Eager to portray the president as a populist enemy of big business, Attorney General William Barr unveiled the Trump administration’s long-expected antitrust lawsuit against search engine giant Google’s parent company, Alphabet, on Tuesday morning. Filed jointly with 11 Republican state attorneys general, the Department of Justice’s suit alleges Google maintains monopolies in “general search services, search advertising, and general search text advertising.”
The case against Google is the first major anti-monopoly effort pursued by the U.S. federal government in years and could, theoretically, lead to the breakup of the search engine and advertising king. However, by rushing to the courts just two weeks before the election—and before all the evidence is assembled—many lawyers involved say Barr is actually undermining the case they’ve been building against Google.
In the attempt to score votes for Trump, the DOJ’s premature anti-monopoly case may end up giving Google a get-out-of-jail-free card.
“Case of the century”
Bipartisan investigations in every state except Alabama have been probing Google’s business practices for a number of years, and the DOJ’s own effort has been in the works since June 2019. Many of the career attorneys working on the lawsuit have described it as the “case of the century,” on par with the legendary 1911 breakup of the Standard Oil monopoly.
Among the four big tech corporations that dominate the infrastructure of the digital economy—Google, Amazon, Facebook, and Apple—Google (Alphabet) is perhaps the clearest case of a classic monopoly. The company has almost total control over internet searches around the globe—around 90% of all searches go through its engine. By having Google search engines and Chrome web browsers installed as the default on every Android mobile phone sold, it extends that power. Meanwhile, a third of every dollar spent globally on online advertising flows to Google.
When it comes to getting eyeballs on a page, no company can compete. With Google search, YouTube, Google Maps, and a wide range of online advertising channels, the company is able to capture consumers at every turn—when they search for information, watch a video, request a pick-up from a ride-hailing app like Uber or Lyft, request food delivery, or look at an ad. Consumers’ data is collected constantly and added to Google’s databases to further hone its market-dominating efforts.
A 450-page report from the U.S. House Judiciary subcommittee on antitrust released Oct. 6 said the company’s control of general online search and search advertising gives it “gatekeeper” status, allowing it the ability to pick economic winners and losers.
The report criticized Google for abusing both advertisers and the public. It said the company often “misappropriates third party content” to boost its own business, fills users’ search results with ads that generate profit for the company while pushing more relevant results further down the queue, and “extorts users for access to its critical distribution channel.” Essentially, if anyone wants to reach people through search results, they have to pay up, but even then they are shuffled further down the search page in favor of higher-paying clients or Google’s own content and services.
Further reading:
Empire of High Technology: Amazon, Apple, Google, Facebook achieve ‘monopoly power’
The search dominance serves to corral advertisers to go with Google, and the advertising, in turn, determines what will show up in people’s search results. It’s a monopolistic loop that gives the company unparalleled power to determine what the public sees when they search, as well as control over the data that advertisers desperately rely on to market their products.
Sinking the case
Justice Department lawyers working on the antitrust lawsuit told the New York Times earlier this fall that a powerful amount of evidence had been amassed against Google, but that they were still working to make the case airtight before it goes to trial. They were put on a rush schedule by Attorney General Barr, however, who issued an internal deadline of Sept. 30 to wrap up the investigation. According to the Times, almost all of the 40 attorneys involved rejected Barr’s order but were overruled.
They wrote a memo that was hundreds of pages long pleading for more time to put together both the evidence proving Google’s monopoly status as well as the demands that should be made on the company. They also explicitly rejected being made into political tools for the benefit of Trump’s re-election effort.
The lawyers “expressed concern that Mr. Barr wanted to announce the case in September to take credit for action against a powerful tech company under the Trump administration.” That is precisely the purpose of the lawsuit announced Oct. 20. With the president’s campaign struggling to change the topic from his disastrous mismanagement of the coronavirus pandemic, Barr is attempting to give Trump a new mantle to run on: conqueror of the unpopular tech giants.
Trump has repeatedly claimed that Google is “RIGGED” against him and that it only shows “anti-Trump” news stories in search results. Right-wing legislators like Sen. Ted Cruz, R-Texas, and Rep. Jim Jordan, R-Ohio, have claimed YouTube and other platforms censor conservatives. Data from search results and social media platform usage actually show the opposite; conservative voices are some of the most highly circulated.
Fearing retribution, several of the lawyers working on the case have anonymously said that Barr’s imposition of an election-oriented deadline may weaken their case and “ultimately strengthen Google’s hand” in mounting a defense. It has opened the entire antitrust investigation to the charge that it is purely a politically-driven effort on the president’s behalf—a claim Google would likely make in court. Zero Democratic state attorneys general have signed on to the Barr lawsuit, preferring to continue their own separate efforts, making the effort seem all the more one-sided.
The lack of any clear action being proposed in the Barr lawsuit—such as explicitly breaking up Google’s search and advertising monopolies—also leaves many wondering how serious the Trump administration is in its pursuit of Google. Charlotte Slaiman, competition policy director for the open internet advocacy group Public Knowledge, said Tuesday morning, “You’ll notice that the [Barr] complaint is pretty open-ended on what type of remedy is needed, and remedying this conduct is going to be very difficult.”
Wall Street seems relatively unconcerned with the threat of a DOJ antitrust suit at this time. Shares of Alphabet on the NASDAQ barely budged—not what you might expect for a company threatened with major government intervention.
Commentators in the business press see Barr’s lawsuit as either purely an election effort or, worst-case scenario, a money-making opportunity for investors. Jim Cramer, the clownish host of CNBC’s “Mad Money” television program, called the lawsuit “another loser case by the government.” He said that if the government ever did really move to break up Google, it would just be unlocking more value, taking the company’s stocks from a “buy” rating to a “strong buy.” He argued the “sum of the parts is worth far more than $1,500,” referring to Alphabet’s current share price.
Hindrance to real anti-monopoly struggle
Barr’s action as Trump’s obedient political servant has put the real anti-monopoly legal effort against Google at risk. His rush-job announcement of a lawsuit before the full case is assembled means that Alphabet will have an easier time defending itself, and even if the company loses, the action taken against it might be weaker than it otherwise would have been.
The reforms recommended earlier this month by the House Judiciary antitrust subcommittee included structurally separating (i.e. breaking up) Alphabet, along with Amazon, Apple, and Facebook. If implemented, that would mean Alphabet may have to spin off its video platform YouTube, its Google search engine, and its super-lucrative advertising divisions into separate companies.
While the Barr lawsuit could theoretically still produce such an outcome, he has lowered the chances of that happening by throwing up the suit before it was ready. Barr is effectively sacrificing the anti-monopoly struggle against Big Tech on the altar of Trump’s re-election.
Make no mistake, Google’s search and advertising monopoly should be broken up, but the lawsuit of Bill Barr and Donald Trump is a hurdle in that effort. Defeating Trump and the GOP on Nov. 3 will be a major step toward invigorating a real anti-monopoly fight.
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