The United States Justice Department has filed an anti-trust lawsuit against Google, claiming the tech giant uses anticompetitive tactics to preserve a monopoly for its flagship search engine and its related advertising business that has illegally choked off competition.
According to The Wall Street Journal, the case, filed in federal court in Washington D.C., marks the “most aggressive US legal challenge to a company’s dominance in the tech sector in more than two decades”.
The case has the potential to send shivers down the spine of Silicon Valley and beyond as it thrusts Google into the type of public showdown the company has sought to avoid.
The Justice Department has accused Google of maintaining its status as a major Internet gatekeeper through an unlawful web of exclusionary and interlocking business agreements that shut out competitors and that the tech firm uses billions of dollars collected from advertising on to pay for mobile-phone manufacturers, carriers and browsers to maintain Google as their preset, default search engine.
“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.”
Deputy US Attorney General Jeffrey Rosen
The practice keeps Google ahead in search on hundreds of millions of devices in the US, while preventing other companies from strengthening their position.
“Google achieved some success in its early years, and no one begrudges that,” Deputy US Attorney General Jeffrey Rosen was quoted by The Wall Street Journal as having 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.”
Google is known to own or control search distribution channels accounting for around 80 per cent of search queries in the US and the Justice Department claims that effectively leaves no room for competition, resulting in fewer choices, less innovation for consumers and less competitive prices for advertisers.
The wide-ranging lawsuit included details on alleged deliberations within Google aimed at avoiding antitrust scrutiny. The government quoted Google’s chief economist as telling employees, “We should be careful about what we say in both public and private.”
The lawsuit has targeted arrangements under which Google’s search application is preloaded, and can’t be deleted, on mobile phones running its popular Android operating system and the Justice Department says Google has expanded those agreements over the past year since its probe began.
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,” Walker argued. “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.”
He said the consequence of the lawsuit, if it were successful, would be higher prices for consumers as Google would have to raise the cost of its mobile software and hardware.
According to The Wall Street Journal, the company, based in Mountain View, California and which sits atop a $120-billion cash hoard, is unlikely to shrink from a legal fight.
The company has argued that it faces vigorous competition across its different operations and that its products and platforms help businesses, whether small or large, reach new customers.
The lawsuit comes amid a broader examination of the handful of technology companies that play an outsize role in the US economy and the daily lives of most Americans.