Antitrust Accusations Building Against Google

The Federal Trade Commission (“FTC”) may be preparing to file an antitrust suit against Google for abusing its dominance as an Internet search engine to stifle competition from other search engines and arbitrarily increase advertisement costs.

The Sherman Antitrust Act, 15 U.S.C. §§ 1-7, which governs American antitrust law, makes direct and indirect “restraint of trade or commerce” illegal, both in interstate and foreign markets. The Clayton Antitrust Act, under 15 U.S.C. §§ 12-27, amended the Sherman Act in 1914 to include specific prohibited acts, such as price discrimination and mergers and acquisitions that substantially reduce competition. The Foreign Trade Antitrust Improvements Act, 15 U.S.C. § 6a, also limited the Sherman Act’s application to foreign trade only where “such conduct has a direct, substantial, and reasonably foreseeable effect” on “trade or commerce” within the United States.

The FTC investigation is rooted in accusations that Google engages in “preferencing,” which means that Google engineers searches to produce results that profit its own secondary services, while limiting search access to competing services. In addition, the investigation concerns whether Google favors advertisements from its own services against competing services.

If the government chooses to pursue an anti-trust lawsuit against Google, it could prove to be the “most far-reaching antitrust investigation” since the United States v. Microsoft Corporation, a monumental antitrust suit in the 1990s.

The FTC has questioned NexTag, also known as Wize Commerce since June 2012, regarding accusations that Google has been channeling search traffic away from the NexTag engine to deter competition from NexTag’s comparison shopping services. NexTag alleges that traffic from Google searches has decreased by half in the last year. NexTag has responded by increasing spending in Google paid ads and expanding partnerships with websites such as Bing and Yahoo.

A parallel investigation into Google’s operations is also taking place in Europe by the European Union. Six individual states — Texas, Ohio, New York, California, Oklahoma, and Mississippi — are also conducting individual investigations into potential Google’s antitrust conduct.

Google has replied that it is “happy to answer any questions” in the course of the investigation. Google further explains that while its growing empire may naturally stifle competition, it nonetheless continues to provide quality products and services, which are beneficial to individual consumers and the economy as a whole.

Experts suggest that if the government chooses to file a lawsuit against Google, Google will likely settle, agreeing to refrain from discriminatory behavior towards competitors and their products and services. However, enforcing these principles will prove to be difficult in the fast-paced world of the Internet.

At the Law Offices of Salar Atrizadeh, we guide our clients in matters related to Business, Internet and Cyberspace by using legal knowledge and skills to create solutions for our clients. Please contact us today to set up a confidential consultation.