Department of Justice, State AGs to Target Google for Antitrust Violations, WSJ Reports

By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.

The Wall Street Journal broke a story this past Friday, reporting that the Department of Justice and several state attorneys generals were about to file an antitrust case against Google, Justice Department, State Attorneys General Likely to Bring Antitrust Lawsuits Against Google.

Both the Justice Department and a group of state attorneys general are likely to file antitrust lawsuits against Alphabet Inc.’s Google—and are well into planning for litigation, according to people familiar with the matter.

The Justice Department is moving toward bringing a case as soon as this summer, some of the people said. At least some state attorneys general—led by Texas Attorney General Ken Paxton, a Republican—are likely to file a case, probably in the fall, people familiar with the matter said.

Much of the states’ investigation has focused on Google’s online advertising business. The company owns the dominant tool at every link in the complex chain between online publishers and advertisers. The Justice Department likewise is making Google’s ad technology one of its points of emphasis. But it is also focusing more broadly on concerns that Google uses its dominant search business to stifle competition, people familiar with the matter said.

As I posted in November about on a blockbuster WSJ investigation of Google’s search algorithm (see Blockbuster WSJ Investigation: How Google Interferes With Its Search Algorithms and Changes Your Results), I was keenly interested in this WSJ update to see what the latest state of play is

Alas, the latest WSJ account is maddeningly short on details, particularly as to the legal theories the government will seek to advance – and admitted as much:

Details about the Justice Department’s legal theories for a case against Google couldn’t be learned.

So I waited to post, hoping that more details might emerge, and that the WSJ piece might serve as a trial balloon to stimulate disclosure  -or leaking? – of further detail. Much of the subsequent coverage has regurgitated the WSJ’s claims – without significantly advancing the state of knowledge. Yes, it’s clear that if the government brings claims, it will be the first major antitrust action brought in decades since the Clinton administration went after Bill Gates’s Microsoft, joining 20 states in an action that settled in 2001, according to the New York Times, U.S. Is Said to Plan to File Antitrust Charges Against Google.

It’s by no means an original observation that we no longer have any meaningful antitrust enforcement in the United States. This started to erode with the Reagan administration – although there have been periods of prosecutorial feistiness, both state and federal. For those who’d like to know more about the subject – and how it continues to distort ourpolitical economy, you can do no  better than start with Matt Stoller’s book, Goliath: The 100 Year War Between Monopoly Power and Democracy.

By Monday, the WSJ was no closer to offering us additional insights to the legal theories the DOJ and state AGs were considering. But it did serve up a possible line to pursue, by  discussing a paper written by a former Obama antitrust official, Former Obama Antitrust Official Lays Out Possible Case Against Google:

A former top antitrust economist in the Obama administration argued Monday that Alphabet Inc.’s GOOG -0.76% Google has used its powerful position in the digital advertising space to stifle competition, outlining a possible case against the search giant at the same time federal and state enforcers are making preparations to go to court.

“There is significant reason for concern that Google has violated U.S. antitrust law,” Yale University economics professor Fiona Scott Morton, the chief economist in the Justice Department’s antitrust division from 2011-2012, wrote in a new academic paper entitled “Roadmap for a Digital Advertising Monopolization Case Against Google.”

The paper argues Google is using its dominance in search as a springboard to dominate the adjacent market of display advertising, harming publishers, advertisers and consumers in the $130 billion digital advertising market.

Now, according to a recent piece in The Verge by Casey Newton The antitrust case against Google is becoming just another partisan fight:

Morton’s analysis is based on a December report from the United Kingdom’s Competition and Markets Authority. The report “found that Google had at least 90% market share in the tools publishers use to serve ads; between 40% and 60% of the market for supply-side platforms, or SSPs, the tools publishers use to accept bids from exchanges; and between 50% and 70% of demand-side platforms, or DSPs, the tools advertisers use to bid for digital ads.” Google disputes the study’s findings.

Newton laments that antitrust is now subject to partisan calculation – and that this is some  recent development:

It would be nice if we could have a debate about Google and competition on the merits. But this is the United States and 2020, and so the debate is already tainted by partisan politics. Ken Paxton, the Texas attorney general who is leading the investigation for the attorneys general, is sending fundraising emails promoting his work. Reuters reported that one email said Texans “‘are put at risk’ by the company, ‘whose executives clearly display anti-conservative and anti-Republican bias, subtly controlling what Americans see when they search for information about national political issues.’”

Is this a problem? And is it really all that new a phenomenon?

