October 9, 2024

Department of Justice Antitrust Case Against Google

Department of Justice (DOJ) Antitrust Case Against Google

The Department of Justice (DOJ) is pursuing a landmark antitrust case against Google, aiming to potentially break up the tech giant.

In 2020, the DOJ, along with 12 state attorney generals filed an antitrust lawsuit against Google, alleging that the company has illegally maintained monopolies in search and search advertising.
In July 2021, the attorneys general from 36 states launched an antitrust lawsuit alleging that Google has hindered competition in the apps market due to its Google Apps store policies.
In September 2023, the state attorney generals “reached an agreement in principle” to settle the July 2021 apps market case, although details were not made public.
In August of 2024, Judge Mehta of the District of Columbia ruled that Google had illegally maintained a monopoly in the search engine market.
In October 2024, the DOJ submitted a court filing related to the 2020 case suggesting potential remedies to Google’s monopoly in the search engine market, including forcing Google to sell off parts of its business like Chrome or Android.

This recent filing by the DOJ signals a more aggressive and broader approach toward restructuring Google. This is because the DOJ is broadly concerned about Google’s search dominance and its control of the ad tech market.

Why is Google Considered a Monopoly?

The DOJ contends that Google is a monopoly because it holds a commanding share of the search market (over 90%) and the search advertising market. This dominance gives them significant control over what information users see and how advertisers reach consumers.

The DOJ alleges that Google uses its dominance to stifle competition, such as by pre-installing its search engine on Android devices and paying browsers to make it the default search option. These practices make it difficult for rivals to gain traction.

Why Just Google?

Right now, the DOJ is focused on Google rather than Apple, Microsoft, X, Meta and ByteDance (TikTok). While these companies are also large and influential, the DOJ is likely focusing on Google due to its dominance in the crucial search market, which it considers a significant controlling gateway to the internet.

It is worth noting that Microsoft, X and ByteDance have all been on the DOJs radar at one time or another. DOJ’s decision to focus on Google over Microsoft, et al. likely reflects a combination of factors, including the specific nature of their respective businesses, the evolving tech landscape, and current enforcement priorities.

What are the Possible Scenarios for Google?

There are several possible scenarios for Google, including:

Google could be forced to sell off parts of its business, such as Chrome, Android, or its advertising platform.
The court could impose restrictions on Google’s conduct, such as limiting its ability to make exclusive deals or requiring it to share data with competitors.
Google could negotiate a settlement with the DOJ, agreeing to certain concessions to avoid a court-ordered breakup, which could include selling off parts of its business.

We believe that the most likely scenario for Google will be a combination of scenarios (2) and (3). The DOJ is going to want to address what it, the states and Judge Mehta are contending. However, they are not going to want to significantly diminish Google’s ability to compete in international markets.

Impact on the Market and DOJ’s Focus on Google:

The complete breaking up of Google (a. la AT&T) would likely lead to more competition in the search and advertising markets, potentially resulting in lower prices, more innovation, and greater consumer choice. However, as mentioned above, this is the less likely scenario.

The more likely scenario of a combination of behavioral restrictions, limited structural changes and potential financial penalties, could impact Google’s profitability, decrease its hold on the search and advertising markets. It would also potentially impact Google’s innovation but provide a more level playing field for other companies could foster innovation in search and related technologies.

Impact on Partners and Customers:

Google’s partners, such as advertisers and website publishers, could benefit from increased competition, potentially leading to lower advertising costs and more diverse platforms to reach consumers.

And we believe customers could see benefits in the form of more innovative search engines, better privacy protections, and more choice in online services. However, it could also lead to less integrated and more complex search engine services.

Bottom Line

The Department of Justice’s pursuit of Google is a significant development in the ongoing debate over the power of Big Tech. And it will likely not end with the DOJs focus on Google; Apple, Microsoft, X, Meta and ByteDance will continue to be potentially in the sights of US DOJ and European Regulatory bodies.

Google likely faces lengthy legal battles and consider the various scenarios. Customers and partners must stay informed about the case and its potential impact on the online services Google offers.

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