Source: geek Park
The last time such antitrust litigation appeared in the United States can be traced back to 1998.
The U.S. Department of justice is hitting Google hard.
On October 20, the U.S. Department of Justice filed an antitrust case, accusing Google of maintaining its monopoly position in the field of search engine and online advertising through anti competitive means. This is the most serious accusation against the US government against technology companies in the 21st century.
The charge has been brewing for a long time. As early as 2012, the U.S. Federal Trade Commission (FTC) launched a monopoly investigation on Google, but there was no formal lawsuit. This time, the justice department took over the jurisdiction of the case and reopened the investigation. In August last year, the Justice Department began to prepare for an antitrust lawsuit against Google. A year later, the lawsuit was officially launched.
The lawsuit, filed in the US federal court, said that Google kept its “gatekeeper on the Internet” by keeping its competitors out of the door.
What does Google monopolize?
“Search engine” is the starting point of Google and the cornerstone of all businesses.
In 1996, Larry Page and Sergey Brin, who were still studying at Stanford University, invented a “page ranking algorithm”, which can sort search results by the number of times a page is linked. It is the prototype of Google search engine. It was the embryonic period of the Internet. The concept of search engine was not mainstream. The most popular search service came from Yahoo, which was established only two years ago.
In 1998, Google was founded. Relying on the absolute leading technology, Google quickly became popular and became the search engine provider of Yahoo in 2000. At that time, YAHOO’s core business was portals. In the early twenty-first Century when the Internet bubble burst, they did not realize that search would become the most important button in the future Internet world.
In 2002, Yahoo had a chance to buy Google for $3 billion, but the Yahoo executives at that time did not approve the deal. They still thought that “search” was not important.
As Google’s market share continues to increase, “Google click” has become a synonym for “search”. In 2006, Google surpassed Yahoo to become the most visited website in the world. At the same time, the whole Internet has entered the “search era” from the “portal era”.
In the next four years, Google continued to maintain its momentum, and achieved 90% of its market share. According to StatCounter, in the 10 years since 2010, Google’s market share in search has been around 90%.
But Google’s ambitions are more than that. In 2006, Google bought YouTube at a low price of $1.65 billion. In 2008, Google launched Chrome browser and Android system with open-source kernel, which won the largest market share in their respective fields.
Chrome has taken nearly 70% of the browser market share, consolidating Google’s absolute leading position in search. Android also accounts for about 75% of the world’s smartphones, bringing a steady stream of users to Google services. YouTube has become one of Google’s most important advertising cash cows, covering 2 billion users worldwide, contributing more than $15 billion in revenue to Google every year, and is still growing rapidly at a compound annual growth rate of 35%.
Google gets a lot of users through Android
With the absolute advantages of search business and the market leading position of many products, Google has become the “king of the Internet”. It is these advantages that become the “key crime” that Google is accused of monopoly.
The core logic of the U.S. government’s accusation against Google is: Google obtains huge revenue through advertising business, and then uses the money to pay mobile phone manufacturers, operators and browsers to make Google the default search engine of these platforms, consolidate its leading position and obtain more advertising revenue. Analysts estimate that Google pays Apple $10 billion a year alone, and Google has been the default search engine for safari.
At the same time, Google can also use search engines to deliver traffic to its products, such as youtube, chrome or Google suite, to help them take the lead. At the same time, the synergy between these products has enhanced Google’s ability to build user profiles and “monopolize traffic”, improving the efficiency of the advertising platform and forming more positive feedback among products.
Such a cycle, so that Google in the field of search engine dominance has been constantly strengthened.
Who are Google’s rivals?
The Justice Department is far from the only one that is eyeing Google.
All state judiciaries in the United States are conducting independent monopoly investigations on Google. Eleven state attorneys general have joined the Justice Department’s lawsuit, and more may follow.
The U.S. Department of justice and state judicial agencies are also continuing to investigate Google’s advertising business, examining its monopoly power in the field of digital advertising using products and technology. According to the government, Google has controlled more than 80% of the information retrieval and query channels in the United States, resulting in a lack of competition in the industry, and the price of advertising has risen accordingly.
Google has also been a top target for European antitrust authorities. In the past few years, European regulators have filed three antitrust complaints against Google. They have issued a total of $9 billion in fines for Google’s “manipulating search results to suppress rivals” and “using Android to pre install its own apps”. Google has made some changes since, but this has not had a significant impact on Google’s business model.
Google pays Apple $10 billion a year to become the iPhone’s default search engine, Google
Some competitors have also formed an “army of complaints” against Google.
