US poised to sue Google Tuesday in landmark antitrust case

The complaint is the first phase of what’s shaping up as a multi-pronged attack against Google. (Image: Bloomberg)

The US Justice Department is poised to sue Alphabet Inc’s Google Tuesday for allegedly violating antitrust laws by abusing its power as the world’s largest search engine, according to two people familiar with the matter.

The lawsuit, the most significant monopoly case to be filed in the US in decades, will accuse Google of squashing competition to protect its dominance over internet search, where it controls about 90 per cent of the market in the US.

The complaint is the first phase of what’s shaping up as a multi-pronged attack against Google. Texas Attorney General Ken Paxton is preparing a complaint against the company over its conduct in the digital-advertising market, where it controls much of the technology used by advertisers and publishers to buy and sell display ads across the web.

Google shares fell on the news in pre-market trading. The Wall Street Journal reported earlier the case is due to be filed Tuesday.

Another group of state attorneys general, including those from Iowa and Colorado, are readying a separate antitrust case against Google’s search business, Bloomberg has reported.

The Justice Department has been in talks with state attorneys general about signing on to its complaint but has struggled to win support from Democrats, Bloomberg has reported.

Google has long been a target of complaints from competitors that it’s used its power to snuff out competition across the internet. What started out as a college research project in the late 1990s now generates about $100 billion in highly-profitable revenue each year. The search engine decides the fates of thousands of businesses online and has funded Google’s expansion into email, online video, smartphone software, maps, cloud computing, autonomous vehicles and display advertising.

The lawsuit comes on the heels of a report by the House antitrust panel that found Google and three other tech giants — Facebook Inc, Apple Inc and Amazon.com Inc — all abused their power as gatekeepers in the digital economy to thwart competitive threats.

The House’s report found that Google has been able to build barriers to competition by becoming the default search engine on desktop and mobile internet browsers. In desktop browsers, Google search has default placement on Google Chrome, Apple’s Safari and Mozilla Corp’s Firefox, amounting to 87 per cent of the market, according to the report.

In mobile, Google search controls essentially the entire market because it’s the default search on its Android operating system and Apple’s iOS operating system. It pays Apple roughly $8 billion a year for the privilege, according to estimates by analysts at Sanford C Bernstein & Co Google also has deals with Mozilla’s Firefox as well as phone makers including Samsung Electronics Co.

The Justice Department’s complaint follows an investigation initiated by Attorney General William Barr into the US’s biggest technology platforms. It will likely be more than a year before the lawsuit goes to trial if it’s not settled first. That could mean a Joe Biden administration will be responsible for continuing the case if the former vice president defeats Trump in November.

Google is expected to put up a fight and will be able to spare no expense with its defence. In hearings and court filings, the company has said it faces robust rivals in all its markets.

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