WASHINGTON, D.C. — Today, the Department of Justice and eleven Republican state attorneys general filed their long-expected lawsuit against Google. The suit alleges that “Google has used anticompetitive tactics to maintain and extend its monopolies in the markets for general search services, search advertising, and general search text advertising.”
““Much of DOJ’s lawsuit rests on defining the search market to focus on general searches, instead of the part of the market that actually makes money: product searches,” said Asheesh Agarwal, Deputy General Counsel of TechFreedom. “In product searches, Google is #2, not #1. Yes, most general searches occur on Google, but most of Google’s revenue comes from product searches where it can show targeted ads. A recent survey found that 70% of consumers begin their product search on Amazon, up from 65% in January. Only 16% started with traditional search engines, down from 23% in January. For service providers, consumers can turn to Yelp, Angie’s List, LinkedIn, or others. DOJ is defining the forest as a single tree, when in fact Google is just part of an entire search ecosystem.”
“Today, consumers can easily use a variety of other sites and apps to search generally and especially to search for specific goods and services,” continued Agarwal. “It’s just not that hard to install an app or change a default setting. This isn’t the 1990s, when consumers had to go to the store and pay $100 to try an alternative to Microsoft Office. It makes sense that Google wants some of its apps pre-installed in a folder on the homescreen, but manufacturers and carriers remain free to pre-install others. There are 15 other slots on the Android homescreen, but DOJ doesn’t even acknowledge that, or that manufacturers and carriers earn money by charging app makers for pre-installation.”
Moreover, DOJ has adopted much of Europe’s dubious antitrust analysis. In 2018, the European Commission argued that Google abused its position with Android, which resulted in a €4.34 billion fine. Like Europe, DOJ alleges that the relevant market is not mobile operating systems generally, where Google and Apple compete fiercely, but rather “licensable” operating systems, which excludes iOS because, unlike Google, Apple does not license its mobile operating system to hardware manufacturers. DOJ’s Complaint alleges that Google has excluded other companies from competing with it in the search market by requiring that manufacturers do two things: (1) set its own search engine as the default on Android devices; and (2) pre-install a suite of Google apps on all Android phones.
“Google has developed the world’s most popular operating system and, unlike Apple, gives it away for free. Google needs to fund the ongoing development of Android somehow,” said Agarwal. “These requirements are, quite literally, the price for Android’s openness. DOJ’s lawsuit could actually raise prices for consumers. If a court forces Google to change these terms, Google could start charging manufacturers for its operating system — costs that would get passed on to consumers in higher device costs or service plans. The same goes for the Chrome browser and pre-installed apps. Of course Google makes its own search engine the default, but consumers can easily change it.”
“It’s too early to say whether DOJ’s lawsuit will succeed,” concluded Agarwal. “It’s certainly possible that more facts could come to light and that DOJ could persuade a court that Google has been violating the Sherman Act, but at this stage that seems unlikely. Based on the amount of competition in the marketplace, DOJ will have a steep uphill climb.”
Read our related work including:
- Our recent analysis of how an overly aggressive antitrust lawsuit could damage the U.S. economy to the benefit of China.
- Our PR analyzing the House Judiciary Antitrust Report
- Our op-ed on ahead of the recent antitrust hearings
- Our comments on the draft vertical merger guidelines
- Our PR on the vertical merger guidelines
- Szóka’s op-ed in The Seattle Times: Trump vs. Bezos: The president is on the wrong side of the Constitution
- Our 2018 coalition letter to Jeff Sessions warning against using the antitrust laws to influence online speech
- Our statement on the court decision blocking DOJ’s lawsuit to stop the AT&T/Time Warner merger
- Our 2015 coalition letter urging Congress to bar the FCC from imposing merger conditions not specific to harms caused by a merger, or that the FCC could not impose by regulation