By Keach Hagey
The Justice Department filed an antitrust lawsuit Tuesday
against Alphabet Inc.'s Google, alleging the technology company
engaged in anticompetitive practices to achieve and sustain its
market dominance, The Wall Street Journal reported. While the suit
focuses primarily on Google's core internet search business, the
Justice Department is separately continuing to investigate Google's
awesome power in digital advertising. States are pursuing a
separate probe of Google; some are joining the Justice Department
case. Here's a look at why Google's businesses are under so much
What does the lawsuit allege?
The Justice Department alleges that Google is illegally
maintaining its monopoly in search through exclusionary contracts
with distributors like mobile-phone makers, wireless carriers and
web browsers to make Google their default search engine. As a
result of these agreements, which involve Google paying out
billions of dollars to distributors each year, Google owns or
controls search distribution channels accounting for about 80% of
the general search queries in the U.S., according to the
government's complaint. These agreements thus prevent competitors
from being able to get any kind of meaningful foothold, the
Google's chief legal officer said in a statement that the suit
was flawed and that consumers use Google because they chose to, not
because they are forced or lack alternatives.
What areas of business does Google dominate?
Having invented the modern search engine, Google continues to
dominate this primary portal to the internet. The company is a big
force in other areas of consumer technology, from online video
(YouTube) to maps (Google Maps). Its Chrome browser controls about
70% of the global online browser market, and roughly half the
market in the U.S., according to StatCounter. About 85% of
smartphones globally run its Android operating system and about 56%
do in the U.S., according to market research firm IDC. Google makes
money selling ads in its products.
If you're buying or selling an ad elsewhere on the web, chances
are very high you're also doing business with Google. Google sucks
up about one in every three dollars spent on digital advertising
and generated nearly $135 billion in total ad revenue in 2019.
Google's critics in government and industry say it has amassed this
market power through anticompetitive practices.
In a blog post responding to competition concerns, Google said
it operates "across many highly competitive sectors where prices
are free or falling and products are constantly improving."
Does Google have any serious competition in answering search
When it comes to general search, there is no getting around
Google's dominance. On mobile, Google handles 95% of search queries
in the U.S., according to StatCounter. On desktop, its share is
81%, with Microsoft's Bing as the next largest player with a 13%
share of user queries. Google Search generated some $98 billion in
revenue in 2019.
Google argues that regulators should actually be considering
search queries made by people who are ready to buy something and
are most valuable to advertisers. In this realm, Google says,
"competition is particularly intense" and Amazon is a rising
Even when looking at the search market in this way, Google is
still dominant, winning about 63% of all search ad revenue in the
U.S., according to research firm eMarketer.
How might Google's search dominance harm competition?
The Justice Department, like other regulators around the world,
is focusing on deals like the billions of dollars Google has been
paying to Apple Inc. to be the default search engine in the
iPhone's Safari browser.
Critics say this arrangement prevents rivals including Bing from
harvesting enough search query data to make their competing search
In 2018, the European Commission fined Google more than 4
billion euros for putting restrictions on its Android operating
system that effectively forced traffic into the Google search
"Our success is based on providing the best results, and if
we're not, users can quickly and easily switch to rivals," Google
said in its blog post.
How does Google use search to help its other businesses?
Critics say Google's search function favors its own properties,
including in areas such as travel and local business reviews. These
complaints have become more urgent as the rise of mobile phones has
shrunk the amount of space available to display results. Some
Google competitors say this pushes their results "below the fold,"
as the Federal Trade Commission put it during its past
investigation into the issue. In some cases, Google answers
questions such as "When is the next flight to Boston?" with flight
times from its own service, rather than sending users a link to
Google has argued that this is simply a more user-friendly way
to answer searches. In 2013, the FTC said it essentially agreed,
closing an investigation into alleged search bias by Google.
What role does Google's technology play in displaying ads across
In automated online advertising, there is a chain of middlemen
between the companies who want to buy ads and the websites -- say,
news sites or blogs -- that are putting their ad space up for sale.
Google owns the dominant product at each link of that chain. The
company became a major player in this area after its 2010
acquisition of the ad tech company DoubleClick and has expanded
Now, Google's tool allowing publishers to offer up ad space for
sale has more than 90% market share, according to U.K. competition
officials, while its product that serves ads on behalf of
advertisers has more than 80% market share and its exchange --
where auctions between buyers and sellers happen in a fraction of a
second -- has more than 50% market share.
Google argues in its blog post that the online advertising space
is "famously crowded" with competitors.
Does Google use that clout to gain an undue advantage?
Google's competitors, advertisers, online publishers and U.S.
lawmakers from both parties have all alleged that Google is
exploiting the conflict of interest inherent in this vertical
integration -- in which Google represents the buyer, seller and
auction house of these rapid-fire online ad sales. In addition,
Google is a direct competitor to the publishers selling the ad
The critics also allege Google has tied its products together in
ways that harm competition. For example, in 2016, Google began
requiring ad buyers to use Google's ad-buying tools to access
advertising on YouTube, prompting a wave of complaints from rivals
alleging it was leveraging YouTube's "must-have" status to prop up
its ad buying tool.
Publishers have complained that Google has given itself an
unfair advantage in online ad auctions, tilting the process in ways
that hurt publishers and helped its own advertising exchange.
Google has denied using its tools in an anticompetitive manner,
arguing that it has made them "interoperable" with rivals and that
publishers and advertisers have many choices of advertising
Does Google's advertising dominance harm consumers?
Google and its supporters say its dominance in advertising has
lowered ad prices and allowed it to offer free services to
consumers. Some regulators around the world and U.S. antitrust
experts see another side of the story. They say companies wind up
having to charge consumers more for goods and services than they
otherwise would if the online ad market were more competitive.
They also argue that consumers are forced to give up more data
to these products -- on their usage habits, interests, location and
more -- than what would represent a fair exchange. And they say
consumers are missing out on innovative products that a more
competitive marketplace would yield. Finally, they argue that the
online search and advertising marketplace is malfunctioning in a
way that is contributing to the decline of local journalism and the
rise of misinformation.
Write to Keach Hagey at email@example.com
(END) Dow Jones Newswires
October 20, 2020 16:41 ET (20:41 GMT)
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