US says Google break-up may be needed

Google faces a US government lawsuit alleging it has been abusing its dominance in online search.
Google faces a US government lawsuit alleging it has been abusing its dominance in online search.

The US Justice Department has filed an antitrust lawsuit against Alphabet Inc's Google, accusing the $US1 trillion ($A1.4 trillion) company of illegally using its market power to fend off rivals and saying nothing is off the table, including a break-up of the internet search and advertising company.

The lawsuit, which was joined by 11 US states, marks the biggest antitrust case in a generation, comparable to the lawsuit against Microsoft Corp filed in 1998 and the 1974 case against AT&T which led to the break-up of the Bell System.

The lawsuit claims that Google acted unlawfully to maintain its position in search and search advertising on the internet and says that "absent a court order, Google will continue executing its anti-competitive strategy, crippling the competitive process, reducing consumer choice and stifling innovation".

The complaint says that Google has nearly 90 per cent of all general search engine queries in the United States and almost 95 per cent of searches on mobile.

Attorney General Bill Barr said his investigators had found that Google does not compete on the quality of its search results but instead bought its success through payments to mobile phone makers and others.

"The end result is that no one can feasibly challenge Google's dominance in search and search advertising," Barr said.

When asked on a conference call if the department was seeking a break-up or another remedy, Justice Department official Ryan Shores said, "Nothing is off the table but a question of remedies is best addressed by the court after it's had a chance to hear all the evidence".

In its complaint, the Justice Department said that people in the US were hurt by Google's actions.

In its "request for relief," it said it was seeking "structural relief as needed to cure any anti-competitive harm".

"Structural relief" in antitrust matters generally means the sale of an asset.

"Ultimately it is consumers and advertisers that suffer from less choice, less innovation and less competitive advertising prices," the lawsuit states.

"So we are asking the court to break Google's grip on search distribution so the competition and innovation can take hold."

Google, whose search engine is so ubiquitous that its name has become a verb, called the lawsuit "deeply flawed," adding that people "use Google because they choose to - not because they're forced to or because they can't find alternatives".

Republican Senator Josh Hawley, a vociferous Google critic, accused the company of keeping power through "illegal means" and called the lawsuit "the most important antitrust case in a generation".

The Microsoft lawsuit was credited with clearing the way for the explosive growth of the internet since the antitrust scrutiny prevented the company from attempting to thwart competitors.

Tuesday's federal lawsuit marks a rare moment of agreement between US President Donald Trump's administration and Democrats.

US Senator Elizabeth Warren tweeted on September 10, using the hash tag #BreakUpBigTech, that she wanted "swift, aggressive action".

Coming just days before the US presidential election, the filing's timing could be seen as a political gesture since it fulfils a promise made by Trump to his supporters to hold certain companies to account for allegedly stifling conservative voices.

The complaint pointed to the billions of dollars that Google pays to smartphone makers such as Apple, Samsung and others to make Google's search engine the default on their devices.

This means that rival search engines never get the scale they need to improve their algorithms and grow, the complaint said.

"General search services, search advertising, and general search text advertising require complex algorithms that are constantly learning which organic results and ads best respond to user queries," the government said in its complaint.

"By using distribution agreements to lock up scale for itself and deny it to others, Google unlawfully maintains its monopolies."

Google has faced similar legal challenges overseas.

The European Union fined Google $US1.7 billion in 2019 for stopping websites from using Google's rivals to find advertisers, $US2.6 billion in 2017 for favouring its own shopping business in search and $US4.9 billion in 2018 for blocking rivals on its wireless Android operating system.

Australian Associated Press