The U.S. Government is (Finally) Suing Google
The U.S. government sued Google on Tuesday claiming that the company is an illegal monopoly. Focusing on Google’s search engine business, the Department of Justice is accusing Google of excluding competition from the marketplace through lucrative and exclusive deals with giant partners like Apple.
What’s the issue?
Competition laws exist, broadly speaking, to protect consumers, provide freedom of competition and promote economic efficiency. A competitive market is essential to give consumers choice, to encourage innovation and to protect the principles of free market trade.
Arguably, the problem here is that the U.S. Department of Justice hasn’t been doing its job until now. How has Google already got this far? It has been widely reported that Google holds exclusive deals with its giant partners. The European Union has launched three separate antitrust investigations into Google since 2010 for violating the EU's competition laws due to its dominant position in the market.
Why now?
It is perhaps surprising that this move is happening now under Trump’s Republican administration. It seems the evidence of anticompetitive tactics by Google is becoming too large and too public to avoid any longer.
The big four were recently grilled by congress for becoming too large, threatening rivals, consumers and arguably even democracy itself (side eye to Zuckerburg and the Cambridge Analytica scandal).
The lawsuit is without doubt a groundbreaking move to change the power dynamics for big tech and could change the way we all consume information and products on the internet.
Ethically, what should we be thinking about?
It is widely accepted that technology giants maintain unethical business practices when it comes to data collection and privacy. Technology businesses that scaled during the advent of the public internet were able to avoid many national corporate regulations and act almost lawlessly across borders.
Over the past two decades, we have traded our personal data for technical innovation, and the real test will be to determine who does have the most power, the four technology giants - Apple, Google Facebook and Amazon - or the U.S. government.
Google’s response to the lawsuit is that it is “deeply flawed” and people use the company’s services because they choose too. But as The Social Dilemma Netflix documentary highlighted, when technology companies hold vast personal data about all of us, how can we be sure that’s not being used to manipulate our choices? How much freedom of choice do we really have when Google can predict our next moves before we can?
But the question for the lawsuit is really, could the technology be better with more marketplace competition, and could the U.S. and global economies be more fair?
Deputy U.S. Attorney General Jeffrey Rosen said on the matter: “Google achieved some success in its early years, and no one begrudges that. If the government does not enforce its antitrust laws to enable competition, we could lose the next wave of innovation. If that happens, Americans may never get to see the next Google.”
And what’s the impact for investors?
Shares of Google’s parent Alphabet Inc. (GOOGL) climbed 1.4% to close at $1,551.08 in New York on Tuesday. It seems that investors aren’t yet concerned about the impact of the lawsuit, which will likely take years to conclude. It’s also probably the first of many on the cards.
About Alphabet Inc.
Alphabet Inc. is the parent company of Google and several former Google subsidiaries
It is the world’s fourth largest technology company by revenue
On January 16th 2020 became the fourth U.S. company to achieve a market value of $1 trillion joining Apple, Amazon, Microsoft and Saudi Aramco
CEO - Sundar Pichai
Co-founders and majority shareholders - Larry Page, Sergey Brin
Company type - Public
Trading information - Alphabet Inc. is listed on the Nasdaq stock exchange in New York. There are two classes of share available. NASDAQ: (GOOGL) is Class A and NASDAQ (GOOG) is Class C. The difference is that class A shares receive one vote per share and trade at a slight but consistently higher premium than class C. Class C shares have no voting rights.
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