Google is in choppy waters over its anti-competitive practices in the online advertising and search market. The internet giant is bracing for one of the biggest antitrust battles with the U.S. Department of Justice planning to file the lawsuit as early as next week. Will the antitrust case possibly limit Google’s influence in online advertising and search?Â
The antitrust investigations continue to loom over Google. According to The Washington PostOpens a new window , the U.S. Department of Justice (DOJ) will brief state Attorney Generals about its plans to file an antitrust lawsuit against the tech giant. Reportedly, the DOJ could file a case against Google potentially as early as next week.Â Â
On September 15, 2020, Don Harrison, president of global partnerships and corporate development at Google, was interrogated by the lawmakers over its dominance in the search business.
Senator Josh Hawley, a member of the Senate Judiciary Committee, shares how Google uses its monopoly in the search and ad market.
Antitrust hearing today featuring @GoogleOpens a new window . Big takeaway: Google uses its monopoly in online search to help create a monopoly in online advertising. It’s monopoly upon monopoly- all adding up to tremendous power for Google pic.twitter.com/eXKAQfLpt5Opens a new window
â€” Josh Hawley (@HawleyMO) September 16, 2020Opens a new window
Senator Amy Klobuchar, the Democrat at the antitrust committee panel, saidOpens a new window , â€œI literally don’t have personal grudges against these companies like sometimes the president has expressed about various companies. I don’t. I just want our capitalist system to work.â€
Harrison disagreed that Google dominated the digital advertising business and argued that the ad tech ecosystem is crowded with competitors, including Facebook, Snapchat, Amazon, AT&T, Twitter, and Microsoft.
Interestingly, the search giant has been receiving antitrust scrutiny since 2011. In 2011, the Federal Trade Commission (FTC) charged a lawsuit against Google over placing tracking cookies in Apple’s Safari browser. A year later, Google was fined $22.5 million. In 2013, the FTC conducted search bias allegationsOpens a new window against Google, but the case was wrapped up without any financial penalties after Google agreed to change its business practices.Â
Dubbed as the biggest antitrust showdown, the investigation is reportedlyOpens a new window the â€˜first entanglement between the U.S. government and the tech giant since 2013.’ Along with the DOJ, Google also faces parallel investigations from the attorney generals of 48 states.Â
Why is Google Facing Antitrust Charges?
For decades Google has ruled the digital ad market with key products such as Google Search, Google Cloud, Adwords, DoubleClick, YouTube video platform, and the Android mobile operating system.Â
With these products, Google processes 90% of all U.S. online searches, which makes up to all of its $160 billion in annual sales revenue. Also, the search giant holds 28% of the $332.84 billion digital ad market worldwide.Â Â
So, the burning question is, can having a successful business attract an anti-competitive lawsuit? Well, Google holds a tight grip on its ad business with tools that help advertisers to buy and sell ads on the internet.Â
Additionally, Google made strategic investments by acquiring DoubleClick, an ad server company in 2007, and AdMob in 2010, which helped it advance its foothold in the ad tech market and squeeze out rivals and small ad tech companies from the competition.
The European Effect on Google
Besides the U.S., Google faces heavy scrutiny from the European Union (EU). Over the years, the EU has penalized Google with billions of dollars. In June 2017, Google was fined $2.7 billionOpens a new window by the EU to manipulate search results and favor its own price-comparison shopping service over smaller European rivals, followed by a $5 billion fineOpens a new window for abusing its Android market dominance in July 2018. In March 2019, the EU penalized Google with $1.74 billionOpens a new window for anti-competitive contractual restrictions on third-party websites.
More recently, on August 4, 2020, the EU announced a full investigationOpens a new window into the $2.1 billion Google Fitbit acquisition deal. The EU regulators are concerned about converting consumer health data into target ads.
After facing heavy scrutiny by the EU, it is time for U.S. lawmakers to probe into Google’s anti-competitive practices. If DOJ becomes successful in the antitrust investigation, it might be the beginning of a new era where startups and small companies will get a fair chance to compete in the ad tech market. The success of this case may weaken Big Tech’s stranglehold in Silicon Valley.
What are your thoughts on Google’s market dominance? Comment below or let us know on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to hear from you!