The lawsuit is the third competition case U.S. regulators have filed against the search and advertising behemoth since October, reflecting the rising unease with Google’s massive profits and expansive reach — and the growing national dissatisfaction with Silicon Valley.
In the latest legal salvo, Democratic and Republican attorneys general from 38 states and territories, led by Colorado and Nebraska, took aim at a broad swath of Google’s digital empire. They claim that Google has solidified its monopoly in search — capturing roughly 90 percent of all queries — through an array of anti-competitive tactics that have created a “moat around its kingdom.” Chief among them are the special deals that Google signs to ensure it is the default option on many Web browsers, smartphones and newer connected devices such as smart televisions and speakers.
State investigators also faulted Google for the way it structures its search results; Google’s method often requires companies to purchase ads to rise to the top of users’ search results. In doing so, the attorneys general alleged, Google is able to drive adoption of its own advertising products, enriching its bottom line and further entrenching its dominance.
“Google’s anticompetitive actions have protected its general search monopolies and excluded rivals, depriving consumers of the benefits of competitive choices, forestalling innovation, and undermining new entry or expansion,” said Phil Weiser, the Democratic attorney general of Colorado. “This lawsuit seeks to restore competition.”
Google sought to rebut the charges in a lengthy blog post. Adam Cohen, the company’s director of economic policy, said the search giant’s business practices reflect a desire to deliver more information to consumers — not stifle competitors.
“We look forward to making that case in court, while remaining focused on delivering a high-quality search experience for our users,” he wrote.
The heightened scrutiny is a turn of fortunes for Google, which for years managed to dodge U.S. antitrust scrutiny. Nearly a decade ago, federal watchdogs similarly probed Google out of concern it had been acting anti-competitively — yet a government agency concluded its inquiry in 2013 without bringing a case against the company and its search business. The United States ultimately opted against seeking massive penalties against Google, even as European regulators issued a battery of punishments — and roughly $9 billion in fines — over allegations that the tech giant behaved anti-competitively.
Now, though, Google faces a political and regulatory assault aimed at the very heart of its business. On Wednesday, Texas Attorney General Ken Paxton led nine fellow Republican officials in suing Google over its advertising practices, claiming the tech giant illegally sought to suppress competition and reap massive profits from targeted advertisements placed across the Web.
On Oct. 20, the Department of Justice filed its own antitrust case against the company. The complaint took aim at Google’s special arrangements to ensure its search engine is set as the default option on a wide array of devices, including Apple’s iPhone, and in services, such as the Mozilla Firefox Web browser. Google denies the allegations that its practices violate federal competition laws.
On Thursday, state attorneys general including Colorado’s and Nebraska’s said they would seek to consolidate their lawsuit with the Justice Department’s earlier complaint so that the cases would be argued together. Much as with earlier lawsuits, the Democratic and Republican state leaders opened the door for a judge to order broad penalties, including potentially forcing Google to sell parts of its business. They stopped short of calling explicitly for Google to be broken up.
“It’s not that people use Google. It’s that Google uses people,” Nebraska Attorney General Doug Peterson (R) said at a news conference.
Search represents the historical and financial core of Google’s empire: It generated $98 billion of revenue for the company last year, which the states said dwarfed the gross domestic product of 129 countries and 46 U.S. states. To preserve its profits, and maintain its monopoly, the attorneys general said, Google for years has used illegal, exclusionary practices.
With its massive financial reserves, Google has long paid a wide array of companies — including its own competitors — to ensure it is the default search service on many products and services. Google pays Apple, for example, between $8 billion and $12 billion annually to be “enthroned” as the preset search engine on Apple’s iPhones, the attorneys general allege.
Investigators estimate that Google’s special deals have helped it become the default search service on 80 percent of Web browsers. It has also tied its search engine to the Android operating system, further pushing its service to billions of smartphone users worldwide. And Google has expanded its exclusionary deals to home assistants, ensuring that the next generation of search tools — including smart speakers and connected vehicles — also generate traffic for Google.
“Google sits at the crossroads of so many areas of our digital economy and has used its dominance to illegally squash competitors, monitor nearly every aspect of our digital lives, and profit to the tune of billions,” said Letitia James (D), the attorney general of New York and one of eight state leaders driving the Google case.
Google’s special deals also have created headaches for companies including Yelp, a reviews site, and TripAdvisor, a travel search service, which for years have asked regulators to intervene. These firms generally must rely on Google to attract traffic and customers. But Google heavily restricts how these companies can advertise — and even their ranking in the search results page — practices that state officials said are aimed at constraining those companies’ growth. In the process, Google promotes its own restaurant reviews and travel offerings, according to the lawsuit, which drew praise from the company’s fiercest critics.
“Bringing an antitrust case against the most powerful company in the world requires determination and courage, so we applaud the cooperative, bipartisan work of the state attorneys general and all the staff involved in this lawsuit,” said Luther Lowe, the senior vice president for public policy at Yelp. “We hope today’s action is the beginning of a return to a more vibrant and open Internet.”
Google, however, argued that antitrust regulators around the world already concluded that the way it presents search results is not anti-competitive. Changing its approach threatened to “harm the quality of your search results,” said Cohen, the company’s economic policy director, adding that regulatory intervention would “come at the expense of businesses like retailers, restaurants, repair shops, airlines and hotels whose listings in Google help them get discovered.”
The antitrust lawsuits against Google have coincided with a broader regulatory reckoning across Silicon Valley. State and federal officials announced last week two wide-ranging antitrust lawsuits against Facebook, alleging that the social networking giant sought to buy, bully or kill its rivals, harming competition and leaving users with fewer options online. The lawsuits called on a federal judge to consider breaking the company up, setting up a massive battle between the U.S. government and one of Silicon Valley’s most powerful corporations.
Citing competition concerns, federal regulators — and lawmakers on Capitol Hill — also have probed Apple and Amazon. (Jeff Bezos, Amazon’s CEO, owns The Washington Post.) And some federal policymakers have sought broad revisions of federal antitrust law, hoping to make it easier to prosecute alleged competition abuses in the future.