By Brent Kendall and Rob Copeland
The Justice Department filed an antitrust lawsuit Tuesday
alleging that Google engaged in anticompetitive conduct to preserve
monopolies in search and search advertising that form the
cornerstones of its vast conglomerate.
The long-anticipated case, filed in a Washington, D.C., federal
court, marks the most aggressive U.S. legal challenge to a
company's dominance in the tech sector in more than two decades,
with the potential to shake up Silicon Valley and beyond. Once a
public darling, Google attracted considerable scrutiny over the
past decade as it gained power but has avoided a true showdown with
the government until now.
The department alleged that Google, a unit of Alphabet Inc., is
maintaining its status as gatekeeper to the internet through an
unlawful web of exclusionary and interlocking business agreements
that shut out competitors. The government alleged that Google uses
billions of dollars collected from advertisements on its platform
to pay mobile-phone manufacturers, carriers and browsers, like
Apple Inc.'s Safari, to maintain Google as their preset, default
The upshot is that Google has pole position in search on
hundreds of millions of American devices, with little opportunity
for any competitor to make inroads, the government alleged.
The lawsuit also took aim at arrangements in which Google's
search application is preloaded, and can't be deleted, on mobile
phones running its popular Android operating system. The government
alleged Google unlawfully prohibits competitors' search
applications from being preloaded on phones under revenue-sharing
Google owns or controls search distribution channels accounting
for about 80% of search queries in the U.S., the lawsuit said. That
means Google's competitors can't get a meaningful number of search
queries and build a scale needed to compete, leaving consumers with
less choice and less innovation, and advertisers with less
competitive prices, the lawsuit alleged.
Google didn't immediately respond to a request for comment, but
the company has said its competitive edge comes from offering a
product that billions of people choose to use each day. Alphabet's
shares opened Tuesday up roughly 1%, ahead of the broader market,
after The Wall Street Journal first reported news of the impending
The Mountain View, Calif., company, sitting on 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
small and large reach new customers.
Google's defense against critics of all stripes has long been
rooted in the fact that its services are largely offered to
consumers at little or no cost, undercutting the traditional
antitrust argument around potential price harms to those who use a
The lawsuit follows a Justice Department investigation that has
stretched more than a year, and comes amid a broader examination of
the handful of technology companies that play an outsize role in
the U.S. economy and the daily lives of most Americans.
A loss for Google could mean court-ordered changes to how it
operates parts of its business, potentially creating new openings
for rival companies. The Justice Department's lawsuit didn't
specify particular remedies; that is usually addressed later in a
case. One Justice Department official said nothing is off the
table, including possibly seeking structural changes to Google's
A victory for Google could deal a huge blow to Washington's
overall scrutiny of big tech companies, potentially hobbling other
investigations and enshrining Google's business model after
lawmakers and others challenged its market power. Such an outcome,
however, might spur Congress to take legislative action against the
The case could take years to resolve, and the responsibility for
managing the suit will fall to the appointees of whichever
candidate wins the Nov. 3 presidential election.
The challenge marks a new chapter in the history of Google, a
company formed in 1998 in a garage in a San Francisco suburb -- the
same year Microsoft Corp. was hit with a blockbuster government
antitrust case accusing the software giant of unlawful
monopolization. That case, which eventually resulted in a
settlement, was the last similar government antitrust case against
a major U.S. tech firm.
Google started as a simple search engine with a large and
amorphous mission "to organize the world's information." But over
the past decade or so it has developed into a conglomerate that
does far more than that. Its flagship search engine handles more
than 90% of global search requests, some billions a day, providing
fodder for what has become a vast brokerage of digital advertising.
Its YouTube unit is the world's largest video platform, used by
nearly three-quarters of U.S. adults.
Google has been bruised but never visibly hurt by various
controversies surrounding privacy and allegedly anticompetitive
behavior, and its growth has continued almost entirely unchecked.
In 2012, the last time Google faced close antitrust scrutiny in the
U.S., the search giant was already one of the largest publicly
traded companies in the nation. Since then, its market value has
roughly tripled to almost $1 trillion.
The company takes on this legal showdown under a new generation
of leadership. Co-founders Larry Page and Sergey Brin, both
billionaires, gave up their management roles last year, handing the
reins solely to Sundar Pichai, a soft-spoken, India-born engineer
who earlier in his career helped present Google's antitrust
complaints about Microsoft to regulators.
The chief executive has in his corner Messrs. Page and Brin, who
remain on Alphabet's board and in effective control of the company
thanks to shares that give them, along with former Chief Executive
Eric Schmidt, disproportionate voting power.
