In what is shaping up to be a momentous legal case, Google faces the potential of being split up if it is found to have violated antitrust laws in the United States.
The US Justice Department, in collaboration with a coalition of state attorneys general, is set to kick off a significant antitrust trial in Washington DC. Their central allegation is that Alphabet’s Google engaged in unlawful practices to maintain its dominance in the search engine market and preserve a monopoly.
Anti-trust allegations against Google
The US government and its state counterparts argue that Google employed questionable tactics, including hefty payments to Apple and other business partners, to secure the status of its search engine as the default option on the majority of smartphones and web browsers.
They assert that these deals were crafted by Google with the intent to be “exclusionary,” thereby denying competitors access to search queries and clicks while solidifying Google’s dominance in the market.
According to government estimates, Google has achieved an impressive 90 per cent market share in the US search engine realm in recent years. The government contends that these browser agreements, which channel billions of web queries to Google daily, have led to reduced choice for consumers and stifled innovation.
Google, on the other hand, has a divergent perspective. The company firmly maintains that it did not violate antitrust laws. In a court filing from January, Google described its browser agreements as “legitimate competition” rather than “illicit exclusion.”
According to Google, these agreements did not hinder competitors from developing their own search engines or prevent companies like Apple and Mozilla from promoting alternative options.
Google’s argument rests on the assertion that makers of smartphones and web browsers chose Google search as the default option in their pursuit of delivering the “highest quality” user experience to customers, as stated in their January filing.
Additionally, Google contends that mobile users have the option to easily switch to another search engine if they so desire.
Generally, it is not illegal for a business to establish an exclusive arrangement with one customer, excluding others. Such exclusive deals are commonplace and typically do not attract significant regulatory scrutiny unless the company lacks market power that could substantially affect competition.
What does the law say?
However, exclusive deals can potentially breach antitrust laws if the company is of significant size or power, and it cannot demonstrate that its actions limiting competition outweigh the benefits for consumers.
In this case, the US Justice Department bears the responsibility of proving that Google’s business deals had an adverse impact on competition in the search industry. Following the government’s presentation, Google will have the opportunity to present its perspective during the non-jury trial and argue that its deals ultimately benefit consumers.
If Google were to lose this case, the US government and state allies are not seeking monetary penalties but instead, an injunction to prohibit Google from continuing its alleged anticompetitive practices. Such an order could have profound business implications for Google, potentially even leading to the company’s breakup as a corrective measure.
Furthermore, the Justice Department may argue that it seeks to prevent Google from leveraging its purported search monopoly to secure exclusive deals in emerging sectors, including artificial intelligence (AI).
This case is widely regarded as one of the most significant challenges to the tech industry’s power since the US Department of Justice sued Microsoft in 1998 for its dominance in personal computers. In that case, the trial court found that Microsoft unlawfully attempted to impede the rival browser Netscape Navigator, ultimately resulting in a settlement that preserved Microsoft as a single entity.
The trial involving Google at the US District Court for the District of Columbia is anticipated to span roughly 10 weeks, with a verdict not expected until sometime in 2024.
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