*Michael Blanchard
I. Introduction
In a highly-anticipated move, the Department of Justice (DOJ) filed an antitrust lawsuit against tech-conglomerate Google LLC (Google) for its exclusionary and monopolistic practices in search optimization and advertising markets.[1] The fifty-seven page complaint argues that “Google has [illegally] used anticompetitive tactics to maintain and extend its monopolies in the markets for general search services, search advertising and general search text advertising . . . .”[2] The DOJ specifically notes that “Google’s actions ha[ve] hurt consumers by stifling innovation, reducing choice and diminishing the quality of search services . . . .”[3]
The complaint focuses on a series of exclusionary agreements Google entered into with mobile-tech companies such as Apple.[4] Through these agreements, Google is the “preset default general search engine on billions of mobile devices” and has even banned preinstallation of their competitor’s products.[5] Google also entered into agreements with other leading smartphone manufacturers, requiring all who use its Android operating system to preinstall its search engine by default––thereby creating control over both the android and IOS mobile platforms.[6] This enables Google to compel preferential treatment of its products across the mobile-tech industry and has dramatically chilled competition through its monopolistic hold over these devices.[7] Additionally, advertisers who use Google’s products must also “pay a toll to Google’s search advertising and general search text advertising monopolies.”[8] Google leads the search advertising sector, making use of their product virtually unavoidable.[9] Alphabet Inc., the parent company of Google, responded to these allegations by noting that they are “deeply flawed,” as users can freely use other search engines––e.g., Bing, Yahoo, or DuckDuckGo––and only use Google out of preference because it offers the best service.[10] This suit stems from an investigation which took longer than sixteen months and is one of the most significant challenges to a tech company’s market power since the 1998 antitrust case against Microsoft.[11] While the DOJ investigated this matter, several other states conducted their own parallel investigations.[12] In December, more than thirty states joined together to bring a separate suit against the tech company.[13]
II. Antitrust Concerns
By regulating certain anticompetitive practices, antitrust laws aim to protect the free market and safeguard consumers from predatory business practices.[14] The first of these laws came with the enactment of the Sherman Act in 1890, which prohibits unfair bid rigging, price fixing, and the creation of monopolies.[15] By its plain language, the Sherman Act only applies to “trade or commerce,” but throughout the years, it has been interpreted to give the DOJ broad regulatory powers against most anticompetitive practices.[16] In 1998, the DOJ filed a similar suit against Microsoft and recognized that “antitrust laws forbid anticompetitive agreements by high-technology monopolists [that] require preinstalled default[s] . . . .”[17] The DOJ alleges Google is the modern-day “monopoly gatekeeper to the internet” and that Google has used anticompetitive tactics to maintain and extend its control over search optimization.[18]
The term “Google” is no longer solely a name, it has been adopted by modern society as a general phrase relating to searching something on the internet.[19] This represents how much of a dominant player this company has become in the search engine marketplace.[20] Last year, Google accounted for almost ninety percent of all search queries in the United States and generated almost $34.3 billion in search revenue.[21] By restricting competition in search and overpowering competition in advertising, Google allegedly violated antitrust laws and reduced the quality of available information––creating harmful effects for consumers.[22] Despite its impressive revenue, Google is known as a “zero-price market.”[23] This term represents businesses who offer their services to consumers at no price and gain revenue from other means––such as advertising or datamining.[24] Critics argue that the Sherman Act of 1890 is antiquated and has “failed to develop an adequate response to zero-price markets.”[25]
III. Future for Google and Zero-Price Markets
The DOJ seeks to use the Sherman Act to “stop Google’s anticompetitive conduct and restore competition for American consumers, advertisers, and all companies now reliant on the internet economy.”[26] While the DOJ is not pursuing a specific remedy at this time, remedies can come in the form of fines, divestment, or a change of business practices.[27] While this suit could take years to come to a resolution, Google is expected to dramatically change its behavior and reduce expansion efforts in the meantime.[28] If Google can come to a settlement agreement with the DOJ––as was the case with Microsoft––they may be able to prevent total divestment by restructuring their business model.[29] The results from this suit could change the tech-industry as we know it and could lead to new innovation and competition in the search engine marketplace.[30]
This suit will also be a major test of current antitrust law and could set off a broader movement of governmental actions against big tech.[31] Big tech companies have become increasingly scrutinized by political officials and many disagree over how to properly regulate their power.[32] Historically, to regulate monopolistic activities, one would need to show that a monopoly exists and that it is charging customers higher prices than it would in a competitive market––this is difficult to show in a zero-price market such as search optimization.[33] Some argue that antitrust laws need to be reformed to “account for the digital era, when many products are free and it can be more difficult to prove the harm to consumers. . . .”[34] This shift in ideology potentially foreshadows future antitrust actions aimed at companies like Facebook, Amazon or Apple.[35] As these types of cases become more prevalent, reformation may be needed as “many of the standard tools used by modern antitrust analysts will be difficult or impossible to use in the presence of zero prices.”[36] Regardless of the outcome, big tech has effectively been put on notice that it will no longer be able to take advantage of outdated antitrust laws.[37]
*Michael Blanchard is a second-year day student at the University of Baltimore School of Law, where he is a staff editor for Law Review and a member of the Honor Board. Michael is also a research assistant for Professor William Hubbard and is the Public Relations Chair for the Business and Tax Law Association. He was recently inducted into the Royal Graham Shannonhouse III Honor Society as a Distinguished Scholar. This past summer, Michael interned for the Honorable Robert N. McDonald in the Maryland Court of Appeals and worked as a summer associate for Baker, Donelson, Bearman, Caldwell & Berkowitz P.C. He looks forward to spending this coming summer working for the Department of Justice through their Summer Law Internship Program.
