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How an antitrust case against Google might play out


  • Evidence is mounting that Google might soon be hit with at least one major antitrust case in the US.
  • But Washington will be gearing up a long and complex battle to prove that Google has acted anticompetitively.
  • An academic paper published this week lays out what an antitrust case might look like, and claims there is “significant reason for concern” that Google violated US antitrust law.
  • A previous FTC staff attorney who worked on the famous Microsoft antitrust case in the ’90s also gave his opinion on how a case could play out.
  • Visit Business Insider’s homepage for more stories.

A serious antitrust case against Google is apparently gaining momentum, and could see the company slapped with a lawsuit as soon as this summer.

Google has had a sizeable antitrust target on its back for years, paying multiple fines to Brussels (the official seat of the European Commission), but we could be about to see the most significant case brought against the company in the US. 

Google is a big business – even bigger if we’re considering its holding company Alphabet – but it’s the company’s advertising practices which seem to be at the forefront of regulators minds. 

A new academic paper from the Omidyar Network published this week, co-written by a former antitrust economist in the Obama administration, concludes that “there is significant reason for concern that Google has violated US antitrust law.”

But years of pent-up antitrust sentiment in Washington doesn’t make this a slam dunk, according to David Balto, an antitrust lawyer and previous FTC staff attorney, who disclosed that he had carried out consulting work for tech companies including Google, but said he is not involved in the current investigation by the Justice Department.

Balto worked on the famous Microsoft investigation in the 1990s, where the company was found to have violated antitrust laws following a huge battle in federal court.

Both the Department of Justice and a group of state attorneys general are said to be planning to file cases against Google, but it will be a long journey. Government lawyers will need to unpack a very complex business of ads, auctions, and heaps of complicated algorithms to understand if Google has been bending the rules to its advantage.

Here’s how such a case might play out, according to both Balto and the Omidyar Network research.

The Microsoft case was dragged out for five years, and it’s possible that any case brought against Google could also last several years.

Investigating the way Google is running its search and ad business is not a small undertaking. Google will be asked to provide all sorts of information about its ads mechanisms. But it also won’t want to reveal too much of its “secret sauce” here either, which could prolong investigations.

And with probes possibly looking into other parts of Google’s business such as Android, this has the potential to be stretched out even longer.

Google’s ad dominance will likely lead the case, and lawmakers will have to prove consumers were harmed

The Omidyar Network paper, which is primarily focused on Google’s ad business, concludes that there is evidence that Google has amassed dominance in advertising, and that it has leveraged its dominance in search “to coerce publishers and advertisers into using Google’s ad tech services and relying on the Google exchange to make purchases and sales.”

But lawmakers will be looking closely at whether Google’s practices have harmed the consumer. 

“The purpose of the antitrust laws is to protect consumers, not competitors. So the fact that some competitor is disadvantaged or excluded from the market is not an antitrust case,” said Balto.

“The way that advertisers have to pay more because of the way auctions are structured – which is a conceivable claim – is not going to matter if it’s going to be of the harm to advertisers, it’s got to look at the ultimate impact on consumers.”

However, the Omidyar paper claims it is “likely” that Google’s practices have caused advertisers to pay higher prices than they should. This, the paper argues, leads to consumers paying higher prices.

bill gates microsoft antitrust suit

Bill Gates.

Porter Gifford/Getty Images

In the Microsoft antitrust case, a technical committee was established to hear complaints under the settlement. But Balto believes the Justice Department was burned by this decision, and likely won’t have forgotten that.

“It was awful,” said Balto. “There were tons of disputes that were never resolved very effectively.”

In the case that a court rules Google must change certain business practices, it would need a way to ensure Google is enforcing those changes.

“A court is going to be extraordinarily reluctant to take on the role of regulator because they just don’t have the resources or the technical expertise to do that, and that’s the critical point,” Balto said.

Balto isn’t the only one who doesn’t foresee a breakup of Google’s business in the cards. David Cicilline, who is leading a separate investigation into anti-monopoly practices of all four major tech companies, told Business Insider that he doesn’t see a breakup being likely, or even possible.

“My view is that we have to come up with solutions to bring more competition into the digital marketplace and to prohibit anti-competitive behavior directly,” he said.

Instead, it’s more likely that Google would be hit with some demands to the way it operates its business.

“I think what we’re more likely to see is that there might be changes [to Google’s] individual competitive practices, maybe some contracting arrangement so they have to tweak something,” said Balto. “But the court is not going to say, ‘Oh you’ve got to divest search, you’ve got to break up the company.’ There isn’t enough there.”

One possible outcome could be for Google to provide additional disclosure for businesses to understand how its advertising auctions work.

So bear with us here, but there’s a pretty significant case called Ohio v. American Express that some experts like Balto say will have a bearing on any antitrust case brought against Google’s ad business.

In short, the case surrounded a rule that merchants who accepted American Express were not allowed to steer customers to using others cards that would charge the merchant lower transaction fees.

The federal government and a group of states brought an antitrust case against American Express for what were deemed to be “anti-steering” policies, but in 2018 the court ruled in favor of Amex.

“For merchants Amex rules were anticompetitive – they paid more – but the Supreme Court said, you’re only looking at half of the equation. The other half of the equation is the other set of customers, the consumers, and for them this wasn’t anticompetitive,” Balto told Business Insider. 

However, it’s not certain that lawmakers in this instance will look at Google’s business the same way, and some critics believe Google presents an unprecedented case entirely.

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