Google Search Monopoly
Context: The United States Department of Justice (DoJ) has sued Google alleging that the company had abused its dominant position in a way that had harmed its competitors as well as customers.
What is the lawsuit about?
Google has maintained its monopoly power through exclusionary practices that harm competition. So the Justice Department has determined that an antitrust response is necessary to benefit consumers.
Antitrust refers to a group of businesses that team up or form a monopoly in order to dictate pricing in a particular market.
Antitrust laws exist to promote competition among sellers, limit monopolies, and give consumers more options.
What led to the lawsuit?
A US House of Representatives panel had submitted the report of a bipartisan investigation into the working of Amazon, Apple, Google and Facebook.
The probe had started in July 2019.
These companies have been on the radar of governments in many countries for being big spenders and trying to steamroll competition by either buying out their rivals or pushing vendors to avoid working with these rivals.
The panel said each of these companies was now acting as a “gatekeeper” over a key channel of distribution, which meant that they had full control over what went on in their respective domains
The report called for the big technology companies to be broken up and for a “presumptive prohibition against future mergers and acquisitions by the dominant platform”.
Why is the lawsuit important?
The lawsuit marks the first time there has been a bipartisan effort — involving both the Democratic and the Republican parties — to look into the monopolistic powers of Google.
What is the Challenge for Google?
Although the lawsuit by a US Federal body is the first of its kind, it is unlikely that there will be any swift action on the company in the near term
The challenge for Google would be continued scrutiny into its biggest revenue generating segment, which is advertising gained from its search engine and affiliate websites.
In the April-June quarter, the company had earned nearly $38 billion, mainly from advertisements.
Apart from increased federal scrutiny, big tech companies are also likely to face more questions and probes from states in the US
What are the allegations that Google faces in India?
Over the last three years, Google has had multiple run-ins with the CCI (Competition Commission of India) for alleged abuse of its dominant position in the market.
In 2019, CCI had held Google guilty of misuse of its dominant position in the mobile Android market and said the company had imposed “unfair conditions” on device manufacturers to prevent them from using other operating systems.
In February 2018, the CCI had fined Google Rs 136 crore for unfair business practices in the online search market. It said that Google had “allocated disproportionate real estate” for its affiliates, to the disadvantage of other companies that were trying to gain market access.
Google has challenged the CCI findings in forums such as the National Company Law Appellate Tribunal and the Supreme Court.
What lies ahead for Google?
Google may argue before the courts that it is being singled out from amongst the other companies, or try to explain why it does not really abuse its dominance in any market segments.
In coming years, as India plans to regulate the use of personal and non-personal data, these tech companies could face scrutiny over how they manage and use the data they collect from users in India
Amazon and Facebook, which are trying to enter the retail space in India, are also likely to be under the lens for the way they price their products and the space they give/deny to their competition