The DOJ Antitrust Case Against Google: A Recap

The Department of Justice (DOJ) has finally released its long-awaited antitrust lawsuit against Google, alleging the company routinely engaged in “anticompetitive tactics to maintain and extend” its monopoly status at the expense of consumer welfare and competition. The anti-trust suit follows the Trump administration’s desire to rein in big tech companies that it argues have “tightened their grip over commerce and communications in America” over the last few years.

The filing may not garner bipartisan support, but it was supported by Republican attorneys general from Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina, and Texas.

Shortly after the DOJ released its antitrust filing, Kent Walker, Google’s SVP of Global Affairs, contended the lawsuit’s findings were “deeply flawed” and “would do nothing to help consumers.”

The search engine market is statistically one of the most monopolistic, with Google controlling approximately 81% of the search engine market and processing over 6.9 billion searches per day globally. Google’s nearest competitors, Bing and Yahoo, only hold approximately 8% of the market each. DuckDuckGo, a search engine that “differentiates itself from Google through its privacy-protective policies” only controls 1.5%.

In the DOJ lawsuit, one of the central allegations against Google is that the company has engaged in Revenue Sharing Agreements (RSAs) where manufacturers of electronic devices preinstall Google products in “exchange for a substantial portion of Google’s search advertising revenues.” For new competitors, these RSAs “present a substantial barrier to entry” as smaller companies simply “can not pay the billions of dollars that Google does” for preinstallation.

One of the most significant RSAs Google engaged in that most likely affects consumers, is its relationship with Apple. The current agreement holds that Google will pay Apple between $8-12 billion from its advertising revenue. In exchange, according to the DOJ lawsuit, “Apple must make Google’s search engine the default for Safari and use Google for Siri.” The agreement, the DOJ alleges, incentivizes “Apple to push more and more search traffic to Google” which maximizes its ad generated revenue.

The DOJ argues Google engaged in RSAs with more companies than just Apple, including other browsers such as Mozilla. When dealing with competitive browsers such as Mozilla, Google enters into agreements that will “make Google the default search engine” in exchange for “40 percent of the advertising revenue it generates from” searches performed on the alternate browser.

Aside from engaging in RSAs that have provided Google with preferential status on Apple devices on other browsers, the DOJ alleges Google has entered into numerous anti-forking agreements. Anti-forking agreements prevent others from using free Android open-source codes to create variant operating systems. The DOJ alleges that these agreements “inhibit the development of an operating system based on an Android fork that could serve as a viable path to market for a search competitor.”

These agreements, the DOJ contends, “set strict limits on the manufactures’ ability to sell Android devices that do not comply with Google technical and design standards.” These agreements also make manufacturers preinstall Google products, make them undeletable, as well as put them on the default home screen. To entice manufacturers to enter into these anti-forking agreements, Google “provides a share of its advertising revenue to Android device manufactures, mobile phone carriers and competing browsers.”

To penalize Google for this alleged anticompetitive behavior, the DOJ has asked the court to order “structural relief” that likely means breaking up Google as well providing “permanent relief necessary and appropriate to restore competitive conditions in the markets affected by Google’s unlawful conduct.” What that means is unclear, but Google could be facing substantial fines in the United States, similar to the $2.7 billion fine the European Union levied last year.

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