Alphabet’s Google Under Scrutiny for Antitrust Concerns

Consumers know Google as one of the most successful technology companies in the world, but the super corporation is currently amid a legal spat with more than a dozen US states over the abuse of its powers.

Led by Texas Attorney General Ken Paxton, 16 US states and Puerto Rico have filed yet another amended complaint against Alphabet Inc’s (GOOGL.O) Google to include what is allegedly more evidence of the web giant breaking antitrust legislation.

In the United States, antitrust laws regulate the structure and conduct of business corporations to prevent anti-competitive behavior. Under these laws, corporations are prohibited to undertake manipulative practices that unfairly restrict trade, lessen competition, or create a monopoly.

The amended lawsuit was filed in a New York federal court on November 12. It accuses Google of manipulating its advertisers through monopolistic and coercive tactics in order to squeeze out competitors and remain the dominant player in online advertising.

The updated filing also highlights Google’s Project Bernanke, a so-called secret internal program introduced in 2013 that was named after the former US Federal Reserve chairman.

The states alleged that Google used their unmatched access to data to ensure that online ads served through their ad system would always win in auctions for ad space.

They further claimed that because Google did not disclose this use of data that they fundamentally performed insider trading.

A statement, released on Google’s blog, responded to the accusations by saying that “AG Paxton mischaracterizes one of many improvements Google Ads has made to optimize advertiser bids. This was entirely implemented by Google Ads for buyers, using the kinds of data and strategies that are available to any buyer participating in an Ad Exchange auction.”

An Onslaught of Attention

The latest allegations are an unwelcome addition to the slew of regulatory scrutiny that Google has been receiving.

In July this year, 37 US state and district attorneys generals filed a lawsuit against the tech corporation alleging that it bought off competitors and implemented restrictive contracts to stifle competition and unlawfully create a monopoly for the Google Play Store in the Android ecosystem.

The allegations stem from an investigation that began in late 2019 and spanned almost every US state. While the investigation has already resulted in several additional lawsuits against the company, the recent examination of internal corporate documents has led to a new wave of claims.

The states accused Google of paying off developers to prevent them from supporting competing app stores. Major competitor Samsung Electronics Co (005930.KS) was alleged to be the intended recipient of a payoff that was meant to persuade them to stop competing.

Google’s legal woes do not end in the US either. On November 10, the corporation lost its appeal against the antitrust decision of Europe’s Competition Commissioner Margrethe Vestager who fined the company 2.42 billion euros ($2.8 billion).

Google was found to have used its price comparison shopping service to gain an unreasonable edge over less influential European competitors. It was the first of three court decisions that brought Google’s EU antitrust fine tally to a staggering 8.25 billion euros ($9.56 billion) as the region looks to strengthen regulations on big tech.

These cases against Google will force changes to the way the major players in the technology industry do business and generate revenue. Whether or not these measures will enhance or impede competition remains to be seen.