U.S. justice department's Google lawsuit expected in weeks: report

Yahoo Finance’s On the Move panel discuss the report that the DOJ plans to bring a lawsuit against Google as soon as this month according to sources.

Video Transcript

ADAM SHAPIRO: I want to turn our attention now to the potential for the Department of Justice to file a lawsuit against Google, Alphabet. Let's talk with Dan Howley and the panel about this. Dan, I thought the states attorneys general were looking at this possibility. But it seems like DOJ is going to beat them to it.

DAN HOWLEY: Oh, it's everyone. It is everyone who wants to get a slice of that pie that is Google, basically. Now, you have the DOJ. That's already been ongoing. Then you have the states attorneys general. And then you also have the House Committee, the House Judiciary Committee looking at them as well.

So these are just a couple of the issues that Google is facing outside of, by the way, the European Commission. So they are in a lot of trouble as far as the antitrust investigations go. And it's really diving into the search industry that they have a huge grip on.

I mean, you Google something. Let's look at Google. I mean, it really is the dominant force in search, as well as web browsers because of Chrome, as well as the operating systems that we use on our mobile devices because of Android. In the US, iOS has a majority, but it's slim. But globally, it's Android that has the majority of users.

And then, obviously, the advertising arm of Google. And they basically have soup to nuts the entire industry locked up there outside of Facebook. So there is going to be a lot looked into here.

But with this investigation, it looks like there's kind of a back-and-forth between Attorney General Barr and some of the career attorneys at the DOJ. The career attorneys want to hold off a little and really do a little more investigation, whereas Barr seems to want to rush that. So it seems that he wants to get an investigation going before the November elections.

RICK NEWMAN: Hey Dan, one of the standards for antitrust probes is consumer harm. And normally, we think of exploitative monopolies as companies that just jack up prices and offer crappy service because they can-- because they can get away with it. That's obviously not the case with Google, which is free to users. So what is the argument in terms of the harm that's actually happening here?

DAN HOWLEY: So it's kind of strange to say that it's free, because yes, you do not pay any money. But your data is now increasingly being looked at as a form of currency. And that's never more clear than with Google and Facebook, which make billions on the fact that you post a photo or you searched for a sports team or something along those lines. That's really where the cash comes in.

Now, as far as the overall harm, well, you could say that if Google is favoring its own products in search or in its Google Play Store, then that's hurting consumers because it doesn't give them the option to see what else is out there on the web. So they may be funneling people to certain products or websites that you might not want to go to or you might not have thought would be the best bet for you. So that's kind of the issue there with search.

As far as advertising goes, well, that really comes down to how that's impacting the global advertising industry. We talk about how media has been dramatically impacted. But then other companies as well have been hit that rely on advertising. So I think as far as the consumer harm goes, you can make the argument that the search and the app stores have a problem there. But as far as advertising, you're right. It's harder to make that case as far as consumers go.

ADAM SHAPIRO: Dan, assuming that they do file this antitrust lawsuit, worst-case scenario, what's the outcome for Alphabet? The worst-case scenario-- look, nobody is seeming to think that there will be a breakup of Alphabet or Apple or Facebook or Amazon. Really what it would come down to is kind of an order saying that you have to adjust your business to these practices now and give up this or open up more or allow for a greater amount of competition in the advertising space, in the search space, something along those lines.

So there's no real idea that Google is going to lose Android or search or advertising. That seems to be completely out of the realm of possibility at this point. But there will be some kind of order that ensures that they can't control as much as they control now. And that goes for Apple and Facebook and Amazon as well. There's nobody speaking about breaking them up really, except for politicians, but that's basically just to make points and not to make an actual argument.

RICK NEWMAN: Hey Dan, the Justice Department and Attorney General Barr have got some criticism for this for speeding it up, which maybe they're doing so that Trump can claim going into the election on November 3 that he's cracking down on Google. But if this goes anywhere, I mean, it's going to be months or possibly years, right, before this even makes it to court and then even longer for an outcome.

DAN HOWLEY: Oh, yeah. I mean, look, you can-- you can file the lawsuit all you want, but that doesn't mean it's going to stop any time soon. Look at Microsoft. I mean, they were well into-- not well into, but they went into 2000, 2001 for that lawsuit that they were working on.

And originally, don't forget, Microsoft was forced to break up. But then they appealed and won that appeal. That's why Microsoft is one company still. Now, the result of that was a change in business practices. And that's where we ended up getting companies like Google and Facebook and Amazon.

So really, it did open up more competition when they went ahead with that ruling for Microsoft. But we ended up in the same position now with these different companies that are now behemoths that are being accused of antitrust. So you can imagine that if there is an order, it would end up opening up the world to more competition, perhaps bigger companies down the line.