By Jon Swartz
The legal team at Google steadfastly swatted away two antitrust lawsuits like pesky flies, mere distractions as the search-engine giant chugs along and accrues record market value despite a pandemic.
Then came suit No. 3.
A bipartisan coalition of 38 attorneys general, spearheaded by Colorado and Nebraska, announced the lawsuit last week , and it goes much farther than its predecessors from the Department of Justice and Texas and nine other states . The most recent suit is broader and more far-reaching than those before it, which narrowly focused on Google’s mobile search and ad-tech market.
Alphabet Inc.’s /zigman2/quotes/202490156/composite GOOGL +1.93% /zigman2/quotes/205453964/composite GOOG +1.85% response was swift and telling. It issued a stinging repudiation of the suit with a blog post and accompanying slide show, and immediately scheduled a press briefing.
“The claims being made have been closely examined and rejected by regulators and courts around the world, including the U.S. Federal Trade Commission , competition authorities in Brazil, Canada and Taiwan, and courts in the United Kingdom and Germany, who all agreed that our changes are designed to improve your search results,” Adam Cohen, director of economic policy at Google, said in the blog post.
Why such an animated, concerted response? Legal experts told MarketWatch the bipartisan suit led by Colorado and Nebraska poses a particular political threat — especially if it is combined with the much narrower Justice case, as Colorado Attorney General Phil Weiser hopes to do.
“A combined case would add heft to the suit,” Vasant Dhar, a professor at NYU Stern School of Business, told MarketWatch. He called such a strategy new to antitrust actions but understandable given the animus toward Big Tech. “Google is in deep trouble.”
The Colorado-Nebraska suit drills down on alleged anticompetitive behavior in Google’s search and search-advertising businesses. It contends Google “uses its massive financial resources to limit the number of consumers who use a Google competitor,” especially in the mobile market, where Google is the default search engine on Android and the company pays Apple Inc. /zigman2/quotes/202934861/composite AAPL +1.87% billions of dollars annually to be the default search engine on iOS devices.
The suit also claims Google leverages its search-advertising business, SA360, to limit competition by prohibiting interoperability, and the company “throttles” those who attempt an end run around Google to reach sites, products and services directly. Google stymies these so-called “specialized vertical providers” by blocking them from reaching potential customers, especially on mobile, the suit charges.
“As the gateway to the internet, Google has systematically degraded the ability of other companies to access consumers,” Weiser, a Democrat, said during a Zoom /zigman2/quotes/211319643/composite ZM +0.97% conference call with reporters. His suit calls for “structural relief” in the form of fines, penalties and injunctions, but he declined to comment on the potential to seek divestitures when asked by a reporter.
As the lawsuits pile up against Google and its search-engine business practices, so do the costs and intellectual headaches associated with a raft of litigation. The explicit Colorado-Nebraska lawsuit, more than previous suits, illustrates “governments catching up to years of activist and academic warnings,” Frank Pasquale, a professor at Brooklyn Law School, told MarketWatch.
“The bipartisan enforcement action of the state attorneys general is arguably more significant than previous lawsuits in that it strikes at the foundation of Google’s dominance: its search results,” contended Luther Lowe, senior vice president of public policy at frequent Google critic Yelp Inc. /zigman2/quotes/201334325/composite YELP +1.38% .
Added to the legal quagmire is the political calculus of Democrats such as Sens. Elizabeth Warren and Richard Blumenthal advocating the breakup of Google and Facebook Inc. /zigman2/quotes/205064656/composite FB +1.65% . “Silicon Valley used to be the darling of Democrats, so this offers pause,” Douglas Gansler, an expert in antitrust law and former attorney general of Maryland, told MarketWatch.
Which leads to another set of questions: How does the incoming Biden administration proceed next year with the Justice Department suit? Could a suit consolidating the Colorado-Nebraska filing and Justice cost Google billions of dollars in legal fees over the next few years?
If Google’s reply on Monday to the Justice lawsuit is any indication, expect a long court slog.
“People use Google Search because they choose to, not because they are forced to or because they cannot easily find alternative ways to search for information on the internet,” the company said in a defiant 42-page filing. The company’s denial of the claims was granular, often offering sentence-by-sentence replies to the Justice Department’s filing.