The Article talks about The Department of Justice's antitrust lawsuit against Google which is a landmark case questioning the tech giant's alleged monopolistic practices in the search advertising market. At its core, the case examines whether Google’s dominance is a result of superior products or unfair business strategies, with profound implications for both global and Indian markets. The final verdict could reshape the future of digital competition, influencing how new technologies develop and ensuring a more equitable online environment for consumers and businesses alike.
This article is written by Nandika Aggarwal a 2nd Year Student of Dr. Ram Manohar Lohiya National Law University, Lucknow
Introduction
Dubbed as ‘the biggest tech antitrust trial in decades’ by Forbes, the Department of Justice v. Google, antitrust lawsuit heard last arguments on 3rd May 2024, the final decision scheduled to be given by J. Amit Mehta in late 2024. The Department of Justice’s main contention against Google was that by formulating contracts with manufacturers like Apple and Samsung, Google has made itself the default search engine, forcing an illegal monopoly in the search advertising market. Google’s main counterargument was quite simple- It offers the superior product. If the users want to change the browser, it’s merely a few clicks of work. But the real question is, as pointedly asked by J. Mehta- “How many people actually do make the switch?” The answer to which, Google predictably could not give. NBC has aptly described the core issue here: Is Google really that good, or has it used its size and power to create an unfair playing field?
Google’s Monopoly- How does it work?
The first thing that has to be taken into account is the consumer base of Google. Google’s consumers majorly fall into two categories- First are the internet users and second are the advertisers. Reportedly, Google makes more than 80% of its revenue from the latter category. When we, the consumers use Google services, we allow Google to collect our data and profile our preferences. Thus collected user information is then sold by Google to the advertisers, facilitating targeted advertising. In today’s age of technology and usage of Big Data, this unique position of Google has made it an almost natural monopoly.
Google, unlike its early days is not just a search engine. Today, Google offers a myriad of other services including- YouTube, Gmail, Google Docs, Google Maps, Google Pay, Google Play Store and plenty more. All of which have integrated profile access. By these services Google has an unmatched and frightening amount of access to user information and thus tracks user behavior for personalized advertising. This creates a self-strengthening cycle for the company which circles in three phases-
1.Exclusive contracts with core manufacturing companies
One of the main contentions against Google, as stated above is the series of its exclusive contracts with manufacturing companies, making Google their default web browser. The Justice Department alleges that, Google spends a whopping amount of $10 billion to secure such contracts. This has led to it capturing approximately 90% market share of the US market and as high as 98% in the Indian Market. In India the word Google itself is synonymous with web searching. This extensive market share leads to the second phase of the cycle-
2. Immense collection of personal data and user behavior
Whenever we use any service on the internet we give up the most important asset in today’s world of advertising- our preferences. We give up what we like, our budgetary restrictions, our cravings and desires on the internet without hesitation. Google then uses this information to create an algorithm that caters to exactly what we want. This information is what advertisers need. Which results in the third phase of the cycle-
3. Google’s absurdly high revenue from advertisers
The primary product sold in search advertising is the little text ads that display next to search page results, on Gmail pages, and on numerous other Google and related websites all across the Internet. The more information an advertising platform has on its users, the more specialized, a slice of the internet population it can give to the advertiser. Advertisers may then target various audiences with different adverts, including different specials and pricing.
In search advertising the advertisers do not pay anything for the mere listing of ads, instead they pay when a user actually clicks on the ad, by a rate called- cost-per-click (CPC). Interestingly, according to an advertising analyst, Google charges 4 to 5 times higher rate than even larger companies like Bing. This is obviously because- with its overwhelming market share and personal data, Google gets significantly more clicks than any other platform. A clear testament to this is the fact that Google is the only company making any profits in the search advertising sector.
Google makes colossal amounts of money- $147 billion in 2020 alone as per CNBC by online advertising. And because of this it is able to then pay huge amounts of money, to establish itself as the default browser which in turns leads to increased data collection, resulting in Google earning even more money- the perfect self-reinforcing cycle. Entry of new companies with the search industry in such a situation is nigh impossible.
This is elucidated perfectly by Mr. Rosenberg, a Google executive in a rather unguarded statement- “We get more users because we have more advertisers because we can buy distribution on sites that understand that our search engine monetizes better. So more users more information, more information more users, more advertisers more users, it's a beautiful thing, lather, rinse, repeat, that's what I do for a 105 living. So that's ... the engine that can't be stopped.”
