GOOGLE ANTI-TRUST CASE, 2020
Published by: Aakansha Singh
On 20th October 2020, the U.S. Justice Department has filed a suit against Google in Washington DC, alleging that the company is violating anti-trust laws by illegally maintaining a monopoly in search engine and search-based advertising, thereby harming competitors and consumers. It would be perhaps the biggest antitrust suit after Microsoft’s DOJ case in 1998. A total eleven of US states with their Republican attorneys joined the federal government in the lawsuit. But several other states also refrained themselves.
The suit accuses that Google pays billions of dollars to companies like Apple, Samsung, Sony, and other phone companies to make its search engine a default option on their phone devices, and thereafter, Google collects users data and use it for advertising business that gives it an undue advantage over other competitors.
Google immediately responded to this suit by tweeting that: “Today’s lawsuit by the Department of Justice is deeply flawed. People use Google because they choose to… not because they’re forced to or because they can’t find alternatives.”
What is the Anti-trust Law?
Anti-trust law, also known as Competition law, regulates business activities and encourages competition by prohibiting any monopolistic arrangements that majorly include anti-competitive agreements, abuse of dominant position, and combinations such as mergers, acquisitions, and amalgamations. In India, the Competition Commission of India regulates business activities by promoting healthy competition under the Competition Act, 2002.
What are allegations made by the US Justice Department?
The Department raised three claims in their suit under Section 2 of the Sherman Antitrust Act which prohibits acquiring or maintaining monopoly power through improper means. The lawsuit alleges that “Google illegally maintains monopoly power in three markets: search services, search advertising, and general search text advertising.” And in these markets, “Google aggressively uses its monopoly to continuously foreclose rivals and to maintain its monopolies.”
· The report says Google has established a monopoly in the markets through the acquisition of many technologies developed by other companies and brought over 260 companies in the last 20 years.
· The department claims that Google spent billions of dollars generated from advertising to pay mobile manufacturers to make Google the default search engine in their smartphones and iPhones. This causes hardships to other search engines to establish themselves in the market.
· The lawsuit further said that Apple and Google are reliant on each other and don’t give a chance to rivals as it is very clear that half of Google’s search traffic in 2019 came from Apple’s devices, and about a fifth of Apple’s annual profit came from Google.
· The complaint blames Google for restraining innovation and degrading the service quality such as privacy data to maintain its monopolies in the markets and these practices harm consumers by reducing the quality of search and limiting privacy protections and alternative search options.
· Alphabet Inc.’s Google has a market value of over USD 1 trillion, controls about 90 percent of global web searches. The company also owns the leading web browser Chrome, the top video site YouTube, and widely used digital mapping system.
· Furthermore, Google uses its control over multiple products and services such as search, email, video, and operating systems to maintain its monopoly and because of Google’s contracts, competitors in search like DuckDuckGo struggle to establish their market.
Google’s Argument in defense
· The company argues that although its businesses are large, its services are useful and beneficial to consumers. And its services face ample competition and promote innovations.
· Further, most of Google’s services are free of cost and consumers can easily switch away from its services even if it’s the default option on their smartphones.
Why the action has taken now?
There is nothing new that Google has a monopoly in search-engine by having 80% market share in the world, then why the action has taken now? Many experts say that it’s a political move just taken before the presidential election in the USA as the country is already suffering because of the capitalistic economy, high unemployment, and concentration of wealth into one place otherwise these are the old topics.
Impact of this lawsuit in India
“Google is a global market player. The lawsuit would have a worldwide impact. But having said that, the Competition Commission of India is already looking into such practices and has already fined Google previously. This is very much under the CCI radar to keep these practices under check,” competition law expert and partner at L&L Partners, Kanika Chaudhary Nayar said.
In the last three years, Google had faced multiple suits in CCI for alleged abuse of its dominant position in the search engine market, the android smartphone, and the television market.
In 2019, CCI held Google guilty of misuse of its dominant position in the mobile Android market for imposing unfair conditions on device manufacturers to not use other operating systems. Further, in February 2018, the CCI had fined Google Rs 136 crore for unfair business practices in the online search market. It said that Google had “allocated disproportionate real estate” for its affiliates, to the disadvantage of other companies that were trying to gain market access.
What will be the result of the lawsuit?
Experts are in the firm belief that the lawsuit may begin next year or in 2022 or maybe, it will be settled down by the government. If the lawsuit will begin in the Court of law, then it will be a new beginning in the search engine by ending the monopolistic power of Google.
And to win, the US Department of justice must prove that Google has acquired monopolistic power through abusive conduct or by unfair practices which is beyond healthy competition.
It is too early to conclude anything as the trial is yet to begin and moreover, the US government is about to change after the presidential election. It will depend upon President Biden and what he decides in the case. It may be settled by the government after imposing a hefty fine or there may be drastic changes if all the allegations against Google are proved right.