On October 20 local time, the U.S. Department of justice launched an antitrust lawsuit against Google. It is also the largest anti monopoly case in more than 20 years.
According to CNNs report on the same day, the US Department of justice is expected to make a wide range of charges in the case, saying that Google has strangled market competition in order to maintain its strong monopoly position in the field of online search.
Neither the Justice Department nor Google immediately responded to requests for comment.
The U.S. Department of justice has been conducting an antitrust investigation into Google for a year. On July 29, the U.S. Congress held an antitrust hearing, and CEOs of four major technology companies attended as witnesses.
At the hearing, Democrat David cicilline, chairman of the house of Representatives antitrust Committee, accused Google of abusing its position as a web portal, saying that Google has changed from a revolving door with internet access into a garden surrounded by walls.. He cites an internal memo showing how Google employees are discussing how other sites have so much traffic..
Google CEO sandar pichay responded that he was not familiar with the document, but said there was competition for online search elements, such as searching for specific items on some travel or retail sites, or vertical search.. When we look at vertical search, it validates what we call competition, said Mr. picchay
In addition to Google, the report also accused Amazon of unfair treatment of third-party sellers on the platform, that Apples App Store fees and policies were anti competitive, and Facebook tried to eliminate future competitors through targeted mergers and acquisitions.
According to people familiar with the matter, the U.S. Department of justice and multi state attorneys general are investigating whether Google has implemented the so-called tie-in strategy, in which different products are bundled for sale, which can help it crowd out competitors and give itself an unfair advantage.
In recent months, U.S. investigators have asked executives of rival companies about the pricing and operations of Googles network. This business sells services that can handle almost every aspect of digital advertising, from brand creativity to content displayed on consumer screens.
The focus of the inquiry was on the discounts, special features and other terms offered by Google, which pushed advertisers and publishers to use only Googles products, rather than mix and match their competitors services. Regulators are also asking how Googles larger online search business interacts with the web sector to increase its share of the digital advertising market, people familiar with the matter said.
Tie in strategy makes the sale of one product conditional on the purchase of another product. Gene Kimmelman, a senior adviser to the public knowledge think-tank and a former chief legal adviser to the Department of justices antitrust division, said the practice is usually not illegal, but if it is used to consolidate a dominant market position, it could be against the law.
If these tools are used to maintain monopolies, prevent new players from entering, and crowd out competitors, then they may be antitrust, Kimmelman said
U.S. regulators will file antitrust lawsuits against Google in the coming weeks, possibly the largest antitrust case since the U.S. government sued Microsoft in 1998. The Microsoft case initially focused on the concept of tie-in, that is, how Microsoft uses its dominant windows operating system to promote customers to use the companys other products and crowd out alternatives.
Now, investigators are asking similar questions about Google. They recently interviewed executives of Googles competitors in July, and the inquiries became more detailed. According to people familiar with the matter, some interviewees even used whiteboards to outline the complex structure of the advertising technology market and Googles operations.
Googles Web division generated more than $21 billion in revenue last year, but it grew slower than the rest of the company. Google has often framed the business as an assistant to web publishers that rely on digital advertising. But critics say Google owns and takes advantage of the market so much that advertisers and publishers are forced to use more of its products.
The problem is that Google controls all these links, which sounds a bit like the stock market, except that Googles advertising market is not regulated, pramila jayapal, a democratic representative in Washington, said at a July 29 congressional antitrust hearing
According to people familiar with the matter, government investigators asked how Google would exempt publishers from using its sellers tools if publishers chose to auction their advertising space in the Google ad market. Regulators also asked about Googles decision in 2015 to limit advertising purchases on its dominant YouTube video service to its own auction tool dv360.
Other advertising technology companies said Googles move cut them off from their inventory of important digital video ads. But Google says other social media sites operate in the same way, and competing ad buying services, such as Amazons, are growing without visiting YouTube.
The budget for search advertising marketing is so large that the extra money spilled over to Googles display ads sometimes accounts for about 10% of the revenue of online publishers, so most publishers have to pay to enter Googles advertising market. Google is where you have to go, theres no better choice, said Kim Melman
A Google spokesman said web publishers could get the extra ad spending through other exchanges, but declined to say how much of those ads were sold outside Googles platform.
Neal Mohan, who once led Googles advertising technology services, said the company was creating its own bidding service. Once Google has a portfolio of bidding, buying and selling tools, it will eventually significantly increase Googles spending, Mohan said.
For many critics, the bigger concern is how Google passes information between its different departments in ways that other industries prohibit. Regulators are considering remedial measures, possibly including separating Googles ad server from other businesses, which, after all, plays a key role in advertising selection and pricing. (small)
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