Yes, Google has a monopoly: but how does it affect us?
This is perhaps the most important aspect of this whole issue, how does Google harms the consumers, if at all? That’s one the popular rhetoric of the issue, that Google, a free service does no harm to its consumer. This idea is wrong majorly for two reasons-
1.As opposed to common belief, Google services are not in fact ‘FREE’
Google is definitely not giving us such services for free, as would be expected by a business. We use these services in exchange for providing them with our personal information, which, as expanded upon above, is then shared with third parties for market advertising. What’s harmful here is that consumers are most often unaware of the value of their information and in a stunted search engine market, (owing to Google’s monopoly) there aren’t any viable alternatives who do value user privacy. Which basically means that users sell their data for far too little, and Google makes massive profits off of that ignorance.
2. It fails to take into account the effect of Google’s alarming efficiency in search advertising- on both the advertisers and us
Advertisers also suffer the burn of Google’s monopoly. They pay prices much higher than the costs borne by Google in acquiring the data, as evident by Google’s incredible profits. Three separate studies have shown that at least 50% of every dollar spent in digital channels now goes to middlemen like Google, instead of publishers showing the ads. Most large businesses and publications today believe it's either extremely difficult or almost impossible to acquire or sell internet advertising without utilizing Google's products.
For the common users, the most obvious harm would be that the higher prices charged on the advertisers will inevitably get passed onto them, increasing general price of the product. The more threatening consequence however is – Price discrimination. Offering only full-price offers to some online buyers while selectively offering discounts to others based on online profiling is one of the most pervasive forms of price discrimination operating in online sales. This hidden Price Discrimination only adds to the shifting of power in overall online bargaining to sellers. Therefore, the extensive personal data that Google collects enables them to exploit consumers who inevitably have imperfect market information.
Department of Justice vs. Google- Only the Tip of the Iceberg?
This US lawsuit is not nearly the end of legal troubles for Google. Currently, Google has about a 100 antitrust cases against going and pending, spanning across 23 jurisdictions. Particularly, for cases on Google’s monopoly as a search engine, Google’s actions have already been condemned by the EU, South Korea, Indian, Turkey and Russia.
EU vs. Google- The long going tussle between Google and the European Union
Since the 2010s, EU has lodged lawsuits against Google multiple times, and three of its complaints have resulted in formal charges against the company. These include charges against Google’s search bias, promoting its own products; against Google’s practice of incentivizing smart phone manufacturers to preinstall Google services; and against Google Adsense, which required users to exclude Google’s competitors. In all these lawsuits, EU fined Google over 8 billion euros.
Google v. Competition Commission of India
In 2022, the Competition Commission of India delivered a very important order against Google’ condemning its monopolistic activities of restricting access of other search engines by pre-installation contracts, naming it ‘digital feudalism’. CCI imposed a huge fine of INR 1337.76 crores, which was later upheld even after Google’s appeals in both the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court.
In the US as well, Google is facing three major antitrust lawsuits- The Search Case, The Ad-Tech case and the Play Store case. The search case, i.e. DOJ v. Google strikes at the heart of Google’s commercial operations- its advertising activities, questioning the Google’ search engine monopoly in the market, under the Sherman Antitrust Act 1890.
If DOJ does win, What happens next?
The final decision, if given against Google, will have some serious commercial consequences for the corporation. The United States and its state allies are seeking an injunction to prevent Google from engaging in the alleged anticompetitive actions. The court could also decide to break up the corporation. The verdict will effectively establish the rules governing tech competition for the next decade, including the battle over commercialized artificial intelligence, as well as newer technologies we cannot yet envision.
For India, this case holds significant implications. A ruling against Google could strengthen the resolve of Indian regulatory bodies like the Competition Commission of India (CCI) to take more assertive actions against monopolistic practices, thereby fostering a more competitive and equitable digital market. This could ultimately benefit Indian consumers by ensuring greater choice, better privacy protections, and fairer pricing.
Conclusion
It's not possible to know what a judgment against Google would make room for. Technology advancement follows a highly unpredictable course. The story of Google’s own creation proves that, as Google itself grew in the aftermath of the famous Microsoft Internet Explorer Antitrust lawsuit that broke Microsoft’s monopoly and allowed the growth of new companies. The goal of the prosecution is not to harm Google but to make way for the aspirations of the next generation of technologists. An apt judgment at this stage will open the online market to new innovations and competition based on better serving user privacy and consumer economic interests.
Very informative 👏🏻