Dozens of US states aim at Google in bipartisan antitrust probe

Fifty states and territories have announced a broad investigation into Google‘s “potential monopolistic behaviour”.

The announcement on Monday by Texas Attorney General Ken Paxton closely followed one from a separate group of states on Friday that disclosed an investigation into Facebook’s market dominance.

The two probes widen the United States antitrust scrutiny of big tech companies beyond sweeping federal and congressional investigations and enforcement action by regulators in the European Union.

Sarah Miller, deputy director of the Open Markets Institute, called the investigations “historic” and said that they are “an unprecedented bipartisan effort to protect democracy and commerce from two of the most dangerous monopolies on the planet”. 

Nebraska attorney general Doug Peterson, a Republican, said at a press conference held in Washington on Monday that 50 attorneys general joining together sends a “strong message to Google”.

California and Alabama are not part of the investigation, which does include the other 48 states along with the District of Columbia and Puerto Rico.

Tara Gallegos, a spokeswoman for California Attorney General Xavier Becerra, would not confirm or deny any state investigation.

The news conference featured a dozen Republican state attorneys general plus the Democratic attorney general of Washington, DC.

‘Free for everyone’

Google’s parent company, Alphabet Inc, has a market value of more than $820bn and controls so many facets of the internet that one cannot surf the web for long without running into at least one of its services.

The Mountain View, California-based tech firm’s dominance in online search and advertising enables it to target millions of consumers for their personal data.

Google expects the state authorities will ask the company about similar investigations conducted in the past in the US and internationally, senior vice president of global affairs Kent Walker wrote in a blog post on Friday.

“Google is one of America’s top spenders on research and development, making investments that spur innovation,” Walker wrote. “Things that were science fiction a few years ago are now free for everyone – translating any language instantaneously, learning about objects by pointing your phone, getting an answer to pretty much any question you might have.”

Critics often point to Google’s 2007 acquisition of online advertising company DoubleClick as pivotal to its advertising dominance.

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 its search platform into a separate company, experts say. Regulators also could focus on areas such as Google’s popular video site YouTube, an acquisition Google scored in 2006.

‘Way too much power’

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.

“On the one hand, you could just say, ‘well Google is dominant because they’re good’,” said Jen King, the director of privacy at Stanford University’s Center for Internet and Society.

“But at the same time, it’s created an ecosystem where people’s whole internet experience is mediated through Google’s home page and Google’s other products.”

Experts believe the probe could focus on at least one of three areas that have caught regulators’ attention.

The first place to look might be online advertising. Google controls more than 31 percent 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 favouring their own services over others,” King said.

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 favouring its own products over those of 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 the fine.

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 Department of Justice opened a sweeping investigation of big tech companies this summer, looking at whether their online platforms have hurt competition, suppressed innovation or otherwise harmed consumers. The US Federal Trade Commission has been conducting its own competition probe of big tech, as has Congress’s House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law.