Yelp, a restaurant review website, and TripAdvisor, a travel information website, are deeply influenced by Google’s business development. They provide information search services for a vertical domain, but more and more users are using Google to search everything directly. Google is also taking advantage of the trend to display a lot of information in search results. For example, when a user searches for a restaurant, the right side of the page will directly display the basic information, map, evaluation and dish pictures of the restaurant. This “one-stop experience” has absorbed a lot of traffic from vertical information websites.
Many news sites are already unhappy with Google. Google’s leading position in the field of search enables it to target search engine users for the most accurate advertising, and thus to take the lead in the web advertising market. Many news sites have little choice but to hang Google’s advertising plug-ins on their own websites. This gives Google a strong bargaining power.
Although the Department of justice’s lawsuit does not address disputes in these segments, it could set a precedent for these small businesses to fight Google. TripAdvisor, commenting on the lawsuit, said it was a “meaningful framework for action,” and the CEO of the Wall Street Journal’s parent company said he was “glad to see the Department of justice make a start.”.
In the face of severe accusations from the government and competitors, Google has no room to retreat.
In a public statement, Google said the Justice Department’s lawsuit was “full of loopholes.” Google said that “people use Google as a result of their own choice, not forced to use or unable to find alternative products.”. As for the allegation that paying apple to become the default search engine, Google said, “it’s like cereal companies paying supermarkets to put their products on more prominent shelves. Google, like countless companies, pays to promote its services. ”
What is the future of Google?
The key to “topple” Google on monopoly lies in redefining the core logic of monopoly.
In 1890, the United States passed the Sherman Antitrust Act, which was used to counter the monopoly of Standard Oil trust company on energy, minerals, agriculture, transportation and other markets. At that time, the key sign and the greatest harm of monopoly in an industry was “price rise”. Because of the lack of competitors, the monopoly trust would have the right to price at will.
But in the Internet industry, this is not the case. Most of Google’s software services are free, and there will be no price rise caused by traditional monopoly, which will harm the interests of consumers. This is one of the key reasons why FTC finally decided to abandon antitrust litigation against Google seven years ago.
In refuting the lawsuit, Google also said that if the monopoly charge is settled, Google will have to raise the price of software and hardware to cope with the change of business structure.
But today, the situation is not quite the same. With the rise of mobile Internet, Google’s Daily website visits expanded to nearly four times of that time, its annual revenue was three times that of that time, and its market value also increased to four times that of that time. As a company with a market value of more than one trillion dollars, Google gradually shows the temperament of “trust”.
What’s more, people are beginning to realize that users of seemingly free Internet products actually pay the price of “data”. More and more enterprises and institutions begin to emphasize the value of data and restrict the access of Internet products to data.
The lawsuit filed by the Ministry of justice has just started, and it is likely to take several years for a result. But the current US attorney general, William Barr, is trying to push the proceedings forward as soon as possible. According to the Wall Street Journal, Barr was interested in investigating the monopoly of technology companies and personally pushed the Google case.
On the other hand, the upcoming presidential election will determine who will “lead” the lawsuit. Biden, the Democratic presidential candidate, declined to comment specifically on the lawsuit, but he still stated his position, saying that the U.S. economy is becoming more and more concentrated, and that this monopoly power is threatening American values of competition, choice and common prosperity.
At the same time, Republicans are also interested in cracking down on technology companies. The 11 state attorneys general involved in the lawsuit are all Republicans. At present, it seems that no matter who is elected president, Google will face a lot of pressure.
In July this year, Sundar Pichai attended a congressional hearing
The lawsuit will also serve as a “weathervane” for the U.S. government to restrict other technology giants.
In the past few years, the U.S. government has launched extensive investigations into technology giants. In July this year, the house of Representatives convened an anti-monopoly hearing on Google, apple, FB and Amazon. If Google’s monopoly charges are confirmed, the other three giants may face similar investigations and charges.
On the contrary, if Google wins the lawsuit, antitrust investigations against other technology giants may be restricted. However, this may stimulate Congress to take new legislative measures against monopoly behavior in the field of science and technology.
At present, the Ministry of justice has not put forward specific punishment measures in the complaint. The penalties that Google may face, from light to heavy, may include fines, forced changes in the way it operates its business, or even forced splitting. A Justice Department official said nothing was impossible.
“If the government does not impose restrictions on Google through antitrust laws, we may not see the next wave of technological innovation,” said the Deputy justice secretary. The US will not spawn the next Google. ”
The last time such antitrust litigation appeared in the United States can be traced back to 1998. At the time, the government was accusing Microsoft.
It was the first attempt by the U.S. government to limit the power of technology giants. In 2002, the government and Microsoft reached a settlement. The latter changed some business development strategies, including opening the toolbar function of IE browser to make it easier for users to use third-party search engines.
At that time, it was Google that accused Microsoft of monopolizing the search function.