This Article is written by Nashita Nazneen. A student of B. S. Abdur Rahman Crescent Institute of Science and Technology
On the 27th of October 2020, the Department of Justice along with 11 states consisting of 38 General Attorneys had filed a suit United States vs. Google against Google for unlawfully maintaining a monopoly in general search services and search advertising. This abuse of dominant position harms both the consumers and competitors. Prior to this suit, a panel of US House of Representatives submitted the report of bipartisan investigation (both Democratic and Republican parties) that studies the working of Amazon, Apple, Google, and Facebook; as they are under the direct radar of the Government for being big and competitive corporate entities. The panel investigated whether the companies are trying to steamroll competition by either buying out their rivals or pushing vendors to avoid buying from their rivals. These companies have full control of their domains.
This suit is instituted to make sure there are more choices, more innovations, and more healthy competition.
UNITED STATES VS. GOOGLE
Deputy Attorney General of the Department of Justice, A. Rosen stated that the main issue is that certain business practices have led to massive concentrations of economic power. The lawsuit states that Google is “a gateway to the Internet and search advertising behemoth”. This Anti-Trust complaint focuses on the fact that Google maintained a monopoly in the market through “exclusionary practices that harm competition and de-benefit the consumers”. Other search engines never get to grow and improve their algorithms.
A very viable argument by Google was that the people are using this search engine not because they were forced or due to lack of alternatives, but because they choose it themselves. There is no prevention from switching to the competitor’s search engine.
This suit led to complete scrutiny into the biggest revenue-generating segment i.e., the advertising segment. It is pertinent to mention that, Google is reimbursed for all the search ads from the outsiders who pay for the display of the advertisement. All the free services provided by Google are alleged to be done in exchange for the personal information of the users. This is linked to data fraud, privacy breach, and undue advantage. All the money that Google receives through advertisements is used to enter into contracts with the device manufacturers to make Google as the default search engine. The consumers do have the option to change the same in their device settings. The government has named this ‘Exclusionary Agreements”.
Apart from this, they will be facing questions as to not doing more to control and limit their influence on day-to-day human activities. Google is also answerable to whether or not they pay the mobile manufacturers to make Google the default search engine.
Earlier the Republican State Attorney of Texas sued Google, followed by the Justice Department. The Texas led case alleged that Google made an illegal deal with Facebook to back off from competing in the market. Georgia, Indiana, Arkansas, Kentucky, Florida, Louisiana, Mississippi, Montana, Missouri, Texas, and South Carolina joined the Justice Department lawsuit. It is most likely that the state case shall be consolidated with the federal case.
This suit is rather alleged to be a political gesture timely planned right before the presidential election, where it fulfills the promise made by the then President Donald Trump to his supporters.
In 2011, Google faced legal action for allegedly abusing a dominant position. This motion was passed by an Electronic Privacy Information Center, a non-profit research agency based in Washington; the Federal Trade Commission (FTC) took up the same.
However, the Commission refused to pursue the case as they are a global market player, and that this suit would cause worldwide impact. Nevertheless, as a settlement procedure, Google had to implement a strict user data security policy and agree to independent privacy audits for the next 20 years.
On the contrary, the Competition Commission of India (CCI) has previously fined Google while overlooking their practices.
In 2018, the CCI fined Google for Rs. 136 Crore for unfair trade practices in the market causing a disadvantage to other companies. The same was challenged in NCLAT and the Supreme Court.
In 2019, Google was found guilty of abuse to a dominant position in the mobile Android market, that it imposes unfair conditions on the device manufacturers preventing them from using other operating systems.
Anti-Trust laws/Competition laws are statutes made by the government to protect consumers and ensure fair and healthy competition among the same business operations. The main aim of this law is to advocate against monopolies and disruptions, manipulations, price-fixing in the market of competition. Furthermore, this law provides the consumers an ocean of choice among various goods and services, doing right by the rule of allocation and the economic principle of the right to choice and meeting consumer needs. They are designed to maximize customer welfare.
With the assistance of civil and criminal enforcement strategies, the Sherman Anti-Trust Act, the Federal Trade Commission Act, and the Clayton Anti-Trust Act are some of the leading laws regulating Competition matters in foreign countries. In India, the Competition Act, 2002 regulates the Indian business/market competition.
RECENT UPDATES BY GOOGLE AFTER UNITED STATES vs. GOOGLE
Google is planning to implement a visually re-designed mobile search model for making it easier and fasters for users to fetch information. Google Designer, Aileen Cheng stated that “it aims to simplify the results”. The search result page will run on an edge-to-edge mechanism with larger and bolder font size and bigger section titles. There would be a color play to guide the users to important information without distracting and overwhelming the users providing more visual space and breathing space placing all the focus on the content/results.
With the main aim to maintain the right to fair choice to the customers and to prevent both economic and business manipulation from the corporate players, such actions were taken. A federal investigation as such on a public corporate entity, would lead to damage to their company image. Given that the public corporate entity is Google, a trillion-dollar company; one may or may not assume guiltiness. If any such investigation has to conduct it has to be done independently in each country, so as to check if they are guilty of the same issues all over the world. It is unreasonable to make Google liable worldwide if the search engine has not misused its dominant position in one country. United States vs. Google (supra) would break down a trillion-dollar company in Anti-Trust issues.
Therefore, federal scrutiny into the business affairs of the company must be done by securing the corporate veil.
- Aashish Aryan, The US sues Google in biggest Anti-Trust case: What this means to India, October 28, 2020. https://indianexpress.com/article/explained/us-sues-google-what-it-means-6825475/.
- AP, US files landmark Anti-Trust case against Google, October 21, 2020 https://www.thehindu.com/news/international/us-files-landmark-antitrust-case-against-google/article32904830.ece.
- Ben Brody and David McLaughlin, Google Anti-Trust woes mount with third suit targeting dominance, December 17, 2020.; https://www.bloombergquint.com/business/google-sued-by-states-over-abuse-of-dominance-in-search-market.
- James Chen, Understanding Anti-Trust Laws, July 31, 2020 https://www.investopedia.com/ask/answers/09/antitrust-law.asp.