Google vs. America

Four antitrust lawsuits have been filed against Google by state attorneys general, charging it with attempting and conspiring to monopolize interstate commerce. If successful, the states concerned will receive threefold the damages caused to their residents by Google's alleged monopolistic behavior.

Such a drastic action, while very unusual for the present time, is not unprecedented in Internet history. The breakup of the Bell System either resulted in or caused the growth of phreaking, depending on your viewpoint. The lawsuit against Microsoft, while its outcome was anticlimactic, did spell the beginning of the end of the domination of Internet Explorer.

It is important to note that because both cases were settled, they are not precedents in the legal sense. But even though they didn't set precedent (make rules future judges have to follow), they did have widespread social, economic, and political effects. These cases might fall into that category, as well.

They reflect a new understanding that Big Tech corporations are the colonizers, not the friends, of the common man of the Internet. Both sides of the political spectrum, despite their widening differences, have united in realizing that these corporations are responsible only to themselves and their shareholders and not to the people.

Overview of the cases

Four cases have been filed. The numbering is for convenience and is arbitrary.

• By the State of Utah, in relation to Android ("Utah-Android case" in headings, Case I in text)
• By the State of Colorado, in relation to searching ("Colorado-search case" in headings, Case II in text)
• By the Federal Government, in relation to defaults for mobile devices ("Federal-mobile case" in headings, Case III in text)
• By the State of Texas, in relation to advertising ("Texas-advert case" in headings, Case IV in text)

Numbers in parentheses refer to paragraph number of the complaint. As they have not been fully unredacted, this article can only be based on the information that is not redacted.

When reading those summaries, it is important to remember that a company does not violate the antitrust laws by securing or maintaining a monopoly because of the quality or attractiveness of its products. What is needed to prove a violation is maintaining a monopoly through anti-competitive conduct.

Utah-Android case

Filed in: Northern District of California (covering the coast of California down to about Monterey, and including the Bay Area)
Link to complaint: https://regmedia.co.uk/2021/07/08/antitrust.pdf
List of plaintiffs: Utah, New York, North Carolina, Tennessee, Arizona, Colorado, Iowa, Nebraska, Alaska, Arkansas, California, Connecticut, Delaware, District of Columbia, Florida, Idaho, Indiana, Kentucky, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Virginia, Vermont, Washington, West Virginia

Colorado-search case

Filed in: District of Columbia (covering Washington DC)
Link to complaint: https://coag.gov/app/uploads/2020/12/Colorado-et-al.-v.-Google-PUBLIC-REDACTED-Complaint.pdf
List of plaintiffs: Colorado, Nebraska, Arizona, Iowa, New York, North Carolina, Tennessee, Utah, Alaska, Connecticut, Delaware, Hawaii, Idaho, Illinois, Kansas, Maine, Maryland, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Dakota, Vermont, Washington, West Virginia, Wyoming, Massachusetts, Pennsylvania, Puerto Rico, Virginia, Guam, District of Columbia

Federal-mobile case

Filed in: District of Columbia (covering guess where)
Link to complaint: https://www.justice.gov/opa/press-release/file/1328941/download
List of plaintiffs: United States, Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina, Texas
This complaint charges Google with using "anti[-]competitive tactics to maintain and extend its monopolies in the markets for general search services, search advertising, and general search text advertising" (1). Specifically, Google has entered into exclusionary agreements with distributors of Internet-connected devices that make Google the default search engine for these devices in exchange for a cut in the revenue from advertising. Such agreements cover almost 60 percent of all searches in the United States, and almost half the rest "are funneled through properties owned and operated directly by Google." (112) For example, Google pays Apple about $10 billion so that Google remains the default search engine on iOS devices. This makes up 20 percent of Apple's income (118), and represents 36 percent of all searches in the entire United States (121).

