Business·Analysis

Pre-election lawsuit against Google sets the stage for global action on tech giants

The Justice Department's lawsuit against Google may open the door to further moves against the tech giants in the United States and elsewhere. 

But tech stocks seem unfazed as U.S. calls Google internet’s 'monopoly gatekeeper'

The Canadian engineering headquarters for Google in Kitchener-Waterloo, Ont. Antitrust action by the U.S. government against one of the global tech giants may focus international attention on how to moderate their monopoly clout. (REUTERS)

A Google News search for the word antitrust didn't even need to include the term "Google" to offer the company plenty of free, if unwanted, extra publicity.

While the search giant is the focus of Tuesday's U.S. Justice Department attempt to limit its grip on internet advertising, the move to launch an antitrust lawsuit reveals a growing political willingness to take action against the technology titans that continue to grow in power.

Many U.S. pundits are suggesting the timing by U.S. Attorney General William Barr, an outspoken Donald Trump partisan in the president's administration, cannot be divorced from a presidential election that is less than two weeks away.

As well as a diversion from issues such as U.S. COVID-19 deaths seen as a liability for the Trump campaign, the legal action seems to signal that the Republicans hope to tap into a growing public disenchantment with the technology companies that dominate our lives.

'Harmful to competition'

And while the timing may have been a surprise prompting shocked headlines on business websites, the frustration with the power of Google, Facebook and others is not. Countries around the world including Canada have pledged to take or have taken action against some of them.

Yesterday's case against Google focuses specifically on the company's alleged monopoly power in internet search and online advertising. In a release, the Justice Department said, "As one of the wealthiest companies on the planet with a market value of $1 trillion, Google is the monopoly gatekeeper to the internet for billions of users and countless advertisers worldwide."

Used against Microsoft Corp. over 20 years ago partly due to complaints by Google about being squeezed out by the software company run then by Bill Gates, the intent of U.S. antitrust laws is to prevent a single firm from getting monopoly control of a market.

Tuesday's action is based on the Sherman Act, created in 1890 to prevent industrial manufacturers, by themselves or in conspiracy with other companies, from driving up prices and blocking competition.

Republicans may believe introducing the issue of tech giant power may boost President Donald Trump's flagging campaign. (Carlos Barria/Reuters)

With the company's control of 90 per cent of searches and the advertising that appears on related pages, the lawsuit by the U.S. Department of Justice (DOJ) alleges Google has used nefarious means to obtain and hold onto that market clout.

"As the antitrust complaint filed today explains, it has maintained its monopoly power through exclusionary practices that are harmful to competition," U.S. Deputy Attorney General Jeff Rosen told reporters Tuesday.

David vs. Goliath

In the United States, anger against the power of companies that have grown rich by taking an enormous share of advertising, media and retail dollars are increasingly seen as a battle between David and Goliath. And even before this week's DOJ lawsuit, that anger seemed to be coming to a head.

"My take is that some of these companies have been cheating," Republican Rep. Ken Buck told Bloomberg last week. " Others have been stifling competition."

And while far-right supporters of Trump, including conspiracy theorists QAnon, have complained that the tech giants have used their influence to suppress free speech, opposition to the companies' enormous clout has created strange bedfellows as both Democrats and Republicans worry about their social, political and commercial dominance.

Alex Stamos, who was once Facebook's chief security officer before an acrimonious departure, describes a group of strange corporate entities that have grown into a combination of public utilities and media companies.

"They are incredibly powerful," said Stamos last week on the New York Times podcast Sway, on the subject of preventing interference in the U.S. election. "One option here is to break them up. But breaking up the companies does not get you what you want."

Former Facebook chief security officer Alex Stamos says the tech giants inhabit a strange territory between public utilities and profit-making media companies. (Steve Marcus/Reuters)

In their manifestation as a public utility, the tech giants take the form of a natural monopoly like the post office or global telephone network where everyone wants to be on the single best system. As a practicality, one very good search engine is better than having to use five different ones before finding the article or subject you were looking for.

But as Stamos explains, putting the power into the hands of a private company means eventually someone in that company will try to find a way of turning that advantage into profit.

Analysts weigh in on U.S. government's lawsuit against Google

News

1 month agoVideo
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The U.S. Department of Justice's lawsuit against Google is part of larger pressures against big tech that will take the company years to litigate, two analysts say 1:30

Working out a solution for Google alone will likely be a long and tortured process. As some commentators have observed, while the DOJ lawsuit may be useful as a chess piece in the coming U.S. election, the hard work of fighting the case will fall to the administration of whoever wins on Nov. 3.

Critics of Tuesday's legal move say launching the litigation early for political advantage instead of taking time for careful preparation may weaken the case in the long run. Google's parent Alphabet Inc., with its enormous legal war chest, appears ready to do battle on an issue that could set precedents for many other areas where the company holds sector domination.

"Today's lawsuit by the Department of Justice is deeply flawed," said Google's Kent Walker in a blog condemning the government action. "People use Google because they choose to, not because they're forced to, or because they can't find alternatives."

So far, share prices seem to show investors are not worried that the lawsuit will endanger the profits of Google or its fellow colossi.

But as political candidates are forced to stake out a position in the final volatile days of a savagely contested election, the DOJ action may have opened the door to further moves against the tech giants in the U.S. and elsewhere that will be hard to close again.

Follow Don on Twitter @don_pittis

About the Author

Don Pittis

Business columnist

Don Pittis was a forest firefighter, and a ranger in Canada's High Arctic islands. After moving into journalism, he was principal business reporter for Radio Television Hong Kong before the handover to China. He has produced and reported for the CBC in Saskatchewan and Toronto and the BBC in London. He is currently senior producer at CBC's business unit.

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