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Monday, April 19, 2021

How Google is trying to put the long arm of monopoly across the Internet

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As the market leader in digital advertising, Google is dependent on outside access to news content, so the search giant and Washington antitrust officials have been engaged in some deft chess for years.

But the situation has only gotten murkier. Google is facing a Justice Department antitrust investigation as well as a suit filed by Amazon, Apple and other internet giants on behalf of news publishers. Those suits alleged that Google exploits its dominance to force publishers to use competing tools for displaying news.

What is the lawsuit?

It’s a class-action suit on behalf of 48 news publishers in the United States and worldwide. And it accuses Google of monopolizing the search advertising market by conscripting publishers into the Google advertising network by requiring them to use Google platforms. That essentially forces publishers to host their content on Google sites, like Google News, rather than on rival networks like Facebook.

Here’s how it works: Google bids on a list of keywords, then it sells the ads on those keywords for sites like their own. That way, Google gets inked in among thousands of sites that sell sponsored content on their sites. By giving sites content from all over the world, the value of the site’s articles from Google sites is likely to be higher.

The publishers describe the practice as “monetizing traffic from, or usage of, third-party content without providing Google with a meaningful share of revenue for its services.”

“This is all about Google exploiting its dominant position to squeeze the competition out of a market that could be worth hundreds of billions of dollars,” said James Boyle, general counsel of the International News Media Association, one of the plaintiffs in the case.

The suit charges that Google is “violating fair competition laws in violation of Section 1 of the Sherman Act and is unjustly enriching itself at the expense of competitors like Facebook.”

If you have a favorite phrase to sum up what Google does, “exploit the competition out of a market that could be worth hundreds of billions of dollars” would be a good start.

How long has this been happening?

There are a few different legal theories about how the publishers claim Google works to get publishers into its network by compelling them to use its platforms, like Google News.

One of the most common theories is called “Google Dumping.” The publishers allege that in 2009, Google began compiling a “search ranking list” that predetermines which websites will see a Google referral. The lawsuit alleges that this was used to convince publishers that “Google’s ‘upranking’ of their websites to the top of its search index was a good deal for them.” Instead of Google taking a cut of ads and referrals to those higher-ranked sites, the publishers argued that Google “siphoned off those funds to its own core business.”

What is the court decision going to be?

Many antitrust experts say that the question now is which court will be the final arbiter. The very definition of fair competition in antitrust law hinges on what the court thinks Google’s market is worth. The plaintiffs are asking for the court to throw out Google’s dominant market position. If the court accepts that Google is a monopolist, then the question is how much money Google will owe to publishers. In other words, what does Google have to pay?

“I think that ruling is basically going to be a bellwether,” said David Balto, a former antitrust official at the Federal Trade Commission. “Is it based on legitimate competition or is it based on a concern about what Google is doing?”

Some say the ruling could set a precedent.

“This is a big problem for Google, but you can never overestimate the importance of a well-written ruling in one particular jurisdiction. It’s the precedent,” said Shelley Potvin, a former assistant U.S. attorney who served in the antitrust division at the Justice Department under President Barack Obama.

What is the Justice Department’s view of this lawsuit?

That’s a tricky question. If the suit is successful, Google would likely have to pay publishers to deal with their content. The Justice Department investigation is looking into that possibility.

The complaint against Google draws a line between the company’s search monopoly and its digital ad monopolies, said Amy Chang, an antitrust expert and a partner at Covington & Burling, a law firm that represents Google.

“[The lawsuit] does make it clear that Google’s own business does come into that constellation of units under antitrust scrutiny,” Chang said.

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