Google partners and other tech industry executives largely downplayed a U.S. Department of Justice antitrust lawsuit filed today against the search engine giant and hailed the technology company as an innovation catalyst rather than an inhibitor.
But while some expect the federal civil suit eventually will fizzle, others predict it could have widespread impacts on the technology industry as a whole while serving as a distraction for Google.
The lawsuit probably amounts to a “lot of noise,” according to Ethan Simmons, managing partner of PTP, a born-in-the-cloud consulting and services firm based in Norwood, Mass.
“I don‘t think anything big is going to come out of it,” Simmons said. “I think it’ll be a slap on the hand, maybe a fine, and it’ll probably be business as usual. It’s going to take years to figure out.”
But Simmons is concerned the lawsuit still will be a huge distraction that could result in Google losing its focus.
“If you look at when Microsoft went through this, it created a big enough distraction, where you could say that they missed out on the whole mobile part of the business, because they were too distracted fighting the antitrust suit,” he said.
From a Google shareholder perspective, meanwhile, Simmons said a potential forced breakup of Google “probably is a good thing” that will unlock shareholder value.
“If you uncouple the cloud services part of the business from the other operations, there‘s a lot of value to unlock,” he said. “If (the DOJ) were to take it to an extreme, I think that’s definitely what they would look at.”
The DOJ lawsuit, filed with the backing of 11 states, alleges Google has used “anti-competitive and exclusionary” distribution agreements to willfully maintain and abuse its monopoly power in general search services, search advertising and general search text advertising. Google actions violate the federal Sherman Anti-Trust Act that bans monopolistic business practices, according to the DOJ.
U.S. Attorney General William Barr characterized the case as “monumental” for both the DOJ and American consumers. The DOJ formally opened its review of market-leading, online platforms in July 2019, and its antitrust division’s investigation of Google is part of that review of whether technology markets have been “deprived of free, fair and open competition.”
The antitrust division has collected “convincing evidence that Google no longer competes only on the merits but instead uses its monopoly power – and billions in monopoly profits – to lock up key pathways to search on mobile phones, browsers and next-generation devices, depriving rivals of distribution and scale,” according to Barr.
“The end result is that no one can feasibly challenge Google’s dominance in search and search advertising,” he said in a statement today. “This lack of competition harms users, advertisers and small businesses in the form of fewer choices, reduced quality — including on metrics like privacy — higher advertising prices and less innovation.”
The DOJ’s 1998 antitrust lawsuit against Microsoft paved the way for a new wave of innovative technology companies, including Google, Barr noted, but he said Google since has evolved into the “monopoly gatekeeper of the internet.”
“Unfortunately, once Google itself gained dominance, it resorted to the same anti-competitive playbook,” Barr said. “If we let Google continue its anti-competitive ways, we will lose the next wave of innovators, and Americans may never get to benefit from the ‘next Google.’ The time has come to restore competition to this vital industry.”
The DOJ’s lawsuit against Microsoft resulted in a 2002 settlement that curbed some of its alleged anti-competitive practices related to its dominance of the personal computer market with its Windows operating system. But Microsoft, which was constrained by a DOJ consent decree through 2011, remained intact after a court ruling to break up the company was overturned on appeal.
Relying on Google Search is a “user choice,” according to Tony Safoian, CEO of SADA Systems, a Los Angeles-based Google Cloud Premier Partner and 2019 Reseller Partner of the Year.
“In the most popular entry points and even those Google squarely controls — like Chrome, Android — the default search engine can be changed with a couple of clicks,” Safoian said. “Same for iPhone and all iOS devices. We are also champions of user choice — all of Google‘s products also work equally well on any operating system and device.”
Google yesterday painted the lawsuit as “deeply flawed,” saying it relied on “dubious antitrust arguments to criticize our efforts to make Google Search easily available to people. “
“People use Google because they choose to, not because they‘re forced to, or because they can’t find alternatives,” Kent Walker, Google’s senior vice president of global affairs said in a blog post today. “This lawsuit would do nothing to help consumers. To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices and make it harder for people to get the search services they want to use.”
“This isn’t the dial-up 1990s, when changing services was slow and difficult, and often required you to buy and install software with a CD-ROM,” Walker said. “Today, you can easily download your choice of apps or change your default settings in a matter of seconds — faster than you can walk to another aisle in the grocery store.”
But John Best, chief technology officer at xOps, a DevOps IT services firm with headquarters in New York City, believes a good argument can be made that “Google does have monopolistic elements, especially vis-a-vis the quality of its rivals with respect to search results, etc.”
“But I think it‘s much too early to say what the impact will be on the wider industry, especially when it comes to how the suit relates to things like Android and so on,” Best said, noting the DOJ’s failed Microsoft breakup.
‘Force For Good’
Google has been a “force for good” in the technology industry in terms of releasing and encouraging the use of its open source programs, according to David Holme, CEO of Exigent, a London-based legal technology provider and consulting organization.
“This has allowed (for) and encouraged entrepreneurs rather than stifle innovation,” Holme said. “How this vision is best deployed in the economy is up to legislators to decide, but from our perspective, Google has allowed smart people with good ideas to test their thinking in a way that was unimaginable even five years ago.”
The tech industry has demonstrated a repeatable model, according to Randy Newell, chief marketing officer at San Francisco’s nClouds, an Amazon Web Services and DevOps consulting and implementation services company.
“Big tech is, itself, the result of early innovation coupled with significant market adoption that then serves to foster standards and massive ecosystems,” Newell said. “These ecosystems, in turn, throw off enormous amounts of new innovation and opportunity.“
While the lawsuit likely will take years to resolve, Luca Jacobellis, president and chief operating officer of 1Path, said it stands to have big ramifications for the entire technology sector.
“When Microsoft was sued before, it was a decade-long battle,” said Jacobellis, whose company is an Atlanta-based provider of software, hardware, professional and managed services to small businesses. “In the end, it hurt Microsoft, and in the long run, this most likely hurts Google, too. This will likely have widespread impact on the tech industry, so it will be interesting to see how it plays out.”