The US Government v. Google: What you need to know

The US government’s lawsuit against Google alleges the firm is abusing its monopoly position in search and search advertising. What’s next?


October 21, 2020

Finally, we can party like it’s 1998.

In the biggest US tech antitrust action since the government took on Microsoft and Bill “Don’t call me Dollar Bill” Gates, the Department of Justice (DOJ) filed an antitrust suit against Google on Tuesday.

What’s the allegation?

According to the Wall Street Journal, Justice officials will lay out the case that Google is abusing monopoly positions in search (~80% of US search volume) and search advertising.

The DOJ claims the company is acting as a gatekeeper and shutting out competition by: 

  • Paying browsers billions of dollars to be the default search engine
  • Pre-loading its search app (which can’t be deleted) on Android phones
  • Preventing competing search pre-loads on phones under revenue-share agreements
  • Owning industry-leading tools at every part of the digital advertising chain

Predictably, Google has called the suit “deeply flawed.”

The stakes are huge

A similar investigation by the Federal Trade Commission in 2013 never made it to court. But the DOJ suit could set a huge precedent:

  • A loss for Google could change the structure of its business, (e.g., a potential spinoff of the Chrome browser).
  • A win for Google would hamper DC’s efforts to wrangle other antitrust targets (Amazon, Apple, Facebook).

Don’t expect anything overnight, though. It took 3 years to reach an agreement with Microsoft.

Google will be deploying its some of its $120B in cash to fight this case

As we previously covered, the company has a ready-made defense.

The US government recently sued American Express for charging merchants high fees, but the payments firm won the case by saying it was a “net positive” across its entire network (e.g., customers get points).

Google certainly has a claim. One study showed that consumers would have to be paid $17.5k a year to give up search.

Either way, this brings back memories of 1998. One other thing that happened that year? Larry Page and Sergey Brin founded Google.

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Psst

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In 1994, Jeff Bezos discovered a shocking stat: Internet usage grew 2,300% per year.

Data shows where markets are headed.

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