The case can go in DOJ’s favor, but Google has its strong points. The legal battle could very well stretch up to a decade.
Twenty years ago, an antitrust monopoly lawsuit by the United States’ Department of Justice (DOJ) against Bill Gates-led Microsoft made national headlines. The company was accused of browbeating and cajoling other companies globally to make its “Internet Explorer” the default web browser on their operating systems. The DOJ won the case and it became the reason for startups like Google in the late 1990s to get a level-playing field and registering a phenomenal growth within a couple of years. After turning into a multi-billion behemoth, Google is in the same situation where Microsoft was more than two decades ago. The DOJ has evoked the Microsoft case to accuse Google of being an anti-competitive monopolist.
The Department of Justice has evoked the Microsoft case to accuse Google of being anti-competitive. But that was a different case.
What is anti-trust case against Google?
The crux of the case is that Google is signing up multi-billion dollar contracts to become the default search engine on other companies’ browsers and devices. DOJ argues that such tactics helped Google transform from ‘a scrappy startup’ to ‘a monopoly gatekeeper for the internet’ that stops other companies in giving fair competition to the giant. The complainants also say that if Google continues the same tactics, the Silicon Valley will never see another Google-like company emerge.
Watch: DOJ’s antitrust lawsuit against Google, Explained
The DOJ has given a detailed description of how Google makes deals with companies that control access to search engines. These companies are device manufactures, telecom carriers and smartphone makers. For example: Google pays to be the default search engine to Apple which has 15% of the global market. The complainant says this amount is estimated to be $8 billion to $12 billion annually, which is 15 to 20% of Apple’s net income.
The crux of the case is that Google is signing up multi-billion dollar contracts to become the default search engine on other companies’ browsers and devices
DOJ claims that Google also works to establish its monopoly through its Android operating system which operates in the vast majority of mobiles. It asks the manufacturers to pre-load their mobile phones with a number of Google apps on the default home screen, and also set Google as the default search engine. This way Google gets a chance to “broad base” its apps network, while it gives monetary commission to mobile manufacturers, who in return give importance to the conditions. The DOJ says the deal effectively rules out other search engines, since people rarely change their default search engines.
Therefore, it says, since Google’s rivals are ruled out of competition, its monopoly strengthens on tens of billions of general search advertising and promotion through it. The company thus earns more in added revenue than it spends on the exclusive deals. Since Google earns billions of dollars through it, the company shares a cut with Apple and other Android manufactures, and renews its deal with them once it gets over.
How it is affecting other search engines?
With Google having tie-ups with so many companies, 60% of general search queries are made on platforms where Google has direct exclusive deals, while other 20% are made through a browser Google owns, mainly Chrome. Now this sums up about 80% of total searches made on the internet. It leaves just 20% searches for all other engines globally.
Some of the allegations have not been covered up in the lawsuit against Google, but they have cropped up time and again to tarnish the image of the company. One such allegation is that Google doesn’t show the most relevant search, but it directs people to searches which benefit Google and its products.
Graph: Global Search Engine Market Share
Find more statistics at Statista
Will it be a short-lived case or will it stretch for years?
The DOJ seemingly has an easy case in its favor. The way Google has played up its tactics, the government just needs to prove that Google has monopoly power and it affects competition by signing exclusive deals with the companies. But that’s just not the case.
Google has its own reasons to justify the stand and they can’t be ignored. Unlike Microsoft in the late 1990s, Google is not accused of bullying companies to pay for its products. It can stop its payments to Apple and other mobile manufacturing companies, and can hope that the users will use Google’s search engine anyway, owing to its ranking as the best available product of its category in the market. Google can ask Android to not give prime allotment to its apps on the system. Android is anyway controlled by Google, so the company could easily find an alternative to promote its app on the system. As it is also indicated in the lawsuit, most anti-Google quotes have come from the competitors and not from people within the organization.
Unlike Microsoft, Google is not accused of bullying companies to pay for its products.
Google can say the complaints are coming from the disgruntled lot, and not from the companies using Google products. And last but not the least, Google can opt for an out-of-court settlement to avoid negative publicity. Whatever happens, Google can unleash a powerful battery of lawyers on DOJ. In all probability, the case won’t just stretch for months, but could take years, or probably a decade, before we see a settlement or some sort of conclusion. We aren’t looking at a legal dispute of Microsoft’s magnitude. DOJ’s allegations against Google aren’t foolproof.