While Android is technically open-source, Google requires manufacturers of smartphones to enter into certain agreements to use Google Play and Maps and have Google share its revenue with them (128). The first is the anti-forking agreement, whereby manufacturers cannot develop alternative Android operating systems. The second is the preinstallation agreement, whereby manufacturers must preinstall Google Play, Chrome, Google search, Gmail, Maps, and YouTube on every phone so that users cannot delete them (134). It also requires that the Google search widget be placed at a specific place on the screen (138). Also, manufacturers have to "implement a Google hotword" that automatically activates Google Assistant and "ensure certain touch actions on the device’s home button directly access Google Assistant or Google" (139). The third is the revenue sharing agreement, which Google enters into with carriers and manufacturers, whereby the carrier or manufacturer gets "a substantial portion of Google’s search advertising revenues" for making "Google the preset default general search engine for all significant search access points on the device." (144) These agreements last for 2 or 3 years. If it walks away, it "loses out on revenue share not only for new mobile devices but also for the phones and tablets previously sold and in the hands of consumers." (152) These exclusive agreements, the complaint alleges, deprive a rival of the chance to compete even if it had a better search engine.

Google has also been trying to expand its empire to newer forms of Internet-connected devices like smart speakers or smartwatches. For instance, Google does not allow smartwatch manufacturers to have another search engine preinstalled concurrently with Google if they want to use its "free" operating system, Wear OS (162).

Google also enters into revenue sharing agreements with browsers, like Safari and Firefox. Internet Explorer and Edge are the only major ones in the United States to have an alternative preset (158). The browsers get up to 40 percent of the advertising revenue generated by people searching with Google as the default (157).

Texas-advert case

Filed in: Southern District of New York (covering Manhattan, the Bronx, and the suburbs to their north)
Link to complaint: https://storage.courtlistener.com/recap/gov.uscourts.nysd.564903/gov.uscourts.nysd.564903.152.0_1.pdf
List of plaintiffs: Texas, Alaska, Arkansas, Florida, Idaho, Indiana, Louisiana, Mississippi, Missouri, Montana, Nevada, North Dakota, South Carolina, South Dakota, Utah, Kentucky, Puerto Rico
The complaint charges Google with monopolizing five markets: ad servers, ad exchanges, ad networks, ad buying tools, and YouTube video ads.

Online advertisers generally do not directly buy advertising space from the publishers of their ads. Instead, they do so through a series of intermediaries, each of which takes its cut of the advertiser's payment. The complaint accuses Google of monopolizing the market in each and every one of them. From publisher (and therefore reader) to advertiser, these are: ad servers, ad exchanges/networks (marketplaces), and ad buying tools.

An ad server "performs three internal critical tasks related to selling ad space." It first identifies each individual user visiting the publisher's website, and links it to other information about the user. (38) Second, it connects to multiple advertising marketplaces and lets "publishers automatically route their inventory into them for sale as the users load publishers’ webpage" and "controls how the different marketplaces can access and compete for a publisher’s inventory." (39) Third, it routes ads sold for a premium to "high-value users" who are more likely to make a purchase upon seeing them (40).

Marketplaces are of two kinds: exchanges for large publishers, networks for small ones (44). Exchanges are "real-time auction marketplaces that match multiple buyers and multiple sellers on an impression-by-impression basis", an "impression" being every time a unique user sees an ad (45). Ad exchanges are only open to advertisers with a minimum number of page views, and that minimum is usually in the millions (46). Like exchanges, ad networks "match publishers' inventory with their advertisers' demand"; however, they "obscure prices within auctions" so that neither buyer nor seller knows the rate at which they take a cut of the buyer's payment. They can do that because they buy the ad space from publishers then resell it to advertisers (52). There are separate networks for web display ads and mobile app ads (53). Google's exchange charges sellers "19 to 22 percent of...clearing prices" (48) and its network charges sellers "around 32 to 40 percent of each transaction" (54).

Ad buying tools are the agents of advertisers, who interface with marketplaces on their behalf, just like how ad servers interface with marketplaces on the behalf of publishers. Ad buying tools for large advertisers are called demand-side platforms (57). Advertisers are required to spend a minimum amount of money to use one, typically in the five figures, because a demand-side platform offers advertisers more freedom to bid and trade and is therefore much more complex (59).

It's not practical for either advertisers or publishers to bypass this system. Every time a user visits a publisher's page, the publisher's ad server sends information about the user and the ad slot to a marketplace. The marketplace requests bids for that impression from ad buying tools. Ad buying tools have to process the request, determine the price they think the impression is worth, and respond to the bid request with that price. This all has to happen in a split second, before the page is even finished loading (60).