Feds Sue Google in Biggest Antitrust Action in 20 Years

Exactly nine years and one week ago, Jeremy Stoppelman, Co-founder and CEO of Yelp delivered his view of Google to the U.S. Senate Committee on the Judiciary, Subcommittee on Antitrust, Competition Policy, and Consumer Rights. Yes, that was September 21, 2011. In his statement, Stoppelman described Yelp as a company of 800 employees with more than 60 million monthly consumer uses.

He wrote this at the time. “At Yelp, our mission is to connect consumers with great local businesses. The site allows people throughout the country to share detailed and passionate reviews about businesses in their neighborhoods. In turn, businesses that provide great service and good value are able to establish and promote themselves online.”

Jeremy went on to discuss Google. He said this. “Google is no longer in the business of sending people to the best sources of information on the web. It now hopes to be a destination site itself for one vertical market after another, including news, shopping, travel, and now, local business reviews. It would be one thing if these efforts were conducted on a level playing field. But the reality is they are not. The experience in my industry is telling: Google forces review websites to provide their content for free to benefit Google’s own competing product – not consumers. Google then gives its own product preferential treatment in Google search results.”

Nine Years Later — the Big Got Bigger

A lot has changed In the nice years since Jeremy’s testimony. For one, Yelp is a company of nearly 6,000 employees, they generate more than $1 billion per year. In the second quarter of 2019, Yelp reported having a monthly average of 61.8 million unique visitors via desktop and 76.7 million unique visitors via its mobile website. Surprisingly, this is only twice what they had nine years ago. And as of June 30, 2019, Yelp had 192 million reviews on its website. 

At the same time, it’s fair to say that since 2011 Google has only solidified its position as the primary local search destination. Having an up to date Google My Business (GMB) profile is increasingly a “must do” for any local business. This is perhaps even more so since Covid 19 landed into our lives and livelihoods. Google continues to add additional local business attributes and engagement functionality. This includes messaging, appointments, photos, reviews to name just a few. 

Cloned Microsoft Case

Fast forward to October 20, 2020, we learn of the U.S. Department of Justice filing an anti-trust suit against Google. The fundamental claim against Google is that it has too much power over search. One apparent focus of the suite is Google’s exclusive deals with Apple and others to serve as their default search engines in exchange for billions in fees. Google has been able to make the money back, and then some, through ad sales. 

The antitrust complaint states the following. “For years, Google has entered into exclusionary agreements, including tying arrangements, and engaged in anticompetitive conduct to lock up distribution channels and block rivals. Two decades ago, Google became the darling of Silicon Valley as a scrappy startup with an innovative way to search the emerging internet. That Google is long gone.”

It’s unclear what remedy the Justice Department is seeking. According to news reports, the immediate goal is not to break up Google but to change how it operates. Of course, that could ultimately lead to breaking Google (owned by Alphabet) down into its component businesses.

News reports call this the biggest anti-trust suit filed in the last 20 years. I am guessing that was a reference to U.S. v. Microsoft. That suit was filed in May 1999 and was settled about three and a half years later in November 2001. Looking even further back, there was the suit filed against “Ma Bell” (aka AT&T) by the U.S. Justice Department in 1974. That suit was finally resolved with the Modified Final Judgement eight years later in 1982. 

One tweet that the New York Times highlighted in its coverage was from Columbia Law School professor Tim Wu. He tweeted this. “The Justice Department is showing that it isn’t just Silicon Valley who clones successful products: They’ve basically cloned the Microsoft case and added Google’s name to it.” 

Major Bank Ahead for Lawyers and Experts

What can we expect? Probably not very much unless you’re an anti-trust lawyer or an expert witness. If you’re either of those, there’s a load of billable hours coming down the pike. We doubt we’ll see much evidence of the lawsuit for at least a couple of years. Maybe not for another election cycle.

But here’s the important thing. There are those in Washington D.C. that believe Google is just the first among a number of Silicon Valley companies that should be targets of substantive anti-trust claims. Who’s next is anyone’s guess. Facebook, Apple, Amazon (ok not actually in Silicon Valley). The only real certainty is if you can get a piece of the action — as a lawyer or expert witness — you’ll be in for a decade of long hours, copious amounts of coffee, and some serious bank.

Image credit: Sept. 20, 2011 – Source: Chip Somodevilla/Getty Images North America

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