Google Faces U.S. Antitrust Regulators Who Want More Than Just Fines

(Bloomberg) -- On Thursday, after a barrage of antitrust lawsuits, Google mounted a defense of its most valuable business. The response showed it's not a Ma Bell breakup Google fears, but being forced to alter its crown jewel—the search engine.

The latest U.S. monopoly case against the company came from 38 state attorneys general, led by Colorado, piling on to a separate state case, filed the day before, and one from the Justice Department. Colorado's suit accuses Alphabet Inc.'s Google of abusing its "virtually untrammeled power over internet search traffic." It's a familiar complaint from rivals in adjacent businesses, such as Yelp Inc. and TripAdvisor Inc., who have long said that Google favors its own stuff in search results and advertising.

The case echoes earlier antitrust action from the European Union, which has fined Google more than $9 billion since 2015. But it may have a greater impact. State attorneys said they spoke to European trust-busters and devised more assertive measures for their own case. “Fines are just like kicking the gorilla in the shins,” said Nebraska Attorney General Doug Peterson. “We fortunately have remedies that are much broader in scope than what some of the foreign competition authorities have."

Thursday's complaint makes no specific demands, but Google has interpreted the case as a ploy to force a redesign of its search engine, a move it said would benefit web "aggregators" at the expense of retailers, airlines, hotels and local businesses. "This lawsuit demands changes to the design of Google Search, requiring us to prominently feature online middlemen in place of direct connections to businesses," Adam Cohen, Google's director of economic policy, wrote in a blog post.

Rob Atkinson, president of ITIF, a research group Google has funded, put it more bluntly: "If successful, the lawsuit today would roll back nearly two decades of search innovation, leaving consumers worse off."

Google said it would challenge the case in court. In a press conference Thursday, the company denied any wrongdoing and said the new lawsuit mirrored an earlier probe from the Federal Trade Commission, which ended with no major action against the company in 2013. Google also said the suit's goal is to degrade its search in favor of these "middlemen"—citing web conglomerate IAC/InterActive Corp., run by Google critic Barry Diller, as one example. 

One new critique raised in the lawsuit involves a Google tool for buying search ads, called SA360. The tool allows large advertisers to purchase ads across a range of Google platforms—but when Microsoft Corp.'s Bing asked for the same treatment, Google refused, according to the complaint. (Microsoft officials didn't respond to a request for comment.)

The result is a deck stacked against Bing and other competitors, the case alleges. Google's dominance in search advertising "is the result of a rigged race, like a 200-meter dash where Google supplies itself a motorbike while its competitors are on foot," the lawsuit reads.

The state lawyers disputed the company's argument that their goal is making internet search worse. "It's just not true," Maura Healey, the Massachusetts attorney general, who joined the Colorado suit, said on Bloomberg TV.

As for the fixes, the states are eyeing "a range of remedies," she said. "Certainly the first thing that needs to happen is these companies need to stop doing the things they are doing."

©2020 Bloomberg L.P.