By Ryan Tracy
WASHINGTON -- A coalition of 38 states filed an antitrust suit
against Alphabet Inc.'s Google unit, alleging it maintained
monopoly power over the internet-search market through
anticompetitive contracts and conduct.
The states alleged that Google leverages its position as the
dominant search engine -- and the personal data such a perch allows
the company to gather -- to limit consumers from using competing
search engines, force businesses to use its proprietary advertising
tools and foreclose competition from specialized search engines for
travel or local businesses.
"Consumers have better products and services when they've got
choice in the marketplace, and they've been deprived," said
Democratic Colorado Attorney General Phil Weiser at a video
streamed news conference with other state attorneys general.
"This will be a unified effort," said Iowa Attorney General Tom
Miller, a Republican.
Google has long said it operates in a competitive market. In a
blog post Thursday, Google economic policy director Adam Cohen said
some of the actions described in the suit were taken to improve
search results.
"We show information that helps you connect with businesses
directly and helps them reach more customers," Mr. Cohen wrote.
"This lawsuit demands changes to the design of Google Search,
requiring us to prominently feature online middlemen in place of
direct connections to businesses."
The 38 states filed in U.S. District Court in Washington, D.C.,
the same venue where the Justice Department filed a suit Oct. 20
against Google targeting its search business. The states said they
were seeking to join the two lawsuits into one piece of litigation.
Another state case, which focused on Google's digital advertising
empire, was filed Wednesday in a Texas federal court.
Thursday's suit asks the court to order actions that prevent
Google from harming competition, "including but not limited to
structural divestitures." The states didn't specify what
divestitures they might seek.
Google has called the federal suit and the Texas-led suit deeply
flawed, arguing that it competes on merit and maintains dominance
because consumers choose its product first.
Thursday's suit added allegations not covered in detail in the
other two lawsuits, echoing concerns long voiced by specialized
digital information providers such as Yelp Inc. and Tripadvisor
Inc. that Google has discriminated against them to curtail their
growth. Both those companies applauded the move.
The separately filed suits partly reflect a practical division
of labor. Agencies with limited resources divvied up the work of
probing different aspects of Google's business.
The filings also have a political backdrop. The leader of
Wednesday's lawsuit, Texas Attorney General Ken Paxton, this month
unsuccessfully asked the Supreme Court to void
presidential-election results in states won by Democrats. His
Google lawsuit received support from nine other Republican
attorneys general, and no Democrats.
By contrast, the Federal Trade Commission and 46 states
coordinated and simultaneously filed their recent antitrust lawsuit
targeting Facebook Inc.
Whether the disparate suits benefit Google, or deepen its legal
problems, remains to be seen. Robert Kaminski, an analyst with
Capital Alpha Partners LLC, noted the Texas-led suit sought
monetary damages that could go beyond any penalties imposed in
other cases. "Three complaints being filed separately is a decision
intended to inflict three times the pain," he said.
Thursday's lawsuit dates to September 2019, when state attorneys
general stood outside the U.S. Supreme Court to declare -- in an
unusually public manner -- that nearly every state and the District
of Columbia were joining to probe Google's conduct. The
investigations later divided along two tracks, with a group of
states including Colorado looking at Google's search business and
another group led by Texas looking at its advertising business.
One section of the suit filed Thursday focuses on SA360, a
Google-owned tool for placing ads on internet searches. Google
promised advertisers they could use the tool to place ads on the
Google search engine as well as others, such as Microsoft Corp.'s
Bing, but actually designed the tool to lend an advantage its own
search engine, according to the suit.
The suit also accuses Google of seeking to forestall competition
from rivals that could siphon search traffic and revenue using new
technologies or specialized services. It cites contractual
requirements and other actions that, according to the suit, are
designed to ensure mobile phones, voice assistants, connected cars,
and other technologies use Google search.
It also cites the way Google designs search results. It alleges
that when consumers search for an electrician or a hotel, Google
displays advertisements and other results in a way that favors
Google-owned travel or recommendation services, rather than those
provided by other companies.
In the blog post, Google's Mr. Cohen noted that some of the
claims about search bias were reviewed by the FTC during the Obama
administration -- and the FTC decided not to bring a suit.
The states' suit also repeats some allegations made in the
Justice Department case, such as an accusation that Google
foreclosed competition through a deal with Apple Inc. to make
Google the default search engine on iPhones.
For now, the suit filed in Texas covers different terrain than
the two Washington, D.C.-based actions. It accuses Google of
abusing its power over the complex, highly technical market for
displaying ads across the web.
Some of those claims could later be added to the other lawsuits
filed in Washington. The Justice Department has been posing
detailed questions to Google's rivals about that part of Google's
business, according to people familiar with that probe.
Congress is also considering changes to antitrust law to bolster
enforcers' abilities to go after big tech companies, though
partisan disagreements could frustrate those legislative
efforts.
The move against Google comes amid rising animus from across the
political spectrum toward the tech giants, rooted in the power they
maintain and the way they wield it.
For most of its history, Google benefited from hands-off U.S.
oversight, with both state and federal officials approving its
acquisitions and generally declining to challenge the company over
complaints from rivals even as it faced antitrust suits in
Europe.
For most of its history, Google benefited from hands-off U.S.
oversight, with both state and federal officials approving its
acquisitions and generally declining to challenge the company over
complaints from rivals even as it faced antitrust suits in
Europe.
That tide shifted in the past two years, as policy makers grew
more concerned about the centrality large technology companies have
acquired in American commerce and discourse.
Google has faced bipartisan criticism at congressional hearings
this year.
"The evidence seems very clear to me. As Google became the
gateway to the internet, it began to abuse its power. It used its
surveillance over web traffic to identify competitive threats and
crushed them," Rep. David Cicilline (D., R.I.) told Alphabet Chief
Executive Sundar Pichai at a hearing in July.
Mr. Pichai said the company faces vigorous competition. "We have
always focused on providing users the most relevant information,
and we rely on the trust for users to come back to Google every
day," he said.
Write to Ryan Tracy at ryan.tracy@wsj.com
(END) Dow Jones Newswires
December 17, 2020 15:36 ET (20:36 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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