[1] Press Release, U.S. Dep’t of Just., Justice Department Sues Monopolist Google For Violating Antitrust Laws (Oct. 20, 2020), https://www.justice.gov/opa/pr/justice-department-sues-monopolist-google-violating-antitrust-laws [hereinafter Justice Department].
[2] Complaint at 3, United States v. Google LLC., No. 1:20-cv-03010 (D.D.C. Oct. 20, 2020), https://www.justice.gov/opa/press-release/file/1328941/download; see also Cecilia Kang et al., U.S. Accuses Google of Illegally Protecting Monopoly, N.Y. Times (Oct. 20, 2020), https://www.nytimes.com/2020/10/20/technology/google-antitrust.html.
[3] Kang et al., supra note 2; see also Complaint, supra note 2, at 7, 54.
[4] See Complaint, supra note 2, at 3; see also Steve Lohr, What Is Happening with the Antitrust Suit Against Google?, N.Y. Times (Oct. 20, 2020), https://www.nytimes.com/2020/10/20/technology/antitrust-google.html.
[5] Justice Department, supra note 1.
[6] See Lohr, supra note 4; see also Complaint, supra note 2, at 3–4.
[7] See Lohr, supra note 4.
[8] See Kang et al., supra note 2.
[9] Id.
[10] See Lohr, supra note 4.
[11] See Justice Department, supra note 1; see also Alison Durkee, Justice Department Sues Google for Antitrust Violations, Forbes, https://www.forbes.com/sites/alisondurkee/2020/10/20/justice-department-suing-google-for-antitrust-violations/#4b4ccf323dbb (Oct. 20, 2020, 12:22 PM).
[12] See Kang et al., supra note 2.
[13] Leah Nylen, More than 30 States File Suit Demanding Breakup of Google, Politico (Dec. 17, 2020, 3:27 PM), https://www.politico.com/news/2020/12/17/3rd-antitrust-lawsuit-hits-google-447741.
[14] See James Chen, Understanding Antitrust Laws, Investopedia, https://www.investopedia.com/ask/answers/09/antitrust-law.asp (July 31, 2020).
[15] Sherman Act of 1890, ch. 647, 26 Stat. 209 (codified at 15 U.S.C. §§ 1–7) (amended 1955, 1974, 1975, 1976, 1982, 1990, 2004); see also Chen, supra note 14.
[16] See John M. Newman, Antitrust in Zero-Price Markets: Foundations, 164 U. Pa. L. Rev. 149, 159 (2015).
[17] Justice Department, supra note 1.
[18] Id.
[19] Google, Merriam-Webster, https://www.merriam-webster.com/dictionary/google (last visited Jan. 21, 2021).
[20] See Kang et al., supra note 2.
[21] See Jonathan Shieber & Ingrid Lunden, The Justice Department Has Filed Its Antitrust Lawsuit Against Google, TechCrunch (Oct. 20, 2020, 9:05 AM), https://techcrunch.com/2020/10/20/justice-department-will-reportedly-file-its-antitrust-lawsuit-against-google-today/.
[22] See Justice Department, supra note 1.
[23] Newman, supra note 16, at 155.
[24] Id. at 154.
[25] Id. at 151.
[26] Justice Department, supra note 1.
[27] Shieber & Lunden, supra note 21.
[28] Shirin Ghaffary & Rani Molla, Why the US Government Is Suing Google, Vox (Oct. 20, 2020, 4:29 PM), https://www.vox.com/recode/21524710/google-antitrust-lawsuit-doj-search-trump-bill-barr.
[29] Id.
[30] Id.
[31] See Durkee, supra note 11.
[32] Ghaffary & Molla, supra note 28; see also Kang et al., supra note 2 (“It reflects pent-up and bipartisan frustration toward a handful of companies — Google, Amazon, Apple and Facebook in particular — that have evolved from small and scrappy companies into global powerhouses with outsize influence over commerce, speech, media and advertising.”).
[33] See Ghaffary & Molla, supra note 28.
[34] See Kang et al., supra note 2.
[35] See Durkee, supra note 11.
[36] John M. Newman, Antitrust in Zero-Price Markets: Applications, 94 Wash. U. L. Rev. 49, 111 (2016).
[37] See Ghaffary & Molla, supra note 28.
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