US justice dept files landmark antitrust lawsuit against Google

Lawsuit Against Google

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Lawsuit Against Google
Lawsuit Against Google

In News:

  • The US Department of Justice (DOJ) has filed an anti-trust lawsuit (case) against Google.
  • As per the DOJ, Google has unlawfully maintained a monopoly in internet search, that harms competitors and consumers.
  • Other major technology companies including Apple, Amazon and Facebook are also under investigation by the Justice Department.

Markets, Monopolies and Antitrust laws:

About: Free Market Economy
  • Any economy runs on the fundamental system of transformation in which all unused goods are transformed into usable products.
  • In a free market economy the systems of transformation is built around the core principles of competition and cooperation.
  • Further unrestrained competition ensures best allocation of resources, lowest price, high quality, maximum goods produced and social equity.
  • As a result the goal of free market economy is maximum welfare.
About: Monopoly
  • A monopoly refers to a situation when a company and its product offerings dominate a sector or industry.
  • The term monopoly is often used to describe a company that has total or near-total control of a market.
    • For example, Google controls most of the online search market, while Amazon dominates the e-commerce market.
    • For many years, Microsoft Corporation had a monopoly on the software and operating systems that are used in computers.
  • Monopolies have an unfair advantage over their competitors, since they are either the only provider of a product or control most of the market share or customers for their product.
  • With their monopoly power, they can make choices that can hurt competition, customers and markets, and even the economies of countries.
 About: Antitrust laws
  • Antitrust laws (also referred to as competition laws) are laws developed by governments to protect consumers from unjust business practices and to ensure fair competition.
  • They are to primarily to deter a ‘trust’ (large business house) from adopting steps to stifle competition
  • They are restraints put by the State to check the overarching power of the private businesses that seek to monopolize and control the market.
  • Antitrust laws are applied to a wide range of questionable business activities, including market allocation, bid rigging, price fixing, and monopolies.
  • The goal of these laws is to provide an equal business environment to similar businesses that operate in a specific industry, while preventing them from gaining too much power over their competition.
  • If these laws didn’t exist, consumers would not benefit from different options or competition in the marketplace. Furthermore, consumers would be forced to pay higher prices.

Allegations against Google:

  • The DOJ claims Google holds 88% of the U.S. search market, with 94% of mobile searches occurring on its services.
  • According to the lawsuit, Google has used its monopoly power to keep competitors out of the internet search market, through various deals.
  • Google pays Apple billions of dollars a year to keep Google’s search engine as the default option on iPhones and other devices.
  • Google also has contracts with smartphone makers that use Google’s Android operating system.
  • These contracts require the smartphone manufacturers to install Google’s search engine as the default search engine.
  • The Justice Department has also investigated Google’s behaviour and acquisitions in the overall market for digital advertising, which includes search, web display and video ads.
  • The department claims Google’s conduct has harmed consumers by lowering the quality of search services and reducing choice by hurting the competition.
  • It said that Google’s monopolistic practices can close the market to rivals.
Google’s defence:
  • Google has argued that although its businesses are large, they are useful and beneficial to consumers.
  • It shared that its services face decent competition and have led to innovations that help people manage their lives and have helped to keep the prices of smartphones low.
  • Consumers choose to use Google’s services because they want to, as consumers can switch away from services like Google Search even if it’s the default option.
  • Moreover, consumers use plenty of specialized search engines like Expedia for travel and even platforms like Twitter to seek information outside of Google’s services.
  • Google claims that the lawsuit will do nothing to help the consumers.
  • In fact, it will help low quality search alternatives, raise phone prices and make it harder for people to get the search services they want to use.

Future Outlook:

  • Unless the government and Google reach a settlement, a trial would likely begin late next year.
  • The Justice Department has to show that Google is dominant in the internet search market and that Google’s deals with Apple and other companies restrict competition in the search market.

Also Read: Editorial Analysis: To battle pollution, involve the private sector

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