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US Department of Justice, 11 states hit Google with antitrust suit

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US Department of Justice, 11 states hit Google with antitrust suit

The U.S. Justice Department filed an antitrust lawsuit against Alphabet Inc.'s Google LLC on Oct. 20 alleging the company unlawfully maintained monopolies in the general search, search advertising, and general search text advertising markets through "anticompetitive and exclusionary practices."

The lawsuit, which was filed in the U.S. District Court for the District of Columbia, accuses Google of paying "billions of dollars each year" to device makers such as Apple Inc., LG Electronics Inc. and Samsung Electronics Co. Ltd., as well as to major U.S. wireless carriers including AT&T Inc., T-Mobile US Inc. and Verizon Communications Inc., to secure default status for its general search engine. Some of these agreements are exclusionary, according to the suit, and specifically prohibit these companies from dealing with Google's competitors.

"Google has foreclosed any meaningful search competitor from gaining vital distribution and scale, eliminating competition for a majority of search queries in the United States," the department said in a news release.

The suit seeks "to remedy the effects of this conduct." Specifically, it asks the court to "enter structural relief as needed to cure any anticompetitive harm," meaning that depending on the outcome of the lawsuit, the court could require divestitures. Additionally, the plaintiffs asked the court to "enjoin Google from continuing to engage in the anticompetitive practices" and enter any other preliminary or permanent relief necessary.

Asked on an Oct. 20 press call to elaborate on the types of relief the agency is seeking, Ryan Shores, associate deputy attorney general and senior advisor for technology industries at the Justice Department, said, "nothing is off the table, but a question of remedies is best addressed by the court after it has had a chance to hear all the evidence."

The states of Arkansas, Georgia, Florida, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina and Texas all joined the suit. All 11 states have Republican state attorneys general. However, a Justice Department official noted that the agency has a line of communication open with other states that have not joined the lawsuit.

In response, Google's public policy Twitter account said in an Oct. 20 tweet that the lawsuit is "deeply flawed," and said that "people use Google because they choose to — not because they're forced to or because they can't find alternatives."

The investigation was first disclosed by Google in September 2019. It comes after the Justice Department announced in July 2019 that it was opening an antitrust probe into technology companies to determine whether they stifle competition or engage in other practices that harm consumers.

A Justice Department official noted on a press call that the agency plans to continue its review of competitive practices by market-leading online platforms and "where necessary address those as well."

When asked if its complaint toward Google could be expanded or amended to include other conditions, an official noted that Google "would not be an exception" to its ongoing review of competitive conditions in the digital marketplace.

During a Sept. 16 U.S. Senate hearing, Donald Harrison, president of global partnerships and corporate development at Google, called the ad tech space "crowded and competitive," and argued that Google's products help businesses grow. Specifically, he claimed that in 2019, Google's search and advertising tools generated $385 billion in economic activity for U.S. businesses and nonprofits.

A June report from the market research firm eMarketer found that Google's share of the U.S. digital ad market will be 29.4% by the end of 2020. By comparison, the same study projects that Facebook Inc. will have a 23.4% share and Amazon.com Inc. will have a 9.5% share by the end of the year.

On the other side of Congress, a U.S. House antitrust subcommittee recently wrapped up an investigation into competition in digital markets. As part of recommendations to restore competition in the digital economy, the subcommittee recommended that "Congress consider legislation that draws on two mainstay tools of the antimonopoly toolkit: structural separation and line of business restrictions."

Notably, structural separations do not necessarily mean forcing a sale. There are two forms of structural separation: ownership separations, which do require a divestiture and separate ownership of each business; and functional separations, which permit a single corporate entity to engage in multiple lines of business but create hard boundaries between them.

However, antitrust experts recently told S&P Global Market Intelligence that they do not expect the House report to be used as evidence in court against the companies by antitrust enforcers.