Okay, Google: Did You Violate U.S. Antitrust Laws?

Google[1] rang in the New Year with a fresh lawsuit, filed against it on November 25, 2019, looming in the United States District Court for the Northern District of Georgia by Inform, Inc. (“Inform”), an online advertising company.[2] Nothing says “Merry, Merry” and “Happy New Year” like a fresh batch of anticompetitive claims against the search engine we all resorted to for our obligatory “what to give Dad” and “30-day cleanse” searches.  The suit alleges that “[t]o maximize [Google’s] advertising profits, to protect their valuable monopolies against potential competitive threats, and to extend Defendants’ [monopolies] globally and across digital devices, [Google has] simultaneously engaged in a series of acquisitions and anticompetitive activities designed to thwart competition on the merits.” (Compl. 4 ¶ 6).

There has been a lot of discussion about antitrust litigation and the tech industry both in the United States and abroad as of late. Investigators, civil plaintiffs, and scholarly articles have presented arguments attempting to apply the antitrust laws to what is viewed as uncharted anticompetitive behavior in the tech industry. Google – who commands a high percentage of the search engine market; search advertising market; mobile operating systems market; among other things – has been the reluctant guinea pig.

As Inform’s complaint asserts, in June 2010, “French regulators found that Google abused its dominant market position in Internet advertising” when it prevented a company from using Google’s AdWords[3] service. (Compl. 6 ¶ 9). In April 2017, Google reached a settlement with Russia’s Federal Antimonopoly Service for $7.8 million in fines and an agreement to rewrite its contracts with smartphone manufacturers because regulators found that “Google apps were being given prominence over rivals on Android-based smartphones.” Id. at 9. In June 2017, the European Commission fined Google $2.7 billion for manipulating Google’s search results to “unfairly steer [consumers] to its own shopping platform.”[4] The European Commission again fined Google $1.7 billion in March 2019 for the clauses in Google’s AdSense[5] contracts with other websites that imposed restrictions on which of Google’s rivals could advertise on those websites. Id. at 10. In June 2019, the U.S. Justice Department announced that it would investigate Google for antitrust violations. Id. In September 2019, a number of state attorney generals followed suit. Id. As recently as December 2019, France’s competition watchdog fined Google $167 million “for abusing its power over the treatment of advertisers, saying it applied opaque rules and changed them at will.”[6] This is not an exhaustive list of fines and investigations.

Inform’s lawsuit is a continuation of this trend. Inform claims in its complaint that Google violated the Sherman Act, the Clayton Act, and Georgia common law. It alleges that Google engaged in “concerted attempts to maintain inextricably intertwined monopolies and to achieve dominance in other markets” through “self-serving and Google-biased manipulation of search algorithms, illegal tie-ins, exclusive dealing contracts, predatory pricing, manipulation of the patent process, tortious interference with competitors’ contracts and business relationships, selective blocking of software applications, and other anticompetitive tactics.” (Compl. 10 ¶ 10). The complaint asserts the following, as well as other examples, of Google’s alleged anticompetitive behavior:

  • Entering into exclusionary agreements with third parties that prohibited those companies from advertising, distributing, promoting, buying, or using the products of Google’s applications competitors;
  • Entering into exclusionary agreements with third parties that prevented those companies from providing services to Google’s advertising services competitors; and
  • Imposing restrictions on how ads and which ads would be supported for display, but not imposing the same restrictions on its own platforms.

(Compl. 4 ¶ 7). Among the alleged results: the demise of Inform’s once profitable online advertising platform, “the [evisceration of] competition in multiple markets, harm [to] consumers, [the degradation of] consumer choice and consumer privacy, and [the stifling] of innovation.” (Compl. 2 ¶ 2). Inform has asked the court to require that Google be legally separated into independent corporations; a declaratory judgment finding that Google leveraged its market power in various markets, which constituted an unreasonable restraint of trade; other injunctive relief; and treble damages, punitive damages, costs of the action and attorneys’ fees. (Compl. 101-103 ¶¶ 1-5).

No matter the outcome of Inform’s case, it is apparent that antitrust scrutiny of Google’s practices is worth following. It is worth following if: (1) you are a big tech company and want to monitor the application of antitrust laws to tech companies; (2) you are a small company who thinks that you have suffered as a result of a larger company’s similar practices; or (3) you are curious to see how antitrust laws will apply to a company offering a largely free online service.

[1] Defendants include: Google LLC; Google INC.; Alphabet INC.; YouTube LLC; and others.

[2] Case #: 1:19-cv-05362-JPB.

[3] AdWords is now called Google Ads. Google Ads is used to buy advertising from Google.

[4] Ivana Kottasová, EU Slaps Google with Record $2.7 Billion Fine, CNN, June 27, 2017 https://money.cnn.com/2017/06/27/technology/business/google-eu-antitrust-fine/index.html

[5] AdSense is the service used when companies wish to sell advertising space to Google

[6]Mathieu Rosemain, France Fines Google 150 Million Euros for Opaque Advertising Rules, Reuters, Dec. 20, 2019 https://www.reuters.com/article/us-france-google-idUSKBN1YO102?taid.

 

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