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Google Faces Antitrust Investigation by 50 US States and Territories

In a recent development, fifty US states and territories, led by Texas, announced an investigation into Google’s “potential monopolistic behavior” as regulators are growing more concerned about Google’s impact on smaller companies striving to compete in their online markets.

The announcement closely followed one from a separate group of states that disclosed an investigation into Facebook’s market dominance. The two investigations widen the antitrust scrutiny of big tech companies beyond sweeping federal and congressional investigations and enforcement action by European regulators.

The Nebraska attorney general, Doug Peterson said at a press conference held in Washington (which featured a dozen Republican attorneys general plus the Democratic attorney general of Washington DC), that 50 attorneys general joining together sends a “strong message to Google”.

Google’s dominance in online search and advertising enables it to target millions of consumers for their personal data and critics often point to Google’s 2007 acquisition of the online advertising company DoubleClick as pivotal to its advertising dominance.

Google expects the state authorities will ask the company about past similar investigations in the US and internationally. Europe’s antitrust regulators slapped Google with a $1.7bn fine in March for unfairly inserting exclusivity clauses into contracts with advertisers, disadvantaging rivals in the online ad business.

One outcome antitrust regulators might explore is forcing Google to spin off search as a separate company, experts say. Regulators also could focus on areas such as Google’s popular video site YouTube, an acquisition made by Google in 2006.

Google has long argued that although its businesses are large, they are useful and beneficial to consumers, but federal and state regulators and policymakers are growing more concerned not just with the company’s impact on ordinary internet users, but also on smaller companies striving to compete in Google’s markets.

Experts believe the investigation could focus on at least one of three areas that have caught regulators’ eyes. The first area might be online advertising. Google will control 31.1% of global digital ad dollars in 2019, according to eMarketer estimates, crushing a distant second-place Facebook. And many smaller advertisers have argued that Google has such a stranglehold on the market that it becomes a system of whatever Google says, goes, because the alternative could be not reaching customers. There’s definitely concern on the part of the advertisers themselves that Google wields way too much power in setting rates and favoring their own services over others.

Secondly, another visibly huge piece of Google’s business is its search platform, often the starting point for millions of people when they go online. Google dwarfs other search competitors and has faced harsh criticism in the past for favoring its own products over competitors at the top of search results. European regulators also have investigated in this area, ultimately fining Google for promoting its own shopping service. Google is appealing against the fine.

Finally, Google’s smartphone operating system, Android, is the most widely used in the world. European regulators have fined Google $5bn for tactics involving Android, finding that Google forced smartphone makers to install Google apps, thereby expanding its reach. Google has since allowed more options for alternative browser and search apps to European Android phones.

The US justice department opened a sweeping investigation of big tech companies this year, looking at whether their online platforms have hurt competition, suppressed innovation or otherwise harmed consumers. The Federal Trade Commission has been conducting its own competition probe of big tech, as has the House judiciary subcommittee on antitrust. It’ll be interesting to see the findings of these investigations.

If you want to know more about how’s Google’s dominance of digital ads and search may impact your business, please contact us for further details.