Google Abuses Its Monopoly Power Over Search, Justice Department Says In Lawsuit

Updated at 3:24 p.m. ET

The Justice Department filed an antitrust lawsuit Tuesday against Google alleging the company of abusing its dominance over smaller rivals by operating like an illegal monopoly. The action represents the federal government's most significant legal action in more than two decades to confront a technology giant's power.

Justice Department lawyers accuse Google of harnessing its internet gatekeeper role to enrich the company's vast business empire, stifling competitors and hurting consumers through exclusionary agreements, including deals such as the one it struck with Apple making Google the default search engine on the Safari browser on iPhones.

Justice Department officials said Google spending profits made from its powerful position to buy special treatment for its search engine on devices and Web browsers created a "self-reinforcing cycle" of monopoly power abuse.

"If the government does not enforce the antitrust laws to enable competition, we could lose the next wave of innovation. If that happens, Americans may never get to see the next Google," Deputy Attorney General Jeffrey Rosen said at a Tuesday press conference.

"The Google of today is a monopoly gatekeeper for the internet," the complaint says. "For many years, Google has used anticompetitive tactics to maintain and extend its monopolies in the markets for general search services, search advertising, and general search text advertising — the cornerstones of its empire."

In the suit, Justice Department lawyers ask a federal court to stop Google from maintaining its fierce grip over Internet search and search advertising. The government is asking a federal judge to provide structural relief "as needed" to resolve the alleged anticompetitive behavior.

While the complaint does not specify what remedy the suit is seeking, Justice officials said "nothing is off the table."

Gene Kimmelman, a former senior antitrust official at the Justice Department, said, if successful, the suit could lead to the breakup of parts of Google's business, such as spinning off the Google Chrome business and Google's Android phone line into separate enterprises.

"Those kind of splitting off of assets to enable competitors to grow and challenge the dominant search provider, Google, are things you could imagine the government asking for," Kimmelman said.

Eleven Republican-led states joined the lawsuit, which was filed in U.S. District Court for the District of Columbia. New York Attorney General Letitia James, a Democrat, said she and other state attorneys general are expected to wrap up their investigation of Google soon and they may ask to join the Justice Department suit.

"Absent a court order, Google will continue executing its anticompetitive strategy, crippling the competitive process, reducing consumer choice, and stifling innovation," Justice Department lawyers wrote.

In a statement, Google called the lawsuit "deeply flawed."

"People use Google because they choose to, not because they're forced to, or because they can't find alternatives," the company said. "This lawsuit would do nothing to help consumers. To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use."

Kimmelman said the suit may usher in a new wave of legal and regulatory troubles for Big Tech.

"I do think it is the beginning of the new era in policy. It's the end of hands-off of the tech sector. It's probably the beginning of a decade of a series of lawsuits against companies like Google," he said.

The lawsuit sets up a high-stakes showdown between the Trump administration and Google two weeks before the presidential election, raising questions about the suit's timing.

President Trump has promised to hold Big Tech accountable, repeatedly accusing tech companies of being biased against conservatives despite the notion not being supported by evidence.

Attorney General William Barr, who took over the Google case after the head of the department's antitrust division recused himself over a conflict of interest, called it "a monumental case" for American consumers.

Barr said in a statement that Google has leaned into its monopoly power so much that "no one can feasibly challenge Google's dominance in search and search advertising."

The lawsuit also sets up the biggest battle over the power of a dominant technology company since the government sued Microsoft in 1998 for using its heft to squash competition.

More than 80% of online searches in the U.S. happen on Google, according to the complaint. On mobile devices, it controls about 95% of searches, Justice Department officials said.

On top of search, Google's Chrome is the most popular web browser in the world. Google also owns hugely popular video site YouTube. Online advertising is highly concentrating in Google, which along with Facebook commands what some call an "ad duopoly," elbowing out tech competitors and publishers for coveted advertising dollars.

That dominance has enabled Google to build a massive advertising business that generates nearly all of its $160 billion in yearly sales. Google captures almost 30% of U.S. digital ad dollars, according to research group eMarketer, ahead of Facebook and Amazon.

Critics say Google has created a stranglehold in search that allows it to show more ads and keep people locked into its properties, such as YouTube and Maps. They say it has done that by striking deals to become the default search engine in many browsers and devices, favoring its own content and websites over those of its competitors in search results and building up a deep trove of data on users and rivals.

Another rival, Yelp, the local search and review site, applauded the Justice Department's Tuesday action.

"By systematically reducing the quality of its search results in order to entrench and extend its search and search advertising monopolies, Google is directly harming consumers," Yelp said in a statement.

In a lengthy report released by House Democrats this month on the unchecked power of Big Tech, lawmakers wrote of Google that "no alternative search engine serves as a substitute."

"Google increasingly functions as an ecosystem of interlocking monopolies," the report said, because of the company's ability to tie together its search and ads business with the data it collects.

Google has long said it plays fairly and that its products — which are free to consumers — promote choice and competition.

The Justice Department and attorneys general from 50 states and territories have been investigating Google for more than a year, with probes focusing on its search and advertising businesses. It comes amid broader scrutiny of the power of Big Tech, which includes separate investigations into Facebook, Amazon and Apple.

Google has weathered challenges before, including a Federal Trade Commission investigation into its search business that ended in 2013 without finding any wrongdoing. The company has been fined more than $9 billion in the past few years by competition regulators in Europe.

Kimmelman said the FTC declining to sue Google seven years ago does not mean the tech behemoth was fully exonerated in the eyes of regulators.

"What may have looked more like a scrappy, small company trying to make it may look different after years of dominating across search and nobody else entering the market," he said. "The facts are more clear-cut now than they were seven years ago."

Editor's note: Google is among NPR's financial supporters.