WASHINGTON (Reuters) — The U.S. Justice Department and 11 states filed an antitrust lawsuit against Alphabet Inc’s Google on Tuesday for allegedly breaking the law in using its market power to fend off rivals.
Google’s public policy team said a full statement is pending Tuesday morning. Meanwhile, the company stated on Twitter: “Today’s lawsuit by the Department of Justice is deeply flawed. People use Google because they choose to — not because they’re forced to or because they can’t find alternatives.”
Google, whose search engine is so ubiquitous that its name has become a verb, had revenue of $162 billion in 2019, more than the nation of Hungary.
The lawsuit marks the biggest antitrust case in a generation, comparable to the lawsuit against Microsoft Corp filed in 1998 and the 1974 case against AT&T which led to the breakup of the Bell System. The Microsoft lawsuit was credited with clearing the way for the explosive growth of the internet since the antitrust scrutiny prevented the company from attempting to thwart competitors.
The lawsuit claims that Google acted unlawfully to maintain its position in search and search advertising on the internet. It states that “absent a court order, Google will continue executing its anticompetitive strategy, crippling the competitive process, reducing consumer choice, and stifling innovation.
“Google is now the unchallenged gateway to the internet for billions of users worldwide … For the sake of American consumers, advertisers, and all companies now reliant on the internet economy, the time has come to stop Google’s anticompetitive conduct and restore competition.”
When asked on a conference call what specific action should be taken, a Justice Department official said, “Nothing is off the table.”
Republican Senator Josh Hawley accused the company of keeping power through “illegal means” and called the lawsuit “the most important antitrust case in a generation.”
Tuesday’s federal lawsuit marks a rare moment of agreement between the Trump administration and progressive Democrats. U.S. Senator Elizabeth Warren tweeted on Sept. 10, using the hashtag #BreakUpBigTech, that she wanted “swift, aggressive action.”
Missouri Attorney General Eric Schmitt filed a lawsuit in junction with the DOJ and other states against Google.
“Google, through its monopoly on search functions, controls a huge amount of the information that Americans access every single day,” Schmitt said in a statement. “This kind of concentration of power is alarming, and it’s critical that we ensure that even the biggest of big tech companies, including Google, are acting responsibly, and are held accountable when they aren’t.”
His statement claims that Google has maintained monopolies by:
- Entering into exclusivity agreements that forbid preinstallation of any competing search service.
- Entering into tying and other arrangements that force preinstallation of its search applications in prime locations on mobile devices and make them undeletable, regardless of consumer preference.
- Entering into long-term agreements with Apple that require Google to be the default – and de facto exclusive – general search engine on Apple’s popular Safari browser and other Apple search tools.
- Generally using monopoly profits to buy preferential treatment for its search engine on devices, web browsers, and other search access points, creating a continuous and self-reinforcing cycle of monopolization.
The 11 states which joined the lawsuit all have Republican attorneys general. They are Arkansas, Florida, Georgia, Kentucky, Indiana, Louisiana, Mississippi, Montana, South Carolina, and Texas.
Seven additional states may file a separate antitrust lawsuit against Alphabet Inc’s Google in the coming weeks, New York Attorney General Letitia James said Tuesday.
James and the attorneys general of Colorado, Iowa, Nebraska, North Carolina, Tennessee, and Utah said in a joint statement their bipartisan investigation is continuing. The states “plan to conclude parts of our investigation of Google in the coming weeks. If we decide to file a complaint, we would file a motion to consolidate our case with the DOJ’s.” The Justice Department’s Google antitrust complaint filed Tuesday was joined by 11 other states.
A group of attorneys general led by Texas is expected to file a separate lawsuit focused on digital advertising as soon as November.
Shares of Alphabet rose nearly 1% after news the government lawsuit was imminent. There was some doubt in the markets that Washington lawmakers will actually come together and take action, according to Robert Pavlik, chief investment strategist, senior portfolio manager at SlateStone Wealth LLC in New York.
“In order for anything to have real bite, you need Congress, and they want to break them up. But given the fact there’s so much animosity, even though they agree something needs to be done with Big Tech, it’s going to take a long time to push through.”
The lawsuit comes more than a year after the Justice Department and Federal Trade Commission began antitrust investigations into four big tech companies: Amazon.com Inc, Apple Inc, Facebook Inc and Google.
Seven years ago, the FTC settled an antitrust probe into Google over alleged bias in its search function to favor its products, among other issues. The settlement came over the objections of some FTC staff attorneys.
Google has faced similar legal challenges overseas.
The European Union fined Google $1.7 billion in 2019 for stopping websites from using Google’s rivals to find advertisers, $2.6 billion in 2017 for favoring its own shopping business in search, and $4.9 billion in 2018 for blocking rivals on its wireless Android operating system.