For well over a year, U.S. regulators have been looking into Google (NASDAQ: GOOG) and other big tech companies. Following a historical senate hearing between the CEOs of four of the largest tech and social media companies earlier this Summer, scrutiny surrounding these companies has only continued to grow. The Justice Department officially announced on Tuesday that it would be pursuing a formal lawsuit against Google over its dominance in online advertising and search engine utilization.
The main argument in the case is that Google maintains a ‘gatekeeper’ like status to the internet since most people use Google’s search engine. In turn, this has led to various business agreements and other connections between other companies that make it hard for businesses to compete with Google.
The Justice Department also claims that Google has been paying billions of dollars to various phone makers to use Google’s product suite as the default, such as Chrome, which in many cases, is not uninstallable. This creates a repeating cycle where demand for Google products will remain set in stone due to its platform being chosen as the default for most phones.
“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,” Deputy U.S. Attorney General Jeffrey Rosen said in a statement.
Google’s legal team responded later that day with its own statement, arguing that people use Google because they want to and that there are other alternatives available nowadays to their search engine and web browser, even though they might not be as popular.
It will likely be quite some time until a final decision is made regarding this case. Google’s traditional defense has been the fact that its main products and services are largely free, which undermines the traditional antitrust argument that the lack of competition leads to increased prices.
U.S. regulators have been performing an antitrust investigation into Google for well over a well, although it was uncertain whether they would press charges or not. The last time U.S. regulators investigated Google for an antitrust probe was back in 2013, with the Federal Trade Commission (FTC) deciding not to go ahead with a legal case. As it turned out, many members on that team recommended the organization to go ahead and press charges against the tech giant.
Shares of Google weren’t that affected by the news. In fact, shares are up around 2.7% in after-hours trading. While it’s a surprising uptick for the tech giant, it will likely be years before a major ruling will be issued for or against Google.
Google Company Profile
Alphabet is a holding company, with Google, the Internet media giant, as a wholly owned subsidiary. Google generates 99% of Alphabet revenue, of which more than 85% is from online ads. Google’s other revenue is from sales of apps and content on Google Play and YouTube, as well as cloud service fees and other licensing revenue. Sales of hardware such as Chromebooks, the Pixel smartphone, and smart homes products, which include Nest and Google Home, also contribute to other revenue. – Warrior Trading News
