Why Google faces the biggest antitrust lawsuit in history

Google on white background

Google celebrates its 25th birthday at the end of this month, but it won’t be all parties at the company. It has been two and a half decades of major successes – and also some failures – that have made the company one of the world’s leading online firms and, without a doubt, the world’s leading search engine.

However, the U.S. judiciary has doubts about how the road has been traveled and will hold Google accountable in court. The company will have to explain the way it built its empire, in what is already considered the biggest antitrust trial in its history, as we have explained in an interview on TVE’s Canal 24 Horas:

Possibly not just Google’s, but in the history of any Internet company. There has been no similar confrontation since 1998 when Microsoft was taken to court for imposing its dominance in the personal computer arena – with Windows as the main player in the market – to cause Internet Explorer to be the default browser.

But those were different times. At the beginning of the 21st century the number of Internet users was considerably smaller. Now the Internet has changed completely, it has become an essential element of the daily life of all citizens and abuse of power is something that American justice is not willing to allow. Not even to one of the bastion companies of the nation, such as Google, which has received favorable treatment in all previous judicial processes. Until now.

What the Google antitrust lawsuit consists of.

The lawsuit was filed in 2020 by the U.S. Department of Justice along with a dozen other states. According to its text, Google has entered into contracts with mobile device manufacturers that cause its search engine to be the default option on cell phones.

In other words, the root of the problem comes because Google, taking advantage of its dominant position, causes that in any mobile device in the world, when a user wants to search for something, in the first place and without giving him the option to choose, Google will appear. If you want to use another search engine, you must open the browser and type in your URL proactively.

This happens on Android cell phones, which account for more than 90% of the market share, thanks to agreements with manufacturers such as LG, Motorola and Samsung. But also in mobile devices with other operating systems. Provided that Google has established an agreement with these manufacturers.

In fact, the US Department of Justice does not look favorably on a secret agreement signed with Apple in 2018. Sundar Pichai and Tim Cook, both CEOs of their respective companies, decided to work together “as if they were a single company.”

Multibillion-dollar deal between Google and Apple

The amount for which the collaboration was signed has not officially transcended, although it is estimated that it could be around $ 18 billion per year, but it is known that the default search engine on iOS is Google’s. Yes, on the devices of its great rival (iPhones, iPad, MacBook…) the default operating system is Google’s, thanks to a million-dollar agreement signed between the two companies.

The reality is that, according to the U.S. Department of Justice, Google processes more than 90% of all searches in the United States. Moreover, more than half of the traffic handled by Google’s search engine comes from Apple devices. So much so, that for Sundar Pichai’s company it would be “critical” to lose the agreement with Apple devices.

In fact, this situation is the key to Google’s business because it allows it to base its significant advertising revenue. The company earns $280 billion annually by selling ads that are shown to people who use its search engine. Its profits are more than $80 billion.

According to the lawsuit, Google ends up with this settlement with the ability to compete with its rivals. For example, it has driven Microsoft’s Bing out of search. In fact, the reality is that if users were asked, few would be able to name alternatives to Google such as, for example, DuckDuckGo.

The trial is expected to last about 10 weeks and both Sundar Pichai and Tim Cook and other senior executives are expected to be summoned to testify in court. It will first be decided whether Google has violated antitrust rules. If so, another trial will be held to impose sanctions, seek remedies and, if necessary, even require the company to be split up.

What Google’s defense is based on

Google has indicated that it intends to demonstrate at trial that the manufacturing companies choose its search engine – and its Google Chrome browser – not because of signed agreements. Its argument will be to defend that this decision is based on “the quality of its services and consumer preferences.”

As Google’s chief legal officer, Kent Walker, has acknowledged, “making it easier for people to get the products they want benefits consumers and is supported by U.S. antitrust law.”

On the other hand, according to Google, changing the default search engine in the Safari browser is very simple. If done from an iPhone it “only” takes four steps, while it’s two from a computer. However, the reality is that few users are those who know about this possibility and, much less, those who carry it out.

Other antitrust lawsuits facing Google in the United States.

But monopolistic status in the search market is not the only one of concern to the U.S. Department of Justice. The sale of digital advertising and the auction system by which ads are displayed have also been the subject of lawsuits.

Even the advantageous position that Google has in the field of Artificial Intelligence is also under scrutiny by the US Justice. Despite the fact that Google has not led so far in the application of AI, it does have a more advantageous market position than its rivals – mainly OpenAI with ChatGPT and Amazon – to impose the use of technologies such as Google Bard.

The company will also have to account for that before the US judiciary. And it should still be thankful that the process could have been much larger, since the US court has pointed out that it cannot prove practices for which it has also been sued. For example, in the accusation of displacing rivals such as Tripadvisor or Yelp in searches.

All this while it continues to face legal proceedings in Europe, where it has suffered several significant fines from the EU due to its advertising practices and Android monopoly.

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