Antitrust Law Daily More states file suits accusing Google of monopoly conduct in Internet search market
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Friday, December 18, 2020

More states file suits accusing Google of monopoly conduct in Internet search market

By Linda O’Brien, J.D., LL.M.

A coalition of 38 states attorneys general has sued Google for leveraging its position as the dominant search engine to limit consumers from using competing search engines and force businesses to use its proprietary advertising tools.

The attorneys general of 38 states have joined together in a new suit against Google for alleged antitrust violations. This is the third major antitrust suit filed against Google this year filed by government entities. According to the complaint filed in the federal district court in Washington, D.C., Google illegally maintains its monopoly power over general search engines and related general search advertising markets through anticompetitive contracts and conduct. As a result, consumers are denied the benefits of competition, including the possibility of higher quality services and better privacy protections, and advertisers are harmed through lower quality and higher prices that are passed along to consumers (Colorado V. Google LLC, Case No. 1:20-cv-03715-APM).

According to the complaint, the world’s largest general search engine has used its dominant market position to stifle competition by systematically degrading the ability of other companies to access consumers. Google’s position derives principally from its overwhelming and durable monopoly in general Internet searches. Approximately 90 percent of all Internet conducted in the United States use Google. No competing search engine has more than seven percent of the market and no new entrant in the general search market in the United States has accounted for more than one percent of Internet searches in any given year. Google monetizes its search results by selling the ability to reach consumers who have entered general search terms to advertisers.

To maintain its monopoly, Google uses its massive financial resources to limit the number of consumers who use a Google competitor. Specifically, Google provides a share of its search advertising revenue to numerous firms, including Android device manufacturers such as Apple Inc., in exchange for becoming the preset default general search engine on their devices. As a result of these agreements, Google has secured the default placement of Google Search on 80 percent of web browsers. Since web browsers are the primary gateway to the Internet in the United States, such revenue share agreements have erected artificial barriers for general search competitors to reach consumers, the complaint asserts.

Additionally, the complaint alleges that Google’s Search Ads 360 (SA360) service, a search advertising marketing tool, is operated to severely limit its use with a competitor. Although Google has consistently assured advertisers that it would operate SA360 in a neutral manner, Google harms competition by refusing interoperability to comparable advertising features offered by Microsoft’s Bing general search engine. Google continuously favors advertising on its own platform and steers advertiser spending to itself by artificially denying advertisers the opportunity to evaluate options that would serve those advertisers best.

To maintain its monopoly, Google also throttles consumers from bypassing its general search engine and going directly to their chosen search destination when those destinations threaten Google’s monopoly power, such as online travel agencies that offer consumers the ability to complete a transaction on their websites. Google derives substantial general search advertising revenue from a small number of vertical commercial segments that represent a disproportionate share of its revenue, such as travel and local services. To foreclose the opportunity that those specialized vertical providers can establish customer relationships, Google takes advantage of the providers’ dependence on Google and prohibits them from prominently displaying their own brand name or the links that would direct consumers to their websites. Further, Google extracts massive amounts of proprietary customer data from the providers that Google can use to compete against them, the complaint states.

The complaint sets forth claims for maintaining a monopoly of general search services, general search advertising, and general search text advertising in violation of Section 2 of the Sherman Act. The action seeks declaratory and injunctive relief as well as remedies to: (1) cure the anticompetitive harm; (2) remove Google’s ability to harm competition in its monopoly maintenance, including structural divestitures; and (3) eliminate Google’s ability to benefit from its anticompetitive conduct.

"Our economy is more concentrated than ever, and consumers are squeezed when they are deprived of choices in valued products and services. Google’s anticompetitive actions have protected its general search monopolies and excluded rivals, depriving consumers of the benefits of competitive choices, forestalling innovation, and undermining new entry or expansion," Colorado Attorney General Phil Weiser said in announcing the filing of the suit. "This lawsuit seeks to restore competition."

Earlier suits against Google. In October, the U.S. Department of Justice and 11 states filed an antitrust action against Google for abusing its monopoly power in general search services, search advertising, and general search text advertising through anticompetitive and exclusionary distribution agreements. According to the complaint filed in the federal district court in Washington, D.C., Google provides a share of its search advertising revenue to Android device manufacturers, such as Samsung, mobile phone carriers, competing browsers, and Apple Inc., in exchange for becoming the preset default general search engine for the most important search access points on a computer or mobile device. Such agreements are alleged to foreclose distribution to Google’s search rivals and limit them as competitive alternatives for consumers and advertisers. The States of Wisconsin and Michigan as well as California have sought to join the suit (U.S. v. Google, LLC, Case No. 1:20-cv-03010).

Earlier this month, the State of Texas led a coalition of 10 attorneys general in filing a six-count complaint in a federal district court in Sherman, Texas, against Google for violations of federal and state antitrust and consumer protection laws, including anticompetitive conduct, exclusionary practices, and deceptive misrepresentations in connection with its role in the multi-trillion-dollar online display advertising industry (Texas v. Google LLC, Case No. 4:20-cv-00957).

The case is No. 1:20-cv-03715.

Attorneys: Aaron M. Frey, Office of the Maine Attorney General, for State of Maine. Philip J. Weiser, Colorado Office of the Attorney General, for State of Colorado. W. Mark Lanier (Lanier Law Firm) and Ashley Keller (Keller Lenkner LLC), Ken Paxton, Attorney General of Texas, for State of Texas. Kenneth Michael Dintzer, U.S. Department of Justice, for the United States. John E. Schmidtlein (Williams & Connolly LLP) and Mark S. Popofsky (Ropes & Gray LLP) for Google LLC.

Companies: Google LLC

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