Executives inside Google are quick to portray their divisions as
mere startups in areas -- like hardware, social networking, cloud
computing and health -- where other Silicon Valley giants are
further ahead. Still, that Google has such breadth at all points to
European Union regulators have targeted the company with three
antitrust complaints and fined it about $9 billion, though the
cases haven't left a big imprint on Google's businesses there, and
critics say the remedies imposed on it have proved
In the U.S., nearly all state attorneys general are separately
investigating Google, while three other tech giants -- Facebook
Inc., Apple and Amazon.com Inc. -- likewise face close antitrust
scrutiny. And in Washington, a bipartisan belief is emerging that
the government should do more to police the behavior of top digital
platforms that control widely used tools of communication and
A group of 11 state attorneys general, all Republicans, joined
the Justice Department's case, officials said. More could join
later, according to the court docket. 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 has reported. In the ad-technology market, Google owns
industry-leading tools at every link in the complex chain between
online publishers and advertisers.
The Justice Department also continues to investigate Google's
Democrats on a House antitrust subcommittee released a report
this month following a 16-month inquiry, saying all four tech
giants wield monopoly power and recommending congressional action.
The companies' chief executives testified before the panel in
"It's Google's business model that is the problem," Rep. David
Cicilline (D., R.I.), the subcommittee chairman, told Mr. Pichai.
"Google evolved from a turnstile to the rest of the web to a walled
garden that increasingly keeps users within its sights."
"We see vigorous competition," Mr. Pichai responded, pointing to
travel search sites and product searches on Amazon's online
marketplace. "We are working hard, focused on the users, to
Amid the criticism, Google and other tech giants remain broadly
popular and have only gained in might and stature since the start
of the coronavirus pandemic, buoying the U.S. economy -- and stock
market -- during a period of deep uncertainty.
At the same time, Google's growth across a range of business
lines over the years has expanded its pool of critics, with
companies that compete with the search giant, as well as some
Google customers, complaining about its tactics.
Specialized search providers like Yelp Inc. and Tripadvisor Inc.
have long voiced such concerns to U.S. antitrust authorities, and
newer upstarts like search-engine provider DuckDuckGo have spent
time talking to the Justice Department.
News Corp, owner of The Wall Street Journal, has complained to
antitrust authorities at home and abroad about both Google's search
practices and its dominance in digital advertising.
Some Big Tech detractors have called to break up Google and
other dominant companies. Courts have indicated such broad action
should be a last resort available only if the government clears
high legal hurdles, including by showing that lesser remedies are
The outcome could have a considerable impact on the direction of
U.S. antitrust law. The Sherman Act that prohibits restraints of
trade and attempted monopolization is broadly worded, leaving
courts wide latitude to interpret its parameters. Because litigated
antitrust cases are rare, any one ruling could affect governing
precedent for future cases.
The tech sector has been a particular challenge for antitrust
enforcers and the courts because the industry evolves rapidly and
many products and services are offered free to consumers, who in a
sense pay with the valuable personal data companies such as Google
The search company famously outmaneuvered the Federal Trade
Commission nearly a decade ago.
The FTC, which shares antitrust authority with the Justice
Department, spent more than a year investigating Google but decided
in early 2013 not to bring a case in response to complaints that
the company engaged in "search bias" by favoring its own services
and demoting rivals. Competition staff at the agency deemed the
matter a close call, but said a case challenging Google's search
practices could be tough to win because of what they described as
mixed motives within the company: a desire to both hobble rivals
and advance quality products and services for consumers.
The Justice Department's case doesn't focus on a search-bias
Google made a handful of voluntary commitments to address other
FTC concerns, a resolution that was widely panned by advocates of
stronger antitrust enforcement and continues to be cited as a top
failure. Google's supporters say the FTC's light touch was
appropriate and didn't burden the company as it continued to
The Justice Department's current antitrust chief, Makan
Delrahim, spent months negotiating with the FTC last year for
jurisdiction to investigate Google this time around. He later
recused himself in the case -- Google was briefly a client years
before while he was in private practice -- as the department's top
brass moved to take charge.
The Justice Department lawsuit comes after internal tensions,
with some staffers skeptical of Attorney General William Barr's
push to bring a case as quickly as possible, the Journal has
reported. The reluctant staffers worried the department hadn't yet
built an airtight case and feared rushing to litigation could lead
to a loss in court. They also worried Mr. Barr was driven by an
interest in filing a case before the election. Others were more
comfortable moving ahead.
Mr. Barr has pushed the department to move forward under the
belief that antitrust enforcers have been too slow and hesitant to
take action, according to a person familiar with his thinking. He
has taken an unusually hands-on role in several areas of the
department's work and repeatedly voiced interest in investigating
If the Microsoft case from 20 years ago is any guide, Mr. Barr's
concern with speed could run up against the often slow pace of
After a circuitous route through the court system, including one
initial trial-court ruling that ordered a breakup, Microsoft
reached a 2002 settlement with the government and changed some
aspects of its commercial behavior but stayed intact. It remained
under court supervision and subject to terms of its consent decree
with the government until 2011.
Antitrust experts have long debated whether the settlement was
tough enough on Microsoft, though most observers believe the
agreement opened up space for a new generation of competitors.
--Ryan Tracy contributed to this article.
Write to Brent Kendall at firstname.lastname@example.org and Rob Copeland
(END) Dow Jones Newswires
October 20, 2020 10:34 ET (14:34 GMT)
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