An expected federal antitrust suit against Google dropped today which has many parallels with an antitrust case filed against Microsoft two decades ago, and while it may seem like part of a Republican vendetta against the tech industry, it has plenty of support from congressional Democrats.
The lawsuit, which focuses on alleged anticompetitive aspects of Google's search engine and search advertising businesses, comes after a months-long investigation and heightened rhetoric from Washington slamming the company and other tech behemoths Facebook, Apple, and Amazon for their perceived monopolies.
Deputy U.S. Attorney General Jeffrey A. Rosen gave a press briefing Tuesday morning, as the New York Times reports, calling the suit a "milestone" and saying that it had "nothing to do" with President Trump's hostility to the tech industry and complaints about bias against conservatives. He also asserted that Google/Alphabet "has maintained its monopoly power through exclusionary practices that are harmful to competition."
In a formal response, Google's Senior Vice President of Global Affairs Kent Walker said that the government's suit is "deeply flawed," and "People use Google because they choose to, not because they're forced to, or because they can't find alternatives."
Walker added, "This lawsuit would do nothing to help consumers. To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use."
Walker's statement echoes what the tech industry and its advocates have been arguing for years about antitrust allegations — old-time antitrust laws don't properly apply in the world of free services like Facebook and Google where harm to the consumer is far less cut-and-dry than the days of the oil and steel barons. And in many cases, these companies are lowering the price of goods, not raising them, out of competition with each other and with traditional businesses like brick-and-mortar retail (as in the case of Amazon).
The Times notes that Attorney General Bill Barr has been actively involved in getting the suit against Google filed before the election, setting tight deadlines that his own department's lawyers pushed back on.
And the suit comes just a week after House Democrats published a report on their investigation into antitrust issues, which came with recommendations for overhauling current antitrust laws.
"To put it simply, companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons," wrote Judiciary Chair Jerry Nadler (D-N.Y.) and antitrust subcommittee Chair David Cicilline (D-R.I.) in the report. "Although these firms have delivered clear benefits to society, the dominance of Amazon, Apple, Facebook, and Google has come at a price."
Frequent tech critic Senator Josh Hawley (R-M.O.) praised the Justice Department's action in a tweet, saying, "This will be the most important antitrust suit in a generation. As the first state attorney general in the country to launch an antitrust investigation of [Google]. I applaud this suit as desperately needed and long overdue. #BigTech’s free pass is over."
Antitrust expert Tim Wu, a professor at Columbia Law, pointed out the clear similarities between the suit that was filed and the 20-year-old suit against Microsoft over Internet Explorer. "The Justice Department is showing that it isn’t just Silicon Valley who clones successful products: they’ve basically cloned the Microsoft case and added Google’s name to it."
Google/Alphabet had responses prepared to many of the government's arguments, which include the fact that it pays Apple to be the primary search engine on iOS devices, and for placement in other companies web browsers.
"Yes, like countless other businesses, we pay to promote our services, just like a cereal brand might pay a supermarket to stock its products at the end of a row or on a shelf at eye level," writes Google's Walker. "For digital services, when you first buy a device, it has a kind of home screen 'eye level shelf.' On mobile, that shelf is controlled by Apple, as well as companies like AT&T, Verizon, Samsung and LG. On desktop computers, that shelf space is overwhelmingly controlled by Microsoft."
Walker goes on to show how Microsoft's Bing and other search engines pay for placement on Safari's home screen, etc.
Google will come at this with the full force of its "global network of lawyers, economists and lobbyists," as the Times notes, having already fended off antitrust suits in Europe for several years. And with cash reserves of $120 billion and a valuation over $1 trillion, it has a lot of money to throw at this.
Photo: Christian Wiedeger