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Google whacked with another anti-trust suit as lawyers gear up for a litigious 2021

Peter Griffin, Contributor. 18 December 2020, 9:04 am

Ten US states have launched a lawsuit against Google alleging its online advertising practices are anti-competitive and give it an unbreakable hold on the digital ad market.

Texas attorney general Ken Paxton is leading the lawsuit on behalf of his state and Arkansas, Indiana, Kentucky, Missouri, Mississippi, South Dakota, North Dakota, Utah and Idaho, all states with Republican prosecutors.

The states are seeking financial compensation, penalties, injunctions against Google's operations and, once again, "structural relief", suggesting a separation of parts of Google's business is seen as necessary.

The lawsuit follows a similar theme to the Department of Justice action launched in October, in that it paints a picture of Google as a competition-crushing behemoth. But whereas the DoJ case lasered in on Google's practice of paying billions of dollars to smartphone and web browser makers to ensure its apps and search engine get prominent position on their devices, the coalition of states goes right for Google's jugular.

Don't be evil? Yeah right, say attorneys general

"Google uses its powerful position on every side of the online display markets to unlawfully exclude competition. It also boldly claims that 'we'll never sell your personal information to anyone,' but its entire business model is targeted advertising-the purchase and sale of advertisements targeted to individual users based on their personal information," the lawsuit reads.

"From its earliest days, Google's carefully curated public reputation of 'don't be evil' has enabled it to act with wide latitude. That latitude is enhanced by the extreme opacity and complexity of digital advertising markets, which are at least as complex as the most sophisticated financial markets in the world.

The trouble really began, the suit alleges, in 2008 when Google acquired ad display platform DoubleClick and integrated it into its own advertising business. That gave Google the scale, reach and technology to dig its teeth into the digital ad market. But the suit alleges that Google then went further, rigging ad exchange bidding processes in its favour.

The suit also alleges a cosy and unlawful duopoly arrangement emerged between Google and Facebook, where the two conspired to manipulate online auctions and Google agreed not to go head to head with Facebook if it stayed out of areas of business it prioritised.

Google has reacted defiantly to the lawsuit:

"We've invested in state-of-the-art ad tech services that help businesses and benefit consumers. Digital ad prices have fallen over the last decade. Ad tech fees are falling too. Google's ad tech fees are lower than the industry average," a company spokesperson said.

What does it all mean?

The stakes are high for Google, which generates 80 per cent of its revenue from advertising. 

But Google is gearing up to fight this lawsuit and the DoJ's one too. Facebook is also readying its own legal defence against a Federal Trade Commission lawsuit filed last week that alleges its acquisitions of Instagram and Whatsapp gave it an unassailable lead in social media.

The legal teams of the two Big Tech companies will also be busy on the other side of the Atlantic, with the European Union proposing new legal bills this week which would give regulators new powers to police illegal content and anticompetitive behaviour on online platforms.

The proposals include multi-billion dollar fines for lack of compliance and while individual tech companies are not named, it is clear that the proposed laws are aimed squarely at the likes of Google, Facebook, Amazon and Apple.

The UK, mired in efforts to complete its exit from the European Union and struggling to contain Covid-19, has said it will separately pursue similar new rules.

It all means that 2021 will be a record year for activity in competition law with the outcome of these legal actions having consequences for anyone who uses the internet anywhere in the world.


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