Because Google is now under attack from all sides

For most of its 22-year history, the research giant has enjoyed an enviable public reputation as an omnipresent yet benevolent force. Like its parent, Alphabet Inc., it has grown into a trillion-dollar conglomerate – more than five times the size of a decade ago – top executives have stuck to their line that Google’s market dominance is simply because consumers choose to use its products. Chief Executive Sundar Pichai said this year: “I’m really focused on giving users what they want.”

Antitrust lawsuits – by federal prosecutors and a separate coalition of 10 states – denounce nefarious activities. They say that Google, through secret, interconnected deals with other tech giants including Apple Inc. and Facebook Inc., knocks out competitors and sells the very users it claims to protect. “Google’s happy days of youth are a distant memory,” says the state cause, led by Texas. “His modus operandi is to monopolize and misrepresent”.

Here’s a look at the duel narratives.

Why are there more lawsuits in the first place?

Federal and state prosecutors have undertaken separate and overlapping investigations over the course of about a year and a half. The federal lawsuit, filed in October, focused on Google’s flagship search business, which accounts for the vast majority of US queries. The government said that the de facto status quo left no room for competition.

The state attorneys general, all Republicans, have chosen to target Google’s digital advertising. Their lawsuit reflected years of complaints from publishers and other advertisers complaining that Google’s system was opaque at best.

Another group of state attorneys general is expected to file a third lawsuit against Google as soon as Thursday.

How does Google make so much money?

Alphabet, its parent company, made $ 34 billion in profits last year, an increase of nearly 12% from the previous year. Almost all of this comes from digital advertising, both on Google-owned platforms like YouTube and on external sites. Google sucks in about one in three dollars spent on digital advertising and generated nearly $ 135 billion in total advertising revenue in 2019.

State Attorneys General say Google doesn’t just profit from traffic. They’ve established a complicated series of deals that give the company a cut in every aspect of ad buying. In one case, the lawsuit states: “Google was able to request that it represent the purchasing side, where it extracted a commission, as well as the sales side, where it extracted a second commission, and was also able to force clear transactions in his exchange, where he extracted a third, even larger, fee. “

The lawsuit also alleges that Google colluded with Facebook in a deal in which the social media giant would cut back on its competitive moves in exchange for guaranteed special treatment in Google-run advertising auctions.

In a blog post in response to competition concerns, Google said it operates “in many highly competitive industries where prices are free or falling and products are constantly improving.”

Google did not respond in detail to the state lawsuit, although it called the claims without merit. A Google spokesperson said, “We have invested in cutting-edge advertising technology services that help businesses and benefit consumers.” Facebook did not comment.

Why should most people care?

It’s not just advertisers who are hurt, prosecutors say. The state attorneys general write that Google’s dominance is essentially a tax on American businesses, borne by consumers through higher prices on the goods and services those companies sell. “Google’s internal documents disprove the public image of Google’s ingenious engineers having fun on their sunny Mountain View campus while trying to make the world a better place,” says the state lawsuit.

The state lawsuit identified new potential victims: creators of popular and viral YouTube content. Because Google restricts YouTube advertisers from using certain business tools to purchase video advertising, the lawsuit claims, Google has limited potential advertisers from supply and thus reduced demand and revenue for content creators, who earn a portion of the advertisements sold.

A YouTube spokesperson declined to comment.

What role does Google’s technology play in displaying ads on the web?

In automated online advertising, there is a chain of intermediaries between businesses looking to buy ads and websites, such as news sites or blogs, that are selling their ad space. Google owns the dominant product in every link in that chain. The company has become a major player in this industry following its 2010 acquisition of advertising technology firm DoubleClick and has expanded over time.

Now, Google’s tool that allows publishers to offer ad space for sale has a market share of more than 90%, according to UK competition officials, while its product that serves ads on behalf of advertisers has a higher market share. at 80% and its exchange, where auctions between buyers and sellers take place in a split second – has a market share of more than 50%.

Google claims in its blog post that online ad space is “notoriously crowded” with competitors.

What about all the data that Google collects about users?

Mr. Pichai, the CEO of Google, rarely speaks in public, but when he does, it’s often about privacy. He is quick to point out that Google offers so-called incognito mode in many of its products, and that users can turn on or off some of the company’s data storage practices. “We firmly believe that privacy and security are for everyone, not just the few,” Mr. Pichai said at a corporate event last year.

The state cause presents a radically different view. “Google’s entire business model is to collect comprehensive data on every user at the targeted ad sales brokerage service,” the lawsuit says.

The lawsuit has a weak view of an advertised attempt by Google to delete third party cookies or data trackers. In announcing the move, Google described it as an effort to build a “reliable and sustainable Web together.” State lawyers wrote: “The planned deletion of third-party cookies from Google’s dominant browser, Chrome, is also justified for privacy reasons, but the effect is to increase information asymmetries between Google and its competitors.”

In its October lawsuit, what did the DOJ lawsuit claim about Google’s dominance in search?

The Justice Department argues that Google illegally maintains its monopoly in search through exclusionary agreements with distributors such as cell phone makers, wireless operators and web browsers to make Google their default search engine. As a result of these deals, which require Google to pay out billions of dollars to distributors every year, Google owns or controls the search distribution channels that account for about 80% of general search queries in the U, according to the government complaint. .

These agreements therefore prevent competitors from being able to gain any kind of meaningful foothold, the government argues.

Google’s chief legal officer said in a statement that the lawsuit was flawed and that consumers are using Google because they have chosen to do so, not because they are forced to or have no alternative.

This story was published by a branch agency with no text changes

Subscribe to Mint newsletter

* Please enter a valid email

* Thank you for signing up to our newsletter.

Source