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US Justice Department sues Google on antitrust grounds

By AI HEPING in New York | China Daily Global | Updated: 2020-10-21 11:25

Google's offices stand in downtown Manhattan in New York City on Oct 20, 2020. [Photo/Agencies]

The US Justice Department on Tuesday sued Google for alleged antitrust violations, saying it abused its dominance in online search and advertising to stifle competition and harm consumers.

The government alleged that Google uses billions of dollars collected from advertisements on its platform to pay for mobile-phone manufacturers, carriers and browsers, like Apple Inc's Safari, to maintain Google as their preset, default search engine, creating a self-reinforcing cycle of dominance.

Filed in a Washington DC court, the case represents the most aggressive act by the US government to mount a challenge against a tech giant since it sued Microsoft more than 20 years ago.

The suit is likely to take years to be resolved but could be the first round in investigations by the Justice Department and the Federal Trade Commission of other major tech companies, including Apple, Amazon and Facebook at both the Justice Department (DOJ) and the Federal Trade Commission.

The suit alleges that Google has entered into exclusionary contracts with phone makers to preload its search engine onto devices using parent company Alphabet's Android operating system.

Those contracts have allowed Google to maintain a monopoly while stifling competition and innovation, the suit contends. It also accuses Google of using profits from that monopoly to buy preferential treatment for its search engine on web browsers, including Safari.

Estimates of Google's control of the market for online searches range from 80 percent to 90 percent, resulting in tens of billions of dollars in annual revenue.

"Google achieved some success in its early years, and no one begrudges that," Deputy US Attorney General Jeffrey Rosen said. "If the government does not enforce its antitrust laws to enable competition, we could lose the next wave of innovation. If that happens, Americans may never get to see the next Google."

Kent Walker, Google's chief legal officer, said in a statement that the lawsuit was deeply flawed. "People use Google because they choose to — not because they're forced to or because they can't find alternatives," he said. "Like countless other businesses, we pay to promote our services, 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."

Walker said that, if successful, the lawsuit would result in higher prices for consumers because Google would have to raise the cost of its mobile software and hardware.

Later, the tech giant published a lengthy blog post in which it said that the DOJ complaint "relies on dubious antitrust arguments".

"This lawsuit would do nothing to help consumers," it said. "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."

Lawmakers in the House and Senate on Tuesday welcomed the Justice Department's move.

"Today's lawsuit is the most important antitrust case in a generation,'' Republican Senator Josh Hawley of Missouri said in a statement. "Google and its fellow Big Tech monopolists exercise unprecedented power over the lives of ordinary Americans, controlling everything from the news we read to the security of our most personal information. And Google in particular has gathered and maintained that power through illegal means."

House Antitrust Subcommittee Chairman David N. Cicilline, Democrat of Rhode Island, described the lawsuit as "long overdue" and brought attention to prior investigations by the committee.

The Mountain View, California, company, sitting on a $120 billion cash hoard, has argued that it faces vigorous competition across its different operations and that its products and platforms help businesses small and large reach new customers.

A group of 11 state attorneys general, all Republicans, have joined the DOJ's case. More could join later. Other states are still considering their own cases related to Google's search practices, and a large group of states is considering a case challenging Google's power in the digital advertising market, The Wall Street Journal reported.

The suit could be an opening shot in a battle against a number of Big Tech companies in the coming months.

The lawsuit has been in the works for more than a year, and Big Tech executives from Google, Apple, Facebook and Twitter have been anticipating an announcement -- designing their testimonies in Congress to ward off a potential federal suit.

The Trump administration has long had Google in its sights. A top economic adviser to President Donald Trump said two years ago that the White House was considering whether Google searches should be subject to government regulation.

Trump and other Republicans have accused Big Tech companies of having an anti-conservative bias — claims the Silicon Valley companies have denied.

In a news conference, Deputy Attorney General Jeffrey Rosen said that the case had nothing to do with online bias and was only about competitive conditions in the marketplace.

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