Google and Competition: Concerns Beyond the DOJ’s Lawsuit

Google and Competition: Concerns Beyond the DOJ’s Lawsuit

December 2, 2020
Google and Competition: Concerns Beyond the DOJ’s Lawsuit
On October 20, 2020, the Department of Justice (DOJ) and
dominate a different market in the future. For example,
11 state attorneys general filed a lawsuit against Google
Google’s alleged dominance in navigation apps might help
LLC under Section 2 of the Sherman Act (15 U.S.C. § 2).
it acquire a commanding position in software for driverless
The lawsuit alleges that Google unlawfully maintains
cars, which may rely on up-to-date mapping to reach their
“monopolies in the markets for general search services,
destinations. To prevent this conduct, the report suggests
search advertising, and general search text advertising in
that Google and other companies active in digital markets
the United States through anticompetitive and exclusionary
could be required to divest or erect walls between certain
practices.” CRS Legal Sidebar LSB10544, The Google
operations or be prohibited from entering certain markets.
Antitrust Lawsuit: Initial Observations, by Jay B. Sykes
provides an in-depth discussion of the DOJ lawsuit.
While these forms of restrictions could increase
competition in some markets, they might simultaneously
The DOJ lawsuit suggests structural relief—potentially
reduce it in others. The launch of Google Assistant, which
involving divestitures of specific operations—as part of the
uses Google’s search service to provide voice assistance,
potential remedy for Google’s alleged anticompetitive
has arguably increased competition in a market in which
conduct. Because the lawsuit focuses on Google’s conduct
Apple’s Siri and Amazon’s Alexa are major players.
in search services and search advertising, any structural
Google’s Chrome OS—a computer operating system—
remedies would likely focus on these services. For example,
increased competition in a market that was previously
if the court finds that Google violated Section 2 of the
dominated by Microsoft’s Windows and Apple’s MacOS.
Sherman Act, it could order the separation of Google’s
Restricting Google from entering digital markets could
search services and search advertising from its other
make it easier for other firms to dominate those markets.
products or only from specific products, such as the
company’s mobile operating system Android and its
Acquisitions
browser Chrome.
The House Subcommittee on Antitrust asserts in its report
that Google has established its positions in several markets
Over the last two years, some Members of Congress have
through acquisitions. According to the report, Google has
raised broader concerns about Google’s conduct in markets
“purchased well over 260 companies—a figure that likely
other than search services in congressional hearings and in
understates the full breadth of Google’s acquisitions, given
a report issued by the House Subcommittee on Antitrust,
that many of the firm’s purchases have gone unreported.”
Commercial, and Administrative Law, Investigation of
The report contends that some of Google’s acquisitions
Competition in Digital Markets. This In Focus explores
have eliminated actual or potential competitors.
some of these additional competition concerns that may not
be addressed by the DOJ lawsuit.
Under federal law, companies planning a merger or
acquisition that is valued above a certain threshold are
Dominance in Other Markets
required to file a premerger notification with the DOJ and
The DOJ lawsuit claims that Google unlawfully
Federal Trade Commiss ion (FTC). However, the DOJ and
monopolizes the markets for search services and search
FTC have not blocked any of Google’s acquisitions, some
advertising, but does not make similar claims about its other
of which may have been too small to meet the threshold for
lines of business. Over the years, Google has become a
premerger notification. The DOJ lawsuit does not cite
major force in several other markets not directly related to
Google’s acquisitions as an aspect of its alleged
search. For example, according to the report by the House
anticompetitive conduct.
Subcommittee on Antitrust, 80% of the navigation app
market is controlled by Google’s apps—Google Maps and
Google may be able to decrease and forestall competition
Waze.
through acquisitions. If the acquisitions involve small or
nascent companies, their value may not meet the premerger
The report asserts that Google can use its dominance in one
notification threshold for automatic DOJ or FTC review.
digital market to gain an advantage and reduce competition
The acquired company may not yet occupy a large enough
in adjacent and unrelated markets. For example, Google’s
share of a product market to trigger competition concerns
video service YouTube generates revenue from the adjacent
that could lead the DOJ or FTC to block the transaction.
market of digital video ad services and requires advertisers
to use Google’s advertising service. The report states that
Restrictions on Google’s ability to acquire existing
Google leveraged “control over YouTube to foreclose
businesses could reduce competition in some markets while
competition in digital video ad services, in part by
increasing competition in others. The DOJ lawsuit alleges
excluding rival ad servers from having access to YouTube.”
that Google used Android to maintain its dominance in
Dominance in one digital market could help Google
search services and search advertising, in part by making
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Google and Competition: Concerns Beyond the DOJ’s Law suit
Google Search the default search engine on Android
browser—make it difficult for potential rivals to offer
devices that come with other Google apps, including
competitive search services and search advertising.
Google Play and Google Maps, preinstalled. However,
Google’s
House and Senate hearings and the report by the House
acquisition of Android in 2005 arguably increased
