Wednesday, October 21, 2020
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The Department of Justice — along with eleven state Attorneys General — filed a civil antitrust lawsuit in the US District Court for the District of Columbia to stop Google from unlawfully maintaining monopolies through anticompetitive and exclusionary practices in the search and search advertising markets and to remedy the competitive harms. The participating state Attorneys General offices represent Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina, and Texas. Google is the monopoly gatekeeper to the internet for billions of users and countless advertisers worldwide. For years, Google has accounted for almost 90 percent of all search queries in the United States and has used anticompetitive tactics to maintain and extend its monopolies in search and search advertising.
As alleged in the Complaint, Google has entered into a series of exclusionary agreements that collectively lock up the primary avenues through which users access search engines, and thus the internet, by requiring that Google be set as the preset default general search engine on billions of mobile devices and computers worldwide and, in many cases, prohibiting preinstallation of a competitor. In particular, the Complaint alleges that Google has unlawfully maintained monopolies in search and search advertising by:
- Entering into exclusivity agreements that forbid preinstallation of any competing search service.
- Entering into tying and other arrangements that force preinstallation of its search applications in prime locations on mobile devices and make them undeletable, regardless of consumer preference.
- Entering into long-term agreements with Apple that require Google to be the default – and de facto exclusive – general search engine on Apple’s popular Safari browser and other Apple search tools.
- Generally using monopoly profits to buy preferential treatment for its search engine on devices, web browsers, and other search access points, creating a continuous and self-reinforcing cycle of monopolization.
The Complaint alleges that Google’s anticompetitive practices have had harmful effects on competition and consumers. Google has foreclosed any meaningful search competitor from gaining vital distribution and scale, eliminating competition for a majority of search queries in the United States. By restricting competition in search, Google’s conduct has harmed consumers by reducing the quality of search (including on dimensions such as privacy, data protection, and use of consumer data), lessening choice in search, and impeding innovation. By suppressing competition in advertising, Google has the power to charge advertisers more than it could in a competitive market and to reduce the quality of the services it provides them. Through filing the lawsuit, the Department seeks to stop Google’s anticompetitive conduct and restore competition for American consumers, advertisers, and all companies now reliant on the internet economy.
The Justice Department’s lawsuit against Google reveals new details about a secretive, multibillion-dollar deal between Google and Apple. The suit targets paid deals Google negotiates to get its search engine to be the default on browsers, phones and other devices. The biggest of these is an agreement that makes Google search the default on iPhones and other Apple devices. The Justice Department said Apple Chief Executive Officer Tim Cook and Google CEO Sundar Pichai met in 2018 to discuss the deal. After that, an unidentified senior Apple employee wrote to a Google counterpart that “our vision is that we work as if we are one company.” The DOJ also cited internal Google documents that call the Apple search deal a “significant revenue channel” for the search giant and one that, if lost, would result in a “Code Red” scenario. That’s because nearly half of Google search traffic in 2019 came from Apple products. Google doled out more than $1 billion last year to U.S. mobile carriers to distribute its search engine.
More antitrust cases are likely to be filed against Google soon by state attorneys general, even though partisan-tinged wrangling has clouded the path forward. At least two separate though overlapping groups of attorneys general are investigating the company concurrently. One effort, led by Texas Attorney General Ken Paxton (R) focuses on online advertising and could lead to a lawsuit being filed within weeks. Some Democrats have argued to their colleagues that the Justice Department’s focus has been too narrow in its investigation of the online-search business and wanted it to include a broader range of issues. Some Republicans have questioned the sincerity of that claim, suggesting that Democrats may be stalling because they don’t want to support a Republican-led effort ahead of the Nov. 3 election. A second, less-publicized Google probe includes a bipartisan group of attorneys general that includes New York, Colorado, Iowa, Nebraska, North Carolina, Tennessee, and Utah. “If we decide to file a complaint, we would file a motion to consolidate our case with the DOJ’s,” these state AGs said. “We would then litigate the consolidated case cooperatively, much as we did in the Microsoft case,” referring to the government antitrust action against the software company two decades ago that was brought jointly by the Justice Department and a number of states.
The abusive practices of the dominant digital platforms are so widespread and have become so embedded that there is no single solution. What is needed is a cocktail of remedies that blends antitrust with ongoing regulatory oversight. The digital-oversight cocktail, therefore, needs to include the ability to establish industry-wide behavioral rules in addition to antitrust enforcement. Historically, the federal government has established a specialized agency to deal with new and specialized circumstances created by new technology, from the regulation of nuclear safety to highway safety to financial markets. The Federal Communications Commission, for instance, was established to oversee the new technology of broadcasting. While the House report encourages expansion of the FTC’s authority, we have reached the point in our digital trajectory where we need a new regulatory agency with digital DNA. The federal government has become proficient at doing again what it did yesterday. These policies and procedures, however, have been ambushed by the future. Yes, antitrust reform and enforcement is important. But if we’re really serious about returning competition and consumer protect to the digital economy, it’s simply not enough to look backward and redress a harm that has already occurred. We need to couple antitrust with a new vehicle for public-interest oversight to prevent abuses in the first place.
The United States Department of Agriculture (USDA) is investing $14 million to provide broadband service in unserved and underserved rural areas in Illinois. This investment is part of the $550 million Congress allocated to the second round of the ReConnect Program. Jo-Carroll Energy Inc. will use a $14 million grant to deploy a fiber-to-the-premises network, which will connect 7,629 people, 378 farms, 150 businesses, eight public schools, three fire stations, two post offices and two museums to high-speed broadband internet in Jo Daviess, Carroll, Whiteside and Stephenson counties in Illinois.
The private market will not close this digital divide on its own. Nearly 28 million American households have a single choice of broadband provider; millions more live in duopolies. Government primarily serves as a regulator—recently, an anti-city, anti-competition regulator—with a few programs that subsidize internet service providers’ (ISPs) service of low-income residents. New models of public-private partnership are essential to achieve universal broadband. The public and civic sectors have three principal tools to shape these partnerships:
- Investing capital directly in building networks, deploying fiber and other infrastructure;
- Making real estate assets available to support broadband deployment —especially street poles, which are essential for 5G deployments; and
- Aggregating demand for internet service to leverage collective buying power.
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