Google was hit with a second multistate antitrust lawsuit in two days Thursday, with the most recent claiming the company altered the designs of its search engine to undercut competitors.
In the complaint, Colorado Attorney General Phil Weiser, a Democrat, and Nebraska AG Doug Peterson, a Republican — joined by 36 other AGs of states and U.S. territories — allege Alphabet Inc.’s
search engine engaged in unlawfully manipulating search results in a clear “concentration of power.” The suit, which also outlines the dangers of Google’s sway over smart cars and other devices through its search-engine dominance, seeks to consolidate with a Justice Department suit filed in October.
“Google often says people use Google, but I would argue Google uses people,” Peterson said in a Zoom
videoconference call. The states allege Google’s “acquisition and command of vast amounts of data obtained because of consumers’ lack of choice has fortified Google’s monopolies.”
Added New York AG Letitia James, who joined the suit: “Google sits at the crossroads of so many areas of our digital economy and has used its dominance to illegally squash competitors, monitor nearly every aspect of our digital lives, and profit to the tune of billions. Through its illegal conduct, the company has ensured that hundreds of millions of people turn to Google first when looking for an answer, but it doesn’t take a web search to understand that unchecked corporate power shouldn’t have disproportionate control over our data and information. For decades now, Google has served as the gatekeeper of the internet and has weaponized our data to kill off competitors and control our decision making — resulting in all of us paying more for the services we use every day.”
Though the AGs recommend divestiture, Weiser said it would be “premature to discuss” remedies.
The lawsuit focuses on how Google displays search results, amid complaints from rivals like Yelp Inc.
and Expedia Group Inc.
about how Google favors its own competing services in search results. This has forced Yelp, Expedia and others to pay to advertise at the top of search results or sacrifice traffic.
“The bipartisan enforcement action of the state attorneys general today is arguably more significant than previous lawsuits in that it strikes at the foundation of Google’s dominance: its search results,” Luther Lowe, senior vice president of public policy at Yelp, said in a statement. “For nearly a decade, Yelp’s small public policy team has openly advocated for heightened antitrust scrutiny of Google’s behavior, so it is gratifying to see Google finally brought to justice for this specific conduct.”
In a blog post, Adam Cohen, director of economic policy at Google, said claims in the Colorado-Nebraska-led suit “have been closely examined and rejected by regulators and courts around the world, including the U.S. Federal Trade Commission, competition authorities in Brazil, Canada and Taiwan, and courts in the United Kingdom and Germany, who all agreed that our changes are designed to improve your search results. It’s also well established that the most important driver for our search results is the specific query—not your personal data.”
A court-ordered redesign of Google Search would “harm consumers and businesses,” seriously undercutting useful search results, according to a person closely affiliated with Google who was not authorized to publicly comment on Thursday’s lawsuit. The company strongly disputed the suit’s claim that it endangers competition of smart devices, pointing to the popularity of Apple’s Siri.
Google shares dipped 1% in trading Thursday.
The Colorado-Nebraska suit comes on the heels of a Texas-led suit of 10 Republican AGs Wednesday that accuses Google’s dominant search engine of wielding a monopoly of the online-advertisement market through its influence on every aspect of the market: buyers, sellers and the exchange on which many interact.
A Google spokeswoman said the company “will strongly defend ourselves from his baseless claims in court.”
In October, the Justice Department and a dozen states sued Alphabet for monopolistic and anticompetitive actions, particularly its use of a search deal with Apple Inc.
and the mandatory inclusion of Google apps in its Android mobile operating system.
Kent Walker, Google’s senior vice president for legal affairs, called the suit “deeply flawed” and said it won’t help consumers.
The three-headed lawsuit against Google differs in approach from a single New York-led suit of Facebook Inc.
last week that includes AGs from 46 states, Washington, D.C., and Puerto Rico. It objects to the social-networking giant’s dominance, especially through its acquisitions of Instagram and WhatsApp. The suit, coupled with a Federal Trade Commission action, seeks for Facebook to spin off Instagram and WhatsApp.
The composition of the broader Facebook action — which parallels the narrative of DOJ charges filed against Microsoft Corp.
for monopolistic business practices three decades ago — is likely to result in prolonged legal actions that could take years, according to legal experts.
“Google engaged in what is a classic tale of a likely monopolization strategy premised on denying scale to rivals. This brings back bad memories of the decades-old case against Microsoft,” antitrust lawyer David Dinielli, a former special counsel with the antitrust division of the Justice Department, said.
“The bad news keeps coming for Google. A remarkable, broad, deep, and bipartisan coalition of legal officials has concluded that its business model has been a disaster for free and open competition online,” Frank Pasquale, a professor at Brooklyn Law School, told MarketWatch. “Today’s lawsuit is just the latest example of governments catching up to years of activist and academic warnings. When I testified before Congress in 2008 about Google’s troubling practices, very few people were worried. Now it’s a matter of urgent public concern.”