Sundar Pichai, CEO of Google, speaks to the media before the opening of the Berlin representation of Google Germany in Berlin on January 22, 2019.
Carsten Koall | Getty Images News | Getty Images
Google created a wide-ranging monopoly that includes favoring its own services and demoting others, a U.S. government antitrust subcommittee argued in an antitrust report Thursday.
The House Judiciary subcommittee on antitrust, which released its investigation findings of Big Tech’s competitive behavior Tuesday, stated that the Alphabet-owned company has held its domination in markets ranging from search to advertising to maps by favoring its own services and demoting third parties — often at the command of executives. The report also warned of furthering “potential” unfair behavior in the company’s growing cloud business and its Fitbit acquisition proposal.
The nearly 450-page report, which was overseen by the Democratic majority on the committee, included information gathered through hearings, interviews and 1.3 million documents. It concludes that Google, as well as Amazon, Apple and Facebook, enjoyed monopoly power and suggested Congress take up changes to antitrust laws that could force them to split apart parts of their businesses and make it harder to complete acquisitions.
“The overwhelmingly dominant provider of general online search is Google, which captures around 81% of all general search queries in the U.S. on desktop and 94% on mobile,” the report says.
“Google abused its gatekeeper power over online search to coerce vertical websites to surrender valuable data and to leverage its search dominance into adjacent markets,” the report states. “Google used its search engine dominance and control over the Android operating system to grow its share of the web browser market and favor its other lines of business,” it added.
In a statement, Google accused the lawmakers of looking more at helping competitors than consumers.
“Google’s free products like Search, Maps and Gmail help millions of Americans and we’ve invested billions of dollars in research and development to build and improve them. We compete fairly in a fast-moving and highly competitive industry. We disagree with today’s reports, which feature outdated and inaccurate allegations from commercial rivals about Search and other services.
“Americans simply don’t want Congress to break Google’s products or harm the free services they use every day. The goal of antitrust law is to protect consumers, not help commercial rivals. Many of the proposals bandied about in today’s reports — whether breaking up companies or undercutting Section 230 — would cause real harm to consumers, America’s technology leadership and the U.S. economy — all for no clear gain.”
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Power and data
The report states that Google has promoted its own services by placing them at the top of search results, and has “actively demoted” rivals through “imposing algorithmic penalties.”
A number of companies, including major public companies and those Google considered competitors, told the subcommittee that they “overwhelmingly depend on Google for traffic, and that no alternate search engine even remotely approaches serving as a substitute.”
The report claimed that in search advertising, where Google holds “significant market power,” Google exploited competitors and consumers. That included blurring the distinction between paid ads and organic listings, which could be considered a violation of Section 5 of FTC Act — a restriction that prohibits companies from deceiving consumers.
The report also said that companies had complained they were forced to spend more on Google ads because the company has made it harder for their products to appear in regular search results.
“Several market participants told Subcommittee staff that their ad spend on Google has increased largely because Google has made it more difficult for businesses to obtain organic traffic,” the report states. “Partly this follows from Google’s preferencing of its own products, which compels demoted firms to pay Google for ad placement as a way to regain visibility.”
The report also said that the company used data collected from its operating system Android and browser Chrome for use in its other areas of business.
“Perhaps most critically, Chrome serves as a way for Google to control the entry points for its core markets: online search and online advertising,” the subcommittee wrote.
The report also noted Google’s 2007 acquisition of advertising tech company DoubleClick, alleging the company merged data DoubleClick had collected on internet users with that of Google’s products, including Google Maps and Gmail, after promising it wouldn’t. The report called it a “bait and switch” and stated it was a part of a broader theme that regulators should consider when evaluating Google’s $2.1 billion proposal to acquire fitness tracker Fitbit, which has been held up in regulatory approval for nearly a year.
Cross-promotion
The report alleges that Google executives knowingly instilled unfair behavior within the ranks over the years, encouraging them to use Google’s dominant search engine to promote other products.
In 2009, now-CEO Sundar Pichai, who was leading development of the Chrome web browser at the time, encouraged the Chrome team to continue to “promote [Chrome] through Google.com” and to “push users to set Chrome as their default browser,” the report stated.
When the company began promoting its Chrome extension on its home search page, several Google employees showed concern internally.
“I find the very, very high-profile promotion of Google Chrome on Google.com quite frankly, startling,” an email between Chrome employees in 2009 stated, according to the subcommitee.
In 2010, then-CEO Eric Schmidt gave a company-wide speech stating that the rise of cloud computing meant that the browser — the primary way users access cloud — would be “increasingly critical to Google’s success,” further encouraging overlap. “Specifically, Google’s documents show that the company has focused on designing Chrome features to provide a better experience of apps like YouTube and Search, advantages that other browsers lack,” the report states.
More recently, in 2018, Google started a program with the Google Play team to provide Google Cloud Platform credits to game developers based on their Play Store spend in order to “increase focus on Play and incentivize migration to Google Cloud Platform.”
Google’s documents suggest the company is considering bundling its popular machine learning service with others products that Google is “seeking to promote,” the report states, citing a recent Google cloud internal document.
“The question that we need to think about is whether we use our entry point with Big Query to get a customer to use all the services such as Data Proc, Data Flow, as a suite and give them a price break on the Analytics Suite because it will be much harder for them to migrate away from us if they use all the other services.”
