The antitrust Division of the U.S. Department of Justice (DOJ) and the Attorneys General (AG) of 11 States (State of Arkansas, State of Florida, State of Georgia, State of Indiana, Commonwealth of Kentucky, State of Louisiana, State of Mississippi, State of Missouri, State of Montana, State of South Carolina and State of Texas), known collectively as the Plaintiffs, have been busy since October 20, 2020.
As seen from the events that have taken place (and documents) at various stages since that point, things began with the Plaintiffs’ Complaint, filed in the United States District Court for the District of Columbia, where the most recent document is noted as the Plaintiffs’ Opening Statement dated September 28, 2023. In fact, by the end of October, 2023, we see that the trial has been proceeding—for two months, the Plaintiffs have laid out their case in Washington, D.C., and it is now Google’s turn to call witnesses.
Why is this case so important? Simply put, this case has been characterized as the “biggest tech monopoly trial of the 21st century”, and will likely affect us all for years to come.
Also referred to by the short version of the case, U.S. and Plaintiff States v. Google LLC [2020], this antitrust case is about a “scrappy startup” that grew up and is now in the midst of serious proceedings because it is seen as “a monopoly gatekeeper for the internet, and one of the wealthiest companies on the planet, with a market value of $1 trillion and annual revenue exceeding $160 billion”.
In fact, the Complaint (containing 11 helpful Figures depicting the technology) states that, “For many years, Google has used anticompetitive tactics to maintain and extend its monopolies in the markets for general search services, search advertising, and general search text advertising—the cornerstones of its empire”. The Plaintiffs allege that Google violated section 2 of the Sherman Act, 15 USC § 2.
The complaint
This Complaint discusses the alleged anticompetitive conduct by Google (Part V of the Complaint), and the anticompetitive effects that have arisen as a result of the alleged anticompetitive conduct by Google (Part VI of the Complaint).
In particular, the Plaintiffs allege that Google is a monopolist in relation to its:
- general search services
- search advertising
- general search text advertising markets
The Plaintiffs say that Google aggressively uses its monopoly positions, and the money that flows from them, to continuously foreclose rivals and protect its monopolies.
Furthermore, the Plaintiffs allege that Google has unlawfully maintained its monopolies by implementing and enforcing a series of exclusionary agreements with distributors over at least the last decade (denying rivals access to the most important distribution channels). The Plaintiffs say that over time, Google’s actions have denied rivals access to the scale that would allow rivals to increase quality.
At one point, the Complaint states, “In sum, Google deprives rivals of the quality, reach, and financial position necessary to mount any meaningful competition to Google’s longstanding monopolies. By foreclosing competition from rivals, Google harms consumers and advertisers”.
The Complaint explains how Google has used various agreements such as distribution agreements for mobile devices, and specifically for Android devices (for example, anti-forking agreements, preinstallation agreements, and revenue sharing agreements). The Complaint also alleges that Google’s agreements lock up browser distribution, and Google is positioning itself to control the next generation of search distribution channels.
What is more, there is a number of anticompetitive effects listed in the Complaint, including harm to rivals and consumers. In fact, the Plaintiffs allege that Google’s exclusionary conduct has caused Google to amass a great deal of power to manipulate and to become a gateway to the internet.
To that end, The Plaintiffs allege the following violations (under categories of claimed relief):
The first claim for relief (maintaining monopoly of general search services)
- General search services in the United States is a relevant antitrust market and Google has monopoly power in that market
- Google has wilfully maintained and abused its monopoly power in general search services through anticompetitive and exclusionary distribution agreements that lock up the preset default positions for search access points on browsers, mobile devices, computers, and other devices; require preinstallation and prominent placement of Google’s apps; tie Google’s search access points to Google Play and Google APIs; and other restrictions that drive queries to Google at the expense of search rivals
- Google’s exclusionary conduct has foreclosed a substantial share of the general search services market, and the anticompetitive acts have had harmful effects on competition and consumers
- The anticompetitive effects of Google’s exclusionary agreements outweigh any procompetitive benefits in this market, or can be achieved through less restrictive means
- Therefore, Google’s anticompetitive and exclusionary practices violate section 2 of the Sherman Act
The second claim for relief (maintaining monopoly of search advertising)
- Search advertising in the United States is a relevant antitrust market and Google has monopoly power in that market
- Google has wilfully maintained and abused its monopoly power in search advertising through anticompetitive and exclusionary distribution agreements that lock up the preset default positions for search access points on browsers, mobile devices, computers, and other devices; require preinstallation and prominent placement of Google’s apps; tie Google’s search access points to Google Play and Google APIs; and other restrictions that benefit Google at the expense of search advertising rivals
- Google’s exclusionary conduct has foreclosed a substantial share of the search advertising market
- Google’s anticompetitive acts have had harmful effects on competition, advertisers, and consumers
- The anticompetitive effects of Google’s exclusionary agreements outweigh any procompetitive benefits in this market, or can be achieved through less restrictive means
- Therefore, Google’s anticompetitive and exclusionary practices violate section 2 of the Sherman Act
The third claim for relief (maintaining monopoly of general search text advertising)
- General search text advertising in the United States is a relevant antitrust market, and Google has monopoly power in that market
- Google has wilfully maintained and abused its monopoly power in general search text advertising through anticompetitive and exclusionary distribution agreements that lock up the preset default positions for search access points on browsers, mobile devices, computers, and other devices; require preinstallation and prominent placement of Google’s apps; tie Google’s search access points to Google Play and Google APIs; and other restrictions that benefit Google at the expense of general search text advertising rivals
- Google’s exclusionary conduct has foreclosed a substantial share of the general search text advertising market
- Google’s anticompetitive acts have had harmful effects on competition, advertisers, and consumers
- The anticompetitive effects of Google’s exclusionary agreements outweigh any procompetitive benefits in this market, or can be achieved through less restrictive means
- Therefore, Google’s anticompetitive and exclusionary practices violate section 2 of the Sherman Act
Next steps
Time will tell how this case will turn out. If the court awards the relief that the Plaintiffs are seeking, we can expect a decree that there was a violation of the Sherman Antitrust Act, any structural relief required, an enjoining of Google from continuing to engage in anticompetitive harm, a costs award in favour of the Plaintiffs, and any other relief that the court finds is just and proper.
Meanwhile, it important to note that Google has just become part of another big antitrust case with Fortnite maker Epic Games.
It began November 6, 2023 and involves Epic’s contention that Google offered Epic Games $147 million to launch Fortnight on Google’s Play Store.
Moreover, Epic Games is of the view that Google’s developer agreements are anticompetitive and Google makes the process of sideloading overly difficult for end users to the point that “scare screens” are used to warn users of security risks involved with sideloading. Sideloading is a strategy of getting an application on your device even if it does not comply with the requirements of the app store in question or the developers may not want to pay the app store commission.
Please note that any views expressed in this article are solely the views of the author.
Additionally, find Christina at https://www.christinacatenacci.com/
Furthermore, Christina is a co-founder of a new AI company, voyAIge strategy. Check it out at:
https://www.voyaigestrategy.com/
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