TR Daily Texas Leads Lawsuit Against Google for Anticompetitive Behavior
Wednesday, December 16, 2020

Texas Leads Lawsuit Against Google for Anticompetitive Behavior

Texas Attorney General Ken Paxton (R.) today said he was leading a coalition of state attorneys general in the filing of a lawsuit against Google, Inc., that targets the company’s online advertising and alleges "anticompetitive behavior, exclusionary practices, and deceptive misrepresentations."

"This Internet Goliath is using its power to manipulate the market, destroy competition, and harm you, the consumer," AG Paxton said on Twitter today, where he announced the lawsuit in a video message. "It isn’t fair that Google effectively eliminated its competition and crowned itself the head of online advertising."

The lawsuit (State of Texas et al., v. Google LLC) filed today in U.S. District Court for the Eastern District of Texas, specifically alleges that Google "monopolized or attempted to monopolize products and services used by advertisers and publishers in online display advertising." The lawsuit alleges that Google has committed specific violations of the Sherman Act.

In the video posted on Twitter, AG Paxton said that "Google repeatedly used its monopolistic power to control pricing, engage in market collusions to rig auctions in a tremendous violation of justice. Right now when you visit the website of news outlets you know and trust … you will see advertisements likely placed there by Google. But Google doesn’t tell you, the public, that they manipulate the advertising auction and they continually illegally profit by taking money away from those webpages and putting it in its own pockets."

"These actions harm every person in America," AG Paxton added.

In a statement, AG Paxton said that "Google’s monopolization of online display advertising includes an anticompetitive agreement with Facebook, making misrepresentations to users and customers, and suppressing competition."

"Google is a trillion-dollar monopoly brazenly abusing its monopolistic power, going so far as to induce senior Facebook executives to agree to a contractual scheme that undermines the heart of competitive process. In this advertising monopoly on an electronically traded market, Google is essentially trading on ‘insider information’ by acting as the pitcher, catcher, batter, and umpire, all at the same time. This isn’t the ‘free market’ at work here. This is anti-market and illegal under state and federal law," AG Paxton said. "Google’s monopolization of the display advertising industry and its misleading business practices stifle innovation, limit consumer choice, and reduce competition. Texas and its coalition of allied states bring this action to lift the veil on Google’s secret practices and secure relief to prevent it from engaging in future deceptive and misleading practices."

State AGs from Arkansas, Idaho, Indiana, Kentucky, Mississippi, Missouri, North Dakota, South Dakota, and Utah, joined Texas as plaintiffs in the suit, in an effort to "remove the veil of Google’s secret practices and end Google’s abuse of its monopoly power in online advertising markets. Plaintiff states seek to restore free and fair competition to these markets and to secure structural, behavioral, and monetary relief to prevent Google from ever again engaging in deceptive trade practices and abusing its monopoly power to foreclose competition and harm consumers."

A Google spokesman today called the lawsuit "meritless."

"Attorney General Paxton’s ad tech claims are meritless, yet he’s gone ahead in spite of all the facts," the Google spokesman said. "We’ve invested in state-of-the-art ad tech services that help businesses and benefit consumers. Digital ad prices have fallen over the last decade. Ad tech fees are falling too. Google’s ad tech fees are lower than the industry average. These are the hallmarks of a highly competitive industry. We will strongly defend ourselves from his baseless claims in court."

The multistate lawsuit follows an action taken by the Department of Justice in October. That lawsuit alleged that Google unlawfully maintained monopolies in the markets for general search services, search advertising, and general search text advertising through anticompetitive and exclusionary practices, such as tying arrangements and other agreements with device manufacturers and browser developers.

At least 11 states, including Texas, joined the federal lawsuit. California Attorney General Xavier Becerra (D.) last week became the first Democratic state AG to join the lawsuit. He said that "Google’s market dominance leaves consumers and small businesses with little choice when it comes to Internet search engines. By using exclusionary agreements to dominate the market, Google has stifled competition and rigged the advertising market. We look forward to litigating this case to restore competition and innovation for California consumers. This lawsuit paves the way for search engine innovation with greater regard for privacy and data protection."

Several groups released statements today in support of the Texas-led lawsuit.

Computer & Communications Industry Association (CCIA) President Matt Schruers said that "CCIA supports antitrust enforcement where consumers are harmed. However, we will be interested to see evidence of consumer harm when ad prices have decreased significantly in the past decade and competition has increased."

"Google should face competition against its ad technology products. If it did, advertisers, websites, and people would experience a better World Wide Web," said Charlotte Slaiman, competition policy director for Public Knowledge.

Sally Hubbard, director-enforcement strategy at the Open Markets Institute, said, "The state attorneys general make strong allegations against Google for illegally monopolizing several digital advertising markets in violation of Sherman Act Section 2. Google's power over the entire ad-tech stack, including the buy side, the sell side, and the exchange itself, amounts to insider trading that should not be tolerated. The complaint’s allegations of an illegal agreement with Facebook to restrain trade, though heavily redacted, indicate Google may have violated Sherman Act Section 1 as well."

On the other hand, the Competitive Enterprise Institute (CEI) said the lawsuit would harm consumers and small businesses.

"A company has monopoly power if it can raise prices, restrict supply, and still keep its dominance. Despite Google’s growth, digital ad prices have fallen by half over the last decade. At the same time, print ad prices have been increasing. Some newspapers have doubled their rates. Google and Facebook, which hold similar market shares, have made the ad market more competitive. Their innovation and price-cutting has made advertising more affordable than ever for small businesses who are struggling to find customers at a difficult time. Attorney General Paxton’s lawsuit would harm consumers and small businesses—precisely the opposite of what antitrust regulation is intended to do," said CEI senior fellow Ryan Young.

Added Jessica Melugin, director of CEI’s Center for Technology and Innovation, "It's hard to take seriously Attorney General Paxton's claim that Google has ‘harmed every person in America.’ Consumers have benefited from Google’s products, services, and innovations, often for free. This suit is a costly solution in search of a problem." —Carrie DeLeon, [email protected]

MainStory: TexasNews Courts MergersAntitrust Privacy

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