, “we could lose the next wave of innovation” and that “Americans may never get to see the next Google.”
Google has now responded to the lawsuit.
“Today’s lawsuit by the Department of Justice is deeply flawed,” Google SVP Global Affairs and Chief Legal Officer Kent Walker wrote in a blog post.
“People use Google because they choose to, not becausethey’re forced to, or because they can’t find alternatives.”
The post goes on to say that the DOJ complaint “relies on dubious antitrust arguments” that “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,” Walker wrote.
Google said its practice of paying to be the default search engine on smartphones like Apple’s is “no different” from moves by other businesses to promote their products, “just like a cereal brand might pay a supermarket to stock its products at the end of a row or on a shelf at eye level.”
Rosen also added that the Google suit represents a “milestone” but not the end of DOJ’s wide-ranging review of the tech industry, and that other lawsuits could be filed “where necessary.”
The landmark federal complaint comes on the heels of a major congressional report finding that Google and other tech giants enjoy “monopoly power” and have wielded their dominance in anticompetitive ways. The congressional report alleges that Amazon has mistreated third-party sellers; that Apple’s app store fees and policies are anti-competitive; and that Facebook has sought to eliminate future rivals through targeted acquisitions.
Some US states have been conducting a separate antitrust inquiry into Google for the past year and on Tuesday said they intend to wrap up that probe “in the coming weeks” and that if they file a lawsuit, it could be merged with the federal case.
“We appreciate the strong bipartisan cooperation among the states and the good working relationship with the DOJ on these serious issues,” said the multi-state group, which includes Colorado, Iowa, Nebraska, North Carolina, Tennessee and Utah. “This is a historic time for both federal and state antitrust authorities, as we work to protect competition and innovation in our technology markets.”
The suit could pose an unprecedented risk to Google’s wider advertising business, which brought in $134.8 billion in revenue last year, accounting for 84% of Google’s total business.
Officials at the Federal Trade Commission have been investigating Facebook for over a year, and that investigation could culminate in its own landmark litigation.
The Google suit also symbolizes the growing criticism, particularly by former Democratic presidential candidates including Sens. Elizabeth Warren and Amy Klobuchar, against historic levels of economic inequality and corporate concentration in the United States.
Trump has repeatedly blasted Facebook, Google and Twitter for allegedly systematically censoring conservative views, a claim the companies deny and for which experts have found no evidence.
Last year, Trump told Fox Business that “we should be suing Google and Facebook and all that, which perhaps we will, okay?”