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Google faces lawsuit against its monopolistic powers, Does it mark the end of tech monopolies?

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What is the lawsuit about?

Deputy Attorney General of the Department of Justice, Jeffrey A Rosen, recently issued a statement announcing the initiation of a lawsuit against one of the world’s biggest tech giants, Google. He said that the major concern of the department is that the business strategies and practices followed by google have led to a concentration of power in single hands, almost creating a monopoly. Google holds a crucial stature in the technology world as it is the gateway to the internet. It is also the most popular search advertising behemoth.

In its early years only, Google achieved enormous success and has continued to maintain the pioneering position through exclusionary and discriminatory practices that harm the upcoming potential competition. According to the officials, nobody is against the extensive popularity the company has achieved but the unhealthy practices it has followed to maintain the status quo. Therefore, the department says, it is quintessential to file an antitrust response for the benefit of the consumers as well as to regulate and administer the wrongs doings of such highly powerful MNCs (Multi-National Corporations).

What led to the lawsuit?

Previously, a report submitted by a US House of Representatives panel reflected upon the bipartisan investigation into the working of big and hefty global tech companies- Apple, Google, Facebook, and Amazon. This antitrust probe was birthed in July 2019 and these companies have been on the government’s radar since then. Not only this, they have come into the eyes of governments in countries all across the world for being sturdy spenders. These businesses have also been alleged of trying to steamroll the competition in their field (and sometimes other as well) by either manipulating vendors or suppliers to avoid working with these new initiatives or by themselves buying out their rivals. This buying out strategy is most predominantly observed in the case of Facebook, which purchased both of its major competitors- Instagram and WhatsApp. Apple was also accused of throwing out a rival app which enabled parents to limit the screen time for children by saying that it was not safe, just because it wanted to promote another application on the same pretense.

The panel also said that all these giants have now taken the positions of a “gatekeeper to the internet and social media”. This also means that they are now in a position to exercise full control over their domain of functioning which can be highly contagious for the consumers of their products and services or other companies trying to achieve success in the same field. As a result, the report suggested that these huge companies should be broken up into smaller firms so as to reduce the centralized power or a presumptive prohibition against future mergers and acquisitions by the dominant platforms should be levied.

What importance does the lawsuit hold?

It is for the very first time that there has been an effort involving both the Democratic and the Republican parties. This bipartisan effort aims to look into the monopolistic powers of Google.

This lawsuit has attracted legal attention to the biggest revenue-generating stream of Google’s portfolio- Advertising. The biggest challenge for the company would be to clear the air of scrutiny and skepticism regarding the advertising profits from its search engine as well as from its affiliated websites. The vast share of the revenue earned from the Advertisement segment alone can be analyzed with the fact that in the April-June quarter, Google had earned nearly $38 billion from advertisements majorly.

Along with the probe from the federal government, these tech firms are likely to witness more careful examinations from each of the states in the United States. The states have hauled up these giants in the past as well for not taking actions to keep a check on their growing control and monopolistic powers that influence day-to-day aspects of life.

Has Google faced anything like this before?

Yes, a decade ago. It was the year 2011 when the company was confronted legally for allegedly abusing its dominance and power in the search market. The Federal Trade Commission (FTC) acted on a complaint filed by the Electronic Privacy Information Center, a Washington-based non-profit research agency.

Even though at the end the five commissioners decide not to take the case against google any more forward, the company had to take certain actions mutually agreed upon as a part of the settlement process. This included the implementation of a strict user data security policy and an agreement to conduct independent privacy audits for the next two decades.

Where could this lawsuit by the US Justice Department lead Google?

Even though the antitrust probe a pioneering step in itself, any major change or alteration in the company’s policy is unlikely to happen immediately in the near term.

More than bringing an actual change, this lawsuit holds importance as the stepping stone in the formulation of something formal to regulate such incidents. Experts say that in the further proceedings Google may raise up the question that why only it has been singled out from the 4 alleged companies. It will also try its best to justify its past course of action and explain why it has not actually abused its powers in any market segment.

What are the allegations that Google faces in India?

The Competition Commission of India and Google have had several face-offs in the last three years, the majority of which dealt in Google abusing its powers in the Indian market. The multiple run-ins alleged Google for using its strong influence in the Search engine market, Android Smart Phone market, Google Flights service as well as the television market to carry out certain unfair and unethical practices.

Last year only India’s anti-trust body held the company guilty of misusing its presiding position to impose unfair conditions on device manufacturers in the mobile Android market. It was also held guilty of preventing these manufacturers from using other operating systems.

In February 2018 also Google faced another battle in Indian boundaries when the CCI fined Google an amount totaling to Rs 136 crore for allegedly carrying out unfair business practices in the online search market. CCI said that the ascendant search engine company had “allocated disproportionate real estate” for its affiliates. This step posed as a high level of disadvantage to other growing companies that were trying to gain market access.

The Competition Commission of India (CCI) says Google is a leading market player and this anti-trust lawsuit holds the power to affect its working globally. 

 

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