Subcommittee on Antitrust have suggested that Google’s
competition among mobile devices and their manufacturers.
ability to combine data from its other products may hinder
Without the resources provided by Google, the Android
competition as well. The FTC and some Members of
operating system, launched in 2007, and the Android
Congress raised concern that Google’s acquisition of the
mobile device, first released in 2008, may not have been
online digital advertising company DoubleClick in 2007
commercially successful.
would allow Google to dominate the advertising market. At
Product Integration
the time, Google said that it would not combine data
collected by DoubleClick with data from its other products,
The DOJ lawsuit asserts that Google’s vertical integration
but it has done so since 2016. Even if the DOJ lawsuit were
has helped it maintain its dominance in search services. For
to reach a resolution that restricts Google from combining
example, Google Search is accessible through the address
data from its search service with data from its other
bar of its browser Chrome and is the default search engine.
products, Google has used acquisitions to enter other
While the DOJ lawsuit may lead the court to consider
markets, such as video games (e.g., Typhoon Studios) and
whether Google’s search service should be separated from
educational software (e.g., Workbench). Depending on the
other products such as Chrome, it does not address the
integration of Google products other than search.
level of user engagement across its products, Google may
be able to continue combining data from these other
Google often integrates its products so that a user of one
products to run predictive models, develop artificial
product can easily use others. Google may also make some
intelligence algorithms, and improve ad targeting.
of its products incompatible or more difficult to use with
It is not clear whether structural separations across its
those offered by other firms. For example, the smart
products would reduce any advantage Google derives from
speaker Google Home can be directly connected to certain
having access to more consumer data than other firms.
music streaming services, including Google’s Play Music
Some websites operated by other companies allow users to
and YouTube Music as well as Spotify and Pandora.
sign in using their Google account, meaning Google may
However, users who wish to stream music from Apple
have access to some of the data collected by those websites.
Music or Amazon Music need a separate device to connect
In addition, Google may be able to obtain large amounts of
to Google Home. Google Nest products—smart home
data by purchasing data from other companies.
devices such as thermostats, video doorbells, and
cameras—can all be accessed from the same app, which
Considerations for Congress
does not accommodate other companies’ products.
The DOJ lawsuit may not be the only antitrust complaint
Although users may benefit from accessing several devices
Google faces. Coalitions of state attorneys general are
from one app, those who have purchased a Nest product
reportedly considering their own antitrust complaints, and
and installed the app may be deterred from considering
the FTC has opened an investigation into all acquisitions by
smart home devices provided by other companies.
Google and other technology companies over the last 10
The integration of products and services could make it
years. Subsequent lawsuits may address some of the
difficult for antitrust enforcers to define a market in which
concerns raised in Congress that are not addressed in the
competition can be evaluated. In addition, implementing
current DOJ complaint. However, these lawsuits may take
structural separations may be difficult when one product
years to resolve, during which time Google could continue
may not be viable without linkages to other products. For
its alleged anticompetitive conduct. Additionally, any
example, files created in Google Docs Editor—which
resolution of lawsuits targeting only Google would not
includes a word processor, a spreadsheet, and other office
directly affect anticompetitive conduct by other companies
software—are automatically stored on Google’s cloud-
operating in digital markets.
based storage service Google Drive. Although users may be
Enforcement actions by the DOJ and FTC may not be
indifferent about where Google Docs are stored, the set of
sufficient to address the concerns raised by Members of
firms competing in the office software market is not
Congress about competition in digital markets. For
identical to the set of firms competing in the file storage
example, new laws might be required if Congress seeks to
market. It is also unclear whether office software is the
keep all companies from using dominance of one digital
appropriate market for analysis, as some users might prefer
market to gain a competitive advantage in another before
to use the word processing program in Google Docs Editor
the lawsuits reach a resolution. However, given the linkages
while favoring a spreadsheet program from another source.
across digital markets, legislation aimed at addressing
Defining the market is also important in evaluating the
competition in a particular product market may have
likelihood of market entry by a potential competitor.
unintended effects on competition in other markets and on
Consumer Data
consumers.
Google’s search service collects large amounts of data from
the search terms users enter. These data enable Google to
Clare Y. Cho, Analyst in Industrial Organization and
improve its search service, and also to build profiles of its
Business
users to improve its ad targeting. The DOJ lawsuit alleges
IF11692
that Google’s access to large amounts of consumer data and
its control of access points—such as Android and Chrome
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Google and Competition: Concerns Beyond the DOJ’s Law suit

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