I happen to think it’s simply wrong and misguided to assume that antitrust enforcement policy is not subject to partisan calculation. Maybe that’s because I believe most, if not all, areas or public policy are.There’s tremendous money at stake in deciding how to apply the rules of the games. In fact, one of Tom Ferguson’s seminal contributions to our political understanding is to explicate how political parties compete for political contributions, and how those contributions shape their policy positions. Ferguson has written extensively about the New Deal, among many other topics, and has mined libraries and archives for the smoking guns (see Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems.)

And it’s precisely in times such as these – with the ongoing COVID-19 pandemic – that we expect to see intense competition over various politics and policy elements, leading perhaps to radical partisan realignment,

So, I will continue to scan the WSJ, as well as other media, intensely to see what antitrust theories the Department of Justice advances to apply to Google, as well as the various state attorneys general. I would be surprised if these prosecutors achieve any degree of consensus. And I would be even more surprised if we don’t see lawsuits filed against Google, and soon, pursuing different legal theories.

I just wish I could tell you at this point what those might be.

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18 comments

  1. Carla

    Amazon, Facebook, Google — I personally boycott them all. Somehow, my lone actions don’t seem to have had an impact ;-(

    Reply
      1. Rolf

        Ditto! We be lurking! However, with reference to Amazon, I was astounded to read this piece in Literary Hub:

        The Max Borges Agency polled 1,108 people from the ages of 18 to 34 who’d bought tech products on Amazon in the last year. An astounding 44 percent said they’d rather give up sex than quit Amazon for a year, and 77 percent would choose Amazon over alcohol for a year. This, however, might reveal as much about the lifestyles and sex drives of millennials and Gen Zers as about Amazon’s allure.

        This I found depressing.

        Reply
        1. Massinissa

          I’m a millenial in my late 20s, and I neither engage in alcohol regularly (which is by my choice) or sex regularly (not entirely by choice). I use Amazon about once a year, usually near the holidays. Which is more than I have done the other two aforementioned activities in the last year, so I suppose I would have answered similarly to that poll. I’m not terribly sure it really means anything important.

          Reply
    1. Synoia

      I suspect your cumulative purchase amounts missing a few zeros to effect the results.

      I look at Amazon, then search on eBay, and it is generally less expensive on eBay. Currently I will not buy from China, because currently noting is delivered from those sellers.

      I try to buy “nearest first” on eBay. Craigslist is just a waste of time, the adverts are not removed after purchase, and the sellers poor communicators.

      Reply
  2. dennis

    time for a bit of whataboutism: what about the telecom companies, who if anything are far worse than google, amazon, and even that black hole of evil, facebook?

    Reply
    1. Massinissa

      Way I see it, we should antitrust all the blasted things. Google is a good start. When was the last truly major antitrust case? Almost all the examples I can think of were from the New Deal or Progressive era, maybe something in the 60s or 70s.

      Reply
      1. John Zelnicker

        @Massinissa
        May 20, 2020 at 5:49 pm
        ——-

        The break-up of AT&T, filed in 1984, that created the seven Baby Bells was probably the last major case with significant results (temporarily).

        Unfortunately, those Baby Bells have merged and acquired and reacquired until we are back to a near monopoly in telecom.

        Reply
        1. Oh

          The AT&T breakup was to provide a bonanza to Wall Street; the re-mergers also was the same kind of gift. Nothing to do with anti-trust. AT&T as a govt. approved monopoly worked well (free handsets, wiring and service) and a great research arm (Western Electric, etc.).

          The govt. allowed oil company and airline mergers (again benefiting Wall St.) and the public got screwed.

          Reply
      2. Rolf

        Also DOJ brought antitrust action against Microsoft, circa 1998. Judge Jackson ruled against Microsoft, but decision was reversed on appeal; DOJ and Microsoft finally settled in 2001.

        Reply
  3. Massinissa

    I don’t care what harebrained, cockneyed reasoning the Republicans have for doing this, at least attempting to do Antitrust on Google is a good thing in my book. Even having the public thinking about Antitrust being a thing that can be done is an overton window shift of sorts.

    Reply
  4. Jesper

    I would not be surprised if Google provides some ammunition for an anti-trust action against Google in its own marketing and its own sales proposals: Google might be providing numbers on how many they reach vs how many the competition reaches. The customers who are dissatisfied with the customer-service (all companies have dissatisfied customers) might also have stories to tell and my expectation would be that customers agree to whatever Google wants as they have no other option.
    The harm, if there is one, is (in my opinion) not about harming the competition, it is about the harm to the customers.
    I used Google as an example here, I’d be surprised if Facebook was very different. The politicians who are publicly stating they are in support of small businesses might already have checked with small businesses how they are treated by the tech-giants. Once they did the check then maybe they decided to side with the giant mult-national, or maybe not.

    Reply

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