The DOJ says Google monopolizes search. Here’s how.
Creating and maintaining such a search index would require an “upfront investment of billions of dollars,” the lawsuit alleges, and hundreds of million dollars in maintenance costs per year, effectively shutting out smaller competitors from entering the market.
Google’s alleged monopolization of search also amplifies its ability to maintain a superior product, the lawsuit alleges. It dominates the amount of data collected, and its larger data sets can be used to create more accurate algorithms, which in turn results in better search results targeted to each individual user. According to the DOJ, this cycle reinforces Google’s market dominance, unfairly protecting it from the competition.
A monopoly on advertising
Google has also monopolized online search advertisements, according to the lawsuit. Its monopoly on search gives it access to the largest potential audience for advertisers, making it by far the most attractive option. The lawsuit specifically cites the attractiveness of text and shopping ads, both of which appear higher than organic search results.
The online search advertising industry has ballooned to $50 billion, and of that, advertisers pay roughly $40 billion to Google per year.
What the DOJ is seeking to do
Despite these allegations, the Department of Justice is not explicitly looking to break up Google or impose specific fines. Rather, it is asking for “structural relief as needed to cure any anticompetitive harm.” In a press event, DoJ representatives noted that investigations into other tech companies were ongoing, and that it also had not ruled out further charges against Google.
Several hours after the lawsuit was filed, the company called the lawsuit “deeply flawed” in a statement posted to its blog.
“People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives,” the statement said. “This lawsuit would do nothing to help consumers. To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use.”
This is not the first time Google has faced scrutiny from American regulators, and it probably won’t be the last. In 2012, the Federal Trade Commission investigated the company before ultimately dropping the case without pursuing charges. In Europe, meanwhile, it has been the target of three separate antitrust lawsuits since 2010, resulting in fines of $9 billion.
What next? The DOJ lawsuit itself will likely take years to make its way through the courts. A 1970s lawsuit against IBM took 13 years to complete, while a 1997 lawsuit against Microsoft took five. In neither case were the companies forced to break up.