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US states sue Google for anti-competitiveness

December 17, 2020

The lawsuit accuses Google of violating anti-trust law with its ad revenue practices. The company and other major tech firms have been in hot water this year over antitrust and anti-competitiveness charges.

Google office in London
Google is accused of rigging ad merkets to boost its own bottom-lineImage: Hannah McKay/REUTERS

Ten US states, led by Texas, filed a lawsuit against Google on Wednesday over alleged anti-competitive practices to boost its online advertising business by illegally working with social network Facebook.

"As internal Google documents reveal, Google sought to kill competition and has done so through an array of exclusionary tactics, including an unlawful agreement with Facebook, its largest potential competitive threat," said the lawsuit.

"This Goliath of a company is using its power to manipulate the market, destroy competition, and harm you, the consumer," Texas Attorney General Ken Paxton said of Google in a video released on Twitter and Facebook.

Google's 'monopolistic powers'

In the video, he accused Google of using its "monopolistic powers to control pricing, engage in market collusions to rig auctions in a tremendous violation of justice," referring to ad space on websites that companies must compete for. In the first nine months of 2020, that ad revenue was nearly $101 billion (€82.8 billion), accounting for 86% of its total revenue.

Paxton's office released a redacted copy of a federal lawsuit, but it was not immediately clear if it had been filed in court.

A Google spokesman said Facebook did not receive special data. The company also called Paxton's claims "meritless" and said the price of online advertising has fallen over the past decade.

"These are hallmarks of a highly competitive industry," said Google in a statement. "We will strongly defend ourselves from [Paxton's] baseless claims in court."

Big tech companies under pressure

Google has been under the gun from the federal government this year for anti-trust investigations. The criticism has been extended to other major tech companies, including Facebook, Apple and Amazon. All four of the companies faced an anti-trust hearing with Congress earlier this year.

Nine of Google's products in search, video, mail and other areas are estimated to have over 1 billion users each, providing the company with a vast amount of user data that it can use in the advertising sphere.

Paxton's move comes after the US Justice Department sued Google in October for abusing its dominance in online search and advertising, the most significant attempt by the US government to buttress competition since its case against software company Microsoft two decades ago.

Europe also looking into tech giants

The European Commission presented a draft of legislation Tuesday that could curb major tech companies' capabilities in Europe.

The EU could revolutionize how Big Tech does business in Europe

The proposed Digital Markets Act and Digital Services Act could force major tech companies such as Google and Apple to pay fines as high as 10% of their annual turnover should they not comply with proper anti-competitive practices.

Companies taking aim

It is not just states that are taking on Google. Online publishers including Genius Media Group and news website The Nation filed a lawsuit in US District Court on Wednesday that claimed Google stifled advertising competition and hurt their respective businesses.

The publishers said they used Google software to sell ads, but received what they considered an unfair split of sales because Google took over the market.

"Through its campaign of anticompetitive conduct, Google has achieved and maintained a monopoly or near-monopoly in [the] marketplace by erecting a toll bridge between publishers and advertisers and charging an unlawfully high price for passage," said the lawsuit.

Genius had previously filed a lawsuit against Google last year of breaching a contract by using song lyrics data in search results. A judge dismissed the case. On its website, Genius says it "serve(s) music knowledge to over 100 million people each month" by annotating music lyrics.

Paxton being investigated

The Texas attorney general is in his own trouble despite pushing forward Wednesday's lawsuit. The FBI is investigating whether he broke the law to assist a wealthy donor who is also under investigation.

Earlier this year, eight of the attorney general's top deputies accused Paxton of bribery and abuse of office in the service of a real estate developer who employs a woman with whom Paxton is accused of having an extramarital affair.

Paxton was also responsible for the last major push to overturn the 2020 US Presidential election result, which former Vice President Joe Biden won. The Supreme Court rejected his legal push, which has drawn speculation that Paxton is looking for a preemptive pardon from current US President Donald Trump.

kbd/sms (AP, AFP, Reuters)