The TLDR: In a greatly significant move, the US government filed an antitrust lawsuit against Google, claiming that its practices stifle competition and hurt the consumer. The last time it took such an action was against Microsoft in 1998—the same year Google was formed. That the suit was filed just weeks before the presidential election isn’t an accident. And the outcome of that election may well determine the future of big tech companies—that are increasingly under pressure to mend their ways.

What is Google accused of?

Being a monopoly—specifically the dominance of its search engine and advertising related to search. The brief pointed to these key issues. 

One: Its exclusive agreements with companies make Google.com the default search engine:

“Google pays billions of dollars each year to distributors—including popular-device manufacturers such as Apple, LG, Motorola, and Samsung; major U.S. wireless carriers such as AT&T, T-Mobile, and Verizon; and browser developers such as Mozilla, Opera, and UCWeb—to secure default status for its general search engine and, in many cases, to specifically prohibit Google's counterparties from dealing with Google's competitors.”

Two: It uses its ownership of the Android platform to force these companies to install a bundle of Google apps—including search apps—in “prime positions where consumers are most likely to start their internet searches.”

Three: As a result, Google or Google-owned products account for 80% of all search queries. That number is even higher for mobile-based search. Every minute, an estimated 3.8 million queries are typed into Google.

Four: This monopoly in search in turn earns billions of dollars in advertising revenue—which it then uses to pay phone manufacturers, carriers and browsers like Safari, “creating a self-reinforcing cycle of dominance.”

Five: This monopoly has hurt rival companies and the consumer:

“Google has ‘substantially’ harmed competition by increasing barriers to entry for competitors who wish to offer or scale up their own search services. Its actions also had the effect of making Google's services worse: no competition means no ‘significant competitive pressure to improve’ its own search or advertising products.”

Not included in the lawsuit: the company’s massive digital advertising arm which has gobbled up most of that market. Starting with its purchase of DoubleClick in 2007, Google has mopped up all the major ad sellers. It now dominates every part of that pipeline and everyone in it: publishers who sell ad space using its tools and companies who advertise their products through its network.

How is this bad for me?

One: It is pretty darn hard to find anything unless Google wants you to. A recent congressional report concluded that the company has engineered its search results— so it works best for Google rather than what is most relevant to you. A Wall Street Journal investigation found:

• Google made algorithmic changes to its search results that favor big businesses over smaller ones.
• The company also boosts some major websites, such as Amazon and Facebook.
• Google keeps blacklists to remove certain sites or prevent others from surfacing in certain types of results.

Two: You are more likely to see ads than the results you’re looking for. As Wired notes:

“In its early days, using Google usually meant searching for something and then clicking a link to another website… Today, ads dominate the top of search results like never before, which puts pressure on companies to pay to be seen. Organic results meanwhile appear to favor Google’s own properties: Google reviews instead of Yelp, YouTube instead of Vimeo, and so on.”

Three: If you own a company, you are forced to hand over your entire ad budget to Google. Without its platform, your brand or product will literally never be found. As one advertiser told Congress, Google "effectively forces its advertising customers to pay for the ability to reach consumers who are searching specifically for the customer's brand." 

And since there is no competing search engine, "Google has the ability to charge potentially inflated prices for its advertising services by forcing customers to increase their bids in order to receive a more favorable position."

Four: Google is a privacy nightmare. It monitors everything you do—on Gmail, Maps, browser, and on every website on its ad platform. And then it bundles that data to sell ads. By squelching its competition, it limits the emergence of a rival who is not in the ad-selling business—and may not collect your data.

Data point to note: Online advertising was the source of virtually all of Alphabet’s $34 billion in profit last year.

What’s Google’s defence?

There are two lines of defence. One, our search engine is awesome; two, people search just as much on other websites:

“Google’s share of the search market in the United States is about 80 percent. But looking only at the market for ‘general’ search, the company says, is myopic. Nearly half of online shopping searches, it notes, begin on Amazon.

 

Next, Google says the deals the Justice Department is citing are entirely legal. Such company-to-company deals violate antitrust law only if they can be shown to exclude competition. Users can freely switch to other search engines, like Microsoft’s Bing or Yahoo Search, anytime they want, Google insists. Its search service, Google says, is the runaway market leader because people prefer it.”

What happens next?

It depends on who wins the election. While the lawsuit delivers on Trump’s promise to take on Big Tech, Joe Biden has been fairly quiet on the topic. It remains to be seen if he will be as gung-ho as some of his fellow Democrats about taking it forward. 

Also unclear: What the government wants. The brief asks the court to direct Google to change its behaviour—which has not worked in the past—and for “structural relief,” which suggests breaking up the company. And that brings us right back to Biden and his appetite for a maha-yudh—which is likely to drag on for years as Google fights tooth and nail.

Reading list

• Wall Street Journal has a lot of great reporting on the lawsuit, Google’s search algorithm and advertising juggernaut. But they are all behind a paywall. 
• You can instead read Ars Technica’s excellent analysis of the lawsuit or The Verge’s roundup of the reporting on it. 
• Also worth a look: Benton Institute’s summary of WSJ’s search-related investigation. 
• For a contrarian view read Wired’s take, which dismisses the lawsuit as an anticlimax. 
• Quartz assembled an eye-opening list of all the companies Google has acquired in recent years. 
• Also see: Our big explainer on why the US government is gunning for the big four tech giants: Facebook, Amazon, Apple and Google.