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Morrisey joins 37 other AGs to sue Google for stifling competition; follows 48-state Facebook suit filed last week

State Attorney General Patrick Morrisey has joined with AGs in 37 other states and territories to sue Google anticompetitive conduct in violation of federal law.

They allege The coalition alleges Google illegally maintains monopoly power over general search engines and related advertising markets through a series of anticompetitive exclusionary contracts and conduct.

The suit parallels one filed in October against Google by the U.S. Department of Justice and the AGs are seeking to consolidate the cases. The coalition is bipartisan. All of West Virginia’s neighbor states except Kentucky have signed on.

The suit also serves as a companion suit filed last week by 48 states against Facebook. That one alleges “Facebook illegally acquired competitors in a predatory manner and cut services to smaller threats, depriving users from the benefits of competition and reducing privacy protections and services – all in an effort to boost profits through increased advertising revenue.”

West Virginia and all five neighbors are parties in that suit.

Morrisey said of the Google suit, “Big tech must be held accountable to ensure meaningful access to competition. Corporations have a right to thrive, but they must not do so at the expense of severely and unlawfully limiting consumer choice. Increased competition provides improved privacy protections, more targeted results and greater opportunities.”

This suit, filed Thursday, and the DOJ suit are in the U.S. District Court for the District of Columbia. Colorado is the lead state. The body of the complaint runs for 78 pages.

It says “As the gateway to the internet, Google has systematically degraded the ability of other companies to access consumers.”

More than 85% of all internet searches are done through Google, it says. It’s closest competitor, Bing, accounts for only 7%. Yahoo doesn’t even get a mention. “Over the past decade, no new entrant in the general search market in the United States has accounted for more than 1 percent of internet searches in a given year.”

Beyond Google’s throttle hold, the suit says, its monopoly is worrisome because it collects vast amounts of data about the people who use it. “Google closely tracks and analyzes virtually every internet search and click performed by users.” It uses this data to make bundles of cash for general search-based advertising: $98 billion in 2019, more than the GDP of 129 countries and the budgets of 46 states.

The suit says Google stifles competition in three ways. First, it uses its power to limit the number of consumers who use a Google competitor. For example, Google pays Apple $8 billion to $12 billion per year to be the default search engine on Apple devices, and it limits general search competition on Android devices with a web of restrictive contracts

Second, Google’s Search Ads 360 service, pledges to offer advertisers a neutral means for purchasing and comparing the performance of Google’s search advertising and its closest competitors. But, in reality, the suit says, Google operates SA360 to severely limit the tool’s interoperability with a competitor, thereby disadvantaging SA360 advertisers.

Third, “Google throttles consumers from bypassing its general search engine and going directly to their chosen destination, especially when those destinations threaten Google’s monopoly power.”

Competition is necessary, the suit says because rival general search engines would be able to create better services for consumers, including improved privacy, advertising-free search, and stronger partnerships with specialized vertical providers (such as travel websites) that can offer the ability to sell a service directly or better ways to find, compare, and buy services. “More competitive general search engines also could offer better advertising and lower prices to advertisers, and lower prices would be expected to flow through to consumers.”

Facebook suit

New York is the lead state in the Facebook suit, which is also in D.C. federal district court.

This complaint runs 75 pages. It says, “Every day, more than half of the United States population over the age of 13 turns to a Facebook service to keep them in touch with the people, organizations, and interests that matter most to them. For them, Facebook provides an important forum for sharing personal milestones and other intimate details about their lives to friends and family.”

The suit notes that users don’t pay for access. Instead, they “exchange their time, attention, and personal data for access to Facebook’s services.”

Facebook makes its money by selling ads, the suit says. Advertisers value the targeted ads they can deliver because of Facebook’s data gathering.

The suit alleges, “Facebook’s unlawfully maintained monopoly power gives it wide latitude to set the terms for how its users’ private information is collected, used, and protected. In addition, because Facebook decides how and whether the content shared by users is displayed to other users, Facebook’s monopoly gives it significant control over how users engage with their closest connections and what content users see when they do.”

It alleges Facebook has used two strategies to stifle competition: acquire potential rivals and suffocate or squash third-party computer software developers.

The suit notes Facebook’s acquisitions of WhatsApp and Instagram – for nearly $19 billion and $1 billion, respectively – as examples of its strategy to eliminate competition with purchase prices above market values.

It also alleges that Facebook targets competitors with a ‘buy or bury’ approach: if a competitor refuses to be bought out, Facebook effectively eliminates the competitor’s ability to operate within Facebook.

The suit seeks to block Facebook from future acquisitions valued at $10 million or more without advance notice to the plaintiff states. It also seeks to halt ongoing and future illegal, anticompetitive conduct, as well as a court order to divest illegally acquired companies.

Tweet David Beard@dbeardtdp Email