In a fight the likes of which we have not seen since the battle between Microsoft and the DoJ that ended around 20 years ago, the Justice Department sued Google this week, accusing it of using its market dominance to hobble its rivals.
Just to be clear from the beginning, I am not a huge fan of Google’s actions and I think its motto of do no evil is probably a bit tarnished at best.
Like the Microsoft case, which distracted the company for close to a decade, this fight is likely to go on for a long time. And be at least equally distracting.
The downside for Google, which is likely pretty clear to them, is that the government can literally print money to fight this battle and Google has to use its investor’s cash for their defense. Also, the government probably doesn’t care much if the case takes a decade to resolve. Google, on the other hand, probably does not want to be burdened by a decade of litigation by a legal team that has unlimited resources.
What we don’t know is what might happen if there is a change in teams in Washington in January. It may not make any difference.
The DoJ and the Attorneys General of 11 states say that Google used its monopoly power to crush competitors in the search and search advertising business.
While Facebook does have a very thriving advertising business, most other competitors have withered.
And, when it comes to search, Google has become a verb, as in “go Google it”. That cannot be a factor in their favor.
The Government says that Google has 90% of all general search engine traffic in the U.S. and 95% of all mobile search.
When asked if DoJ wants to break up Google, the attorneys said that they will leave that up to the court. Fat chance; it is just that this is not the time to show your hand.
Justice says that Americans have been hurt by having less choice, less innovation and less competitive pricing.
Not surprisingly, Google said nah!, that’s not true. What else might they say?
There is some truth to the suggestion that Google or Alphabet, Google’s parent, is incredibly intertwined with hundreds of entities and would be ridiculously hard to unwind. A few hundred billion dollars in cash (to fund competitors) as a penalty is a possible alternative.
Given that this was done a couple of weeks before a Presidential election, it could be seen as a political move and probably Bill Barr did push for the filing to occur before the election since Trump has, on many occasions, threatened to crack down on tech companies that he sees as his enemies. Still, it is HIGHLY unlikely that DoJ filed this lawsuit if it didn’t think it had a reasonable chance of getting something out of it.
The 11 AGs that joined the suit are all Republicans. That doesn’t mean that the Democratic AGs love Google. It may mean that they want to file their own competing lawsuit. All this is great news for law firms. There will be hundreds of thousands of billable hours. Credit: Reuters