The U.S. Justice Department filed an antitrust lawsuit against “monopolist” Google on Tuesday, claiming the search giant has used “anticompetitive tactics” to maintain its dominance in search and advertising. The filing comes after more than a yearlong investigation into the operations of Google and other tech giants, and stands as the biggest challenge to a major tech company since the government sued Microsoft two decades ago.
Google, a subsidiary of Alphabet Inc., has long been at the top of the online ad world (alongside Facebook), with Alphabet clearing nearly $135 billion in total ad revenue last year. Together, the two companies combine to control about 60% of all online ad sales.
At the heart of the Justice Department’s filing is that Google enjoys a major advantage by being the go-to search engine for hundreds of millions of devices in the U.S. — a reality that essentially makes it impossible for competitors to gain traction. About 90% of search queries are funneled through Google, the lawsuit said, which the government claims bars competitors from gaining enough users to scale their businesses. As a result, consumers are left with fewer worthwhile options and advertisers are charged more, according to the lawsuit.
Compounding matters, the government said Google unfairly has its search app automatically added to phones operating on its Android operating system. The company has routinely entered into “exclusivity agreements that forbid preinstallation of any competing search service,” the DoJ’s press filing said Tuesday.
“Today’s lawsuit by the Department of Justice is deeply flawed,” A Google rep told TheWrap. “People use Google because they choose to — not because they’re forced to or because they can’t find alternatives.”
Along with the Justice Department, 11 state attorneys general participated in the lawsuit. Those states are: Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina, and Texas.
“Today, millions of Americans rely on the Internet and online platforms for their daily lives. Competition in this industry is vitally important, which is why today’s challenge against Google — the gatekeeper of the Internet — for violating antitrust laws is a monumental case both for the Department of Justice and for the American people,” Attorney General William Barr said. “Since my confirmation, I have prioritized the Department’s review of online market-leading platforms to ensure that our technology industries remain competitive. This lawsuit strikes at the heart of Google’s grip over the internet for millions of American consumers, advertisers, small businesses and entrepreneurs beholden to an unlawful monopolist.”
The investigation into Google was first announced last September by 50 attorneys general. California and Alabama were the only states not included, while Puerto Rico and the District of Columbia were included.
Tech giants have faced increasing scrutiny from lawmakers and federal investigators in recent years. Google-owned YouTube paid a record-setting $170 million settlement last September to the Federal Trade Commission and the state of New York for collecting personal information on children without their parents’ consent. (Google has also been fined $9 billion in Europe for anti-competitive practices in recent years.) Sen. Elizabeth Warren, during her attempt to become the 2020 Democratic nominee, also outlined her plan to bring antitrust suits against tech giants like Facebook and Google if she were elected president.
Despite the news, Google’s stock price was up about 0.4% to $1,536 per share on Tuesday.