Business / Tech

U.S. Justice Department preparing antitrust probe of Google

AP, Bloomberg

The U.S. Justice Department is readying an investigation of Google’s business practices and whether they violate antitrust law — the Trump administration’s first major step to scrutinize the potentially anti-competitive conduct of a giant technology firm.

The search giant was fined a record $2.72 billion by European regulators in 2017 for abusing its dominance of the online search market. In the U.S., the Federal Trade Commission made an antitrust investigation of Google but closed it in 2013 without taking action.

Now the Justice Department has undertaken an antitrust probe of the company’s search and other businesses.

Google, owned by Alphabet Inc., has faced mounting scrutiny as regulators around the world have focused on tech companies’ business practices over the past year.

In addition to the 2017 record fine, European regulators also slapped a $1.7 billion penalty on the company in March for barring websites from selling ads from rivals alongside some Google-served ads near search results.

Google says it has now ended that practice.

The company made changes voluntarily when the FTC shut down its investigation, including letting advertisers use information from their Google ad campaigns to create campaigns with rivals.

But an FTC staff report that was released years later showed that the agency staff had urged the presidentially appointed commissioners to bring a lawsuit against Google. That never happened.

The Justice Department inquiry would be run by Makan Delrahim, the head of the antitrust division.

In a speech delivered earlier this year at a technology conference, Delrahim cheered the success of large technology platforms. Without mentioning Google, he said the companies have grown because of “innovative and disruptive services.”

“In my view, it’s no accident, and a point of pride, that a majority of these leading platforms are American companies,” he said at the time.

American antitrust officials are under increasing pressure from both Democratic and Republican lawmakers and advocates of tougher enforcement to step up scrutiny of technology giants.

The federal government’s hands-off approach may be changing amid continuing criticism that lax enforcement in the U.S. has allowed tech platforms to dominate their markets.

The FTC earlier this year set up a task force to examine the conduct of tech companies and their past mergers. President Donald Trump and many Republicans have complained that Facebook, Google and Twitter suppress conservative views.

Last year, then-Attorney General Jeff Sessions met with state officials about technology companies.

His replacement, William Barr, said at his Senate confirmation hearing that he wanted to learn more about how “huge behemoths” in Silicon Valley “have taken shape under the nose of the antitrust enforcers.”

Google commands the lead in revenue for digital advertising by a wide margin, controlling 31.1 percent of global digital ad dollars, according to eMarketer’s estimates this year.

Facebook is a distant second with 20.2 percent.

Politicians and outside antitrust analysts have expressed concern in recent years that Google controls too much of the digital ad process.

It makes the technology, hosts the largest search site where ads appear and collects data from all ad campaigns that it runs. Its middleman role has long been a source of complaint for publishers, including News Corp., which publishes the Wall Street Journal and other newspapers.

Oracle Corp., which competes with Google in the digital advertising market, has also called on American enforcers to examine Google’s conduct.

“Google is very clearly dominant in that market,’ Ken Glueck, an executive vice president at Oracle, said in an interview in April. “There is conduct that is exclusionary in the market and there are harms in that market.”

Another longtime foe is Yelp Inc., which says Google unfairly promotes its own products, such as business listings, over other companies’ services.

Google, known universally for its search engine, also has fingers in a number of other pies, like online advertising, email messaging and video. That gives U.S. antitrust enforcers lots to look at.

Governments around the world are becoming increasingly unnerved by the power amassed by major technology companies — with the dominance of Google in search, Facebook in social networking and Amazon in e-commerce raising the sharpest concerns.

In the most dramatic scenario, a case might be made for breaking the companies into smaller pieces.

Here are some possible areas U.S. antitrust cops might poke into:

Ads

Google commands the lead in digital ad revenue by a wide margin. But the latest penalty from European regulators isn’t likely to have much effect on the firm’s business. The amount is just a fraction of the $31 billion in profit that its parent conglomerate made last year.

Search results

Google’s search engine handles 2 out of every 3 queries in the United States. European regulators have found that Google manipulated its search engine to gain an unfair advantage over other online shopping sites in the lucrative e-commerce market, fining the company nearly $2.8 billion. Google disputes those findings and is still appealing that 2017 decision.

The FTC staff report released after the agency’s investigation showed that the staff legal recommendations rejected by the commissioners involved allegations of Google tinkering with its search results in a way that stifled competition.

Lawmakers from both parties appear determined to examine whether Google rigs its search results to also promote its own political agenda.

Android

Another huge antitrust fine from the European overseers, $5 billion, came against Google in July 2018 for a finding that it abused the dominance of its Android operating system by forcing handset and tablet makers to install Google apps, reducing consumer choice.

The company appealed the ruling and also made changes to avoid additional fines.

It started this spring giving European Union smartphone users a choice of browsers and search apps on Android.

Following an Android update, users will be shown two new screens giving them the new options.

Android users who open the Google Play store after the update will be given the option to install as many as five search apps and five browsers. Apps are included based on their popularity and are shown in random order.

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