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Update: Group of 38 AGs file new antitrust suit against Google

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Update: Group of 38 AGs file new antitrust suit against Google

In what represents the third government antitrust lawsuit against Alphabet Inc.'s Google LLC in two months, a bipartisan group of 38 attorneys general from across the U.S. filed suit on Dec. 17 against the online giant, alleging the company engaged in anticompetitive conduct to maintain monopoly power in specific search and advertising markets.

The lawsuit, which was filed in federal court in Washington, D.C., asks the court to "enter any relief, as needed, to cure any anticompetitive harm from Google's conduct, prevent any future harm, and undo the continuing effects of past harm to competition." Among other things, the suit asks for structural divestitures as well as measurable conduct remedies.

The suit specifically alleges that Google maintains market power through exclusionary and anticompetitive conduct.

"Google monetizes its search results by selling to advertisers the ability to reach consumers who have entered general search terms," write the states in their suit. "As a result of its significant power in the general search services market, Google also has built durable monopolies in general search text advertising and in the larger market for general search advertising."

The states also allege that Google has entered into contracts to exclude rival search engines and make Google's general search engine the default on as many browsers as possible.

An example detailed in the lawsuit says that a browser with Google as the default search engine gives the company "de facto exclusivity," because consumers rarely change the default.

The states allege that Google has search advertising revenue share agreements with device makers, such as Apple Inc., and U.S. mobile carriers, such as T-Mobile US Inc., and as a result, it has "secured default placement of Google Search on 80 percent of web browsers ... and has thus erected artificial barriers to prevent general search competitors from reaching consumers."

Among other claims, the suit alleges that Google has engaged in an exclusionary practice by "refusing interoperability" with its search advertising tool with comparable advertising features.

Sally Hubbard, director of enforcement strategy at the Open Markets Institute, a research and advocacy organization focused on antitrust, said in an interview that while it is a little early to identify which remedies will occur, she believes there is a recognition among antitrust enforcers that behavioral conditions alone will not suffice.

"[Behavioral conditions] will be included, but I think that enforcers are going to be seeking structural fixes," she said.

Hubbard noted that all of the cases filed against Google and Facebook in recent months have sought structural relief.

Robert Atkinson, president of the nonpartisan public policy think tank Information Technology & Innovation Foundation, said in an interview that he found it "a little troubling" that antitrust enforcers were going back and "calling do overs" by pursuing divestitures.

“It's the idea that we're going to be sending a message to a company… maybe if you get really big we might take it [an acquisition] back ten years later," he said. "That is going to lead to uncertainty in the marketplace going forward,” he added.

The suit was filed by the attorneys general from New York, Arizona, Colorado, Iowa, Nebraska, North Carolina, Tennessee, Utah, Alaska, Connecticut, Delaware, Hawaii, Idaho, Illinois, Kansas, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Vermont, Virginia, Washington, West Virginia, Wyoming, the District of Columbia, and the territories of Guam and Puerto Rico.

Google said in a Dec 17 blog post that the lawsuit would require Google to redesign its search engine to prominently feature online middlemen in place of direct connections to businesses. This would not only harm the quality of search results — according to Adam Cohen, director of economic policy for Google — it would also "come at the expense of businesses like retailers, restaurants, repair shops, airlines and hotels whose listings in Google help them get discovered, and connect directly with customers."

The case builds on a previous antitrust lawsuit filed in October against Google by the U.S. Justice Department and 11 states. That suit similarly alleged that the company unlawfully maintained monopolies in the general search, search advertising, and general search text advertising markets through anti-competitive and exclusionary practices. Since that initial lawsuit was filed, three more states have joined.

Hubbard says she thinks that the Dec. 17 suit will be consolidated with the DOJ case.

Google previously called the Justice Department lawsuit "deeply flawed," with Google Senior Vice President of Global Affairs Kent Walker saying, "People use Google because they choose to, not because they're forced to, or because they can't find alternatives."

Google also countered the idea that its agreements to make Google the default search engine are anticompetitive. "Our agreements with Apple and other device makers and carriers are no different from the agreements that many other companies have traditionally used to distribute software. Other search engines, including Microsoft Corp.'s Bing, compete with us for these agreements. And our agreements have passed repeated antitrust reviews," Walker said.

In the Dec. 17 filing, the 38 states said they "support the allegations in the complaint recently filed by a number of sister States and the United States Department of Justice."

However, they note that "the additional claims in this case are brought to combat a broader range of Google's illegal conduct."

The news comes one day after 10 states filed a separate antitrust lawsuit against Google alleging anti-competitive conduct, exclusionary practices and deceptive misrepresentations. In that Dec. 16 suit, which was filed in federal court in Texas, the states allege that Google monopolized online-display advertising and that the company had an anti-competitive agreement with Facebook Inc. to harm competition.

Hubbard said she thinks it is possible that Facebook could either be added as a defendant to this case, or that the allegation detailed in the Dec. 16 suit could be added to an existing suit against Facebook.