(Bloomberg Opinion) -- Dozens of states are taking the antitrust case against Google to another level.
On Thursday, a bipartisan group of 38 state attorneys general sued Google parent Alphabet Inc., accusing it of antitrust violations. The regulators contend the internet giant leveraged its market dominance in the search-engine market to favor its own offerings over smaller competitors and maintain its monopoly. The complaint goes much further than the suit the Department of Justice brought against company in October and the separate action filed Wednesday by 10 Republican states. The latest suit has a justifiable argument, and it could mark a critical turning point in forcing Google to change its practices when it comes to its crown jewel search business.
The attorneys general contend Google’s search engine has grown so powerful it has effectively become “a monopolistic gatekeeper, free to limit passage across the internet and to charge supracompetitive tolls.” They repeat the Justice Department’s assertion that the company’s multibillion-dollar distribution agreements to make its search engine the default option on mobile devices artificially limit competition. But the states also build upon the case by contending that Google has also stifled other internet companies in specialized categories such as travel, home repair and local services by lowering their prominence on search result pages and through domineering business practices. The list of affected companies include TripAdvisor Inc., Yelp Inc., Expedia Group Inc. and ANGI Homeservices Inc. Google, in a blog post response, said its search engine is made to give users the “most relevant” information, adding changing their pages would “harm the quality” of the search experience.
To illustrate the states’ main point, the small-business review site Yelp said that when a mother searches for a pediatrician on Google, she is steered to the company’s own product instead of being offered the highest-quality information. “This self-serving bias by Google happens billions of times per week in the United States,” Yelp said in a blog post applauding the suit. “By systematically reducing the quality of its search results to entrench and extend its search and search advertising monopolies, Google is directly harming consumers.”
The central tenet of the case makes sense. By suppressing what may be the best information lower on the page to its own benefit, Google is hurting emerging competitors and the consumer experience. The lawsuit also says Google discriminates against companies in the categories where it competes by restricting their access to a prominent area of the search results page called “OneBox.” Making it seemingly more indefensible, Google allows access to this box for segments where it doesn’t generate significant revenue such sports, weather and movies, the lawsuit notes. And finally, perhaps most important, Google forces companies to give up proprietary pricing data and content that it can use to aggregate and populate its search pages, thereby giving a unrivaled competitive advantage to its own offerings.
Earlier this summer, I argued Google’s practices of ranking its own services higher on its search results and scraping content off third-party websites should be restricted. I am glad regulators are officially going after the company for these egregious practices. In a positive step, the states are asking for changes in behavior and other serious remedies — including possible divestitures of businesses and potential monetary damages. Frankly, it’s about time.
Internet companies, web publishers and news sites have struggled for years to hold on to advertising dollars as marketing budgets shifted to Google and Facebook. The two dominant internet ad players have succeeded partly by keeping users on their platforms by pulling in proprietary content from third parties. Any actions that can drive users back to the external websites that actually created the valuable content will be beneficial. The extra traffic can be used to generate new subscription and transaction revenues.
The latest suit also comes after a flurry of actions from global regulators to curb the powers of large technology companies. In October, the U.S. House antitrust subcommittee published a 450-page report outlining its legislative recommendations to crack down on tech market abuses. China’s antitrust regulator released a set of draft regulations last month that seek prohibit monopolistic practices like selling goods below their cost, and the European Union unveiled proposed rules earlier this week restricting technology platforms from using independent seller data to compete with them. As a result, consumers could see concrete antitrust reforms with real teeth around the world next year.
The days when Google and other large technology companies had free rein to use their financial resources and platforms to squelch competition could well be coming to an end. That’s positive for users and the internet as a whole.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron's, following an earlier career as an equity analyst.
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