WASHINGTON—Payola—billions of dollars of it—to companies that should be their competitors is the key to Google’s search engine monopoly, federal prosecutors said as the biggest antitrust trial in decades opened in U.S. District Court in D.C. on September 12.
Lead Justice Department prosecutor Kenneth Dintzer told federal Judge Arit Mehta that Google co-opts competitors to make itself the default search engine on iPhone, Apple, LG, Motorola, Samsung, and other devices. It does the same thing to other web browsers, such as Firefox.
It pays “more than $10 billion a year for these privileged positions,” the DOJ attorney said.
“This case is about the future of the internet and whether Google’s search engine will ever face meaningful competition,” Dintzer told Judge Mehta, an Obama appointee who has private sector experience in handling complex business cases.
The facts in U.S. et al v Google are very simple: Approximately 90% of all Internet searches are done on Google, which has stifled competition in various ways. “To Google” has become a verb.
And that’s dangerous to consumers, because it restrains trade in a vital sector of the marketplace, data.
The fact is very simple: Google’s search engine has 90% of the U.S. market, as even its competitors are bought off, with searches on their sites automatically transferred to Google’s. Those that aren’t bought off are bought up.
That dominance is reminiscent of the famous trust-buster trials of the early 1900s. The government went after the Standard Oil monopoly just over a century ago, saying the Rockefeller-owned behemoth was so large it even forced competitors to use its services and products—at its prices—or die.
Google’s search engine achieved the same monopoly goal, but by a different route, and one common overseas: Payola.
Indeed, Google’s search engine is so dominant that “advanced Google search” rests atop the search box of the Communications Workers, the union that combats Google the most in organizing drives and has a specific local, the Alphabet Workers Union, to do so.
Google’s gold conquers its competition, Dintzer and his prosecution team told the court. Google Search has become the “default search engine” for all of them.
“Google wielded its digital dominance to the detriment of corporate rivals and consumers,” a summary of DOJ’s case says. “Google relied on a mix of special agreements and other problematic business practices to secure an insurmountable lead in online search, capturing the market for nearly 90% of all queries in the United States.”
“Google’s contracts ensure that rivals cannot match the search quality ad monetization, especially on phones. Through this feedback loop, this wheel has been turning for more than 12 years. It always turns to Google’s advantage,” said Dintzer.
Forced Apple into giving it default status
And Google forced Apple into giving Google’s search engine a default position on its computers in return for revenue sharing. “This is not a negotiation,” Dintzer said. “This is Google saying: Take it or leave it.”
Which sounds a lot like the price “choices” John D. Rockefeller Sr., Standard Oil’s owner, offered shippers before the trust-busters of the Progressive Era broke up his company into 36 pieces in 1911. In short, Standard then and Google now are “a monopoly that engages in restraint of trade,” to use the language of the laws involved.
Google’s “grip on distribution” of searches is by basically buying off, or buying out, competition, DOJ’s pre-trial brief said. “This vast, unparalleled reach allowed Google to enrich itself through lucrative ads, maintain its online foothold, and render it impossible for other search engines to compete,” it explained.
Google has known for years the case was coming. The initial filing was in late December 2020. Biden administration Assistant Attorney General for Antitrust Jonathan Kanter told lawmakers last year to expect trials to actually begin this year against Google and other Big Tech firms.
“The problem of monopoly power is especially acute in digital markets. As the internet has become increasingly central to our nation’s economic, social, and political life, the rise of dominant, gatekeeping platforms has come to impose an increasingly severe threat to open markets and competition, with risks for consumers, businesses, innovation, resiliency, global competitiveness, and our democracy,” Kanter told the Senate Judiciary Committee last October.
“Such gatekeeping firms often seek to reinforce and protect their dominance by building competitive ‘moats.’ Through acquisitions of nascent competitors, self-preferencing in vertical supply chains, and webs of one-sided agreements imposed on trading partners, firms can create kill zones around their core monopolies, suppressing innovation and preventing the emergence of new business models and new competition.”
The big Google search engine lawsuit follows a pending settlement between Google and 52 state Attorneys General, led by Colorado Democrat Phil Weiser, over the firm’s monopolistic practices around Play Store. Weiser is also the lead AG joining the DOJ’s case in federal court in D.C.
“The settlement in Utah v. Google alleges Google harmed consumers by using its monopoly power in the Android app market to inflate prices for paid apps and in-app purchases,” Weiser said on September 7.
“All companies—no matter how big or powerful—cannot refuse to play by the rules, including Google. We brought this lawsuit because it is illegal to use monopoly power to drive up prices and limit consumer choice,” said Weiser after that settlement was announced. “A bipartisan group of attorneys general fought hard for a fair marketplace that encourages competition, innovation, and lower prices for consumers.”
Sara Morrison, who reports on tech for Vox, notes the Google search engine suit is the department’s second antitrust suit against Google in 2023. The first revolves around Google’s advertising practices, and how it manipulates them to ensure its favored customers get top billing. This Google trial is expected to last 10 weeks.
The other upcoming cases include a planned Federal Trade Commission antitrust suit against Meta—more commonly known as Facebook—for buying up Instagram and WhatsApp, followed by “a likely case” pitting the FTC against another behemoth: Amazon.
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