Google Search a Target of U.S. Antitrust Probes, Rival Says

(Bloomberg) -- U.S. federal and state authorities are asking detailed questions about how to limit Google's power in the online search market as part of their antitrust investigations into the tech giant, according to rival DuckDuckGo Inc.

Gabriel Weinberg, chief executive officer of the privacy-focused search engine, said the company has spoken with state regulators, and talked with the U.S. Justice Department as recently as a few weeks ago.

Justice Department officials and state attorneys general asked the company about requiring Google to give consumers alternatives to its search engine on Android devices and in Google's Chrome web browser, Weinberg said in an interview.

“We've been talking to all of them about search and all of them have asked us detailed search questions,” he added.

Weinberg's comments shine a light into how the inquiry is examining Google's core business -- online search. Bloomberg has reported that the Justice Department and Texas are already examining Google's dominance of the digital advertising market. The Justice Department and a coalition of states led by Texas Attorney General Ken Paxton have been investigating the company for a year, and the DOJ has begun drafting a lawsuit, which could be filed in the coming months. It would kick off one of the most significant antitrust cases in the U.S. since the government sued Microsoft Corp. in 1998.

Earlier: DOJ Scrutinizes Google Advertising, Search in Antitrust Probe

The investigations have been wide-ranging and are looking into various parts of Google's business. States including Utah and Iowa are focusing on search, according to people familiar with the matter. Texas is looking at the digital ad market and related technology.

Google handles the majority of online searches in the U.S., with Microsoft's Bing, DuckDuckGo and other providers trailing far behind. Google Search is free for users, but the company's lead helps it charge thousands of businesses high prices for ads that run above the free web listings in results. Last year, that business generated almost $100 billion in revenue.

Read more: Google Search Dominance Has Businesses Paying for Their Name

“We continue to engage with the ongoing investigations led by the Department of Justice and Attorney General Paxton, and we don't have any updates or comments on speculation,” a Google spokeswoman said. In the past, the company has said that online competition is just a click away.

The Federal Trade Commission previously investigated whether Google stifled competition in the market for online search advertising, but it closed the probe in 2013 after the company agreed to relatively minor changes. However, portions of communications between FTC commissioners and staff later showed that staffers recommended bringing an antitrust lawsuit against Google.

Read more: Google Should Be Afraid of Latest U.S. Scrutiny

Weinberg said the questions he has fielded recently about requiring Google to present users of its tech alternatives to its own search engine suggest that's something the government could include in a possible future settlement.

“That's one direction we think has a decent probability,” he added. The Justice Department declined to comment. Attorneys general in Utah and Iowa didn't respond to requests for comment.

In Europe, Google was fined a record $5 billion for antitrust violations in 2018. As part of that ruling, the company is required to give consumers using phones that run its Android operating system a choice of different search engines and web browsers. Competing services must bid in an auction to be included in a “choice screen.”

“Could this be a precursor to similar changes in the U.S.?” Mark Shmulik, Toni Sacconaghi and other analysts at Sanford C. Bernstein, wrote in a note to investors earlier this week.

Europe's remedy has gone through various iterations and some rivals have argued that having to pay to be included in the choice screen is unfair.

Read more: Google App Prompts Watched ‘Very Very Closely' by EU's Vestager

Ecosia, a not-for-profit search engine based in Germany, boycotted the auction. DuckDuckGo participated in the most recent auction, but said it may not be able to compete if prices rise.

“This auction remedy, proposed by Google, was constructed to make Google money, not to provide meaningful consumer choice,” DuckDuckGo said in a blog post last week.

It suggested scrapping the auction and said that an unpaid “search preference menu” has increased competition already in Russia. In 2010, Microsoft created a successful browser preference menu without an auction where the top five web browsers by market share appeared randomly, DuckDuckGo said.

“While our view is that users are unlikely to switch search engines, Yandex grew their search engine share by 2,000 basis points to 58% in three years following a similar ruling in Russia,” Bernstein's Shmulik wrote in the recent Bernstein note to investors.

If the U.S. incorporates these suggestions, it could bypass Europe as the most successful regulator of Alphabet Inc.'s Google, Weinberg said.

“The U.S. gets criticized for being behind Europe but in reality what's happened in Europe hasn't worked,” the CEO added. “The U.S. not only can do it right from the start but has the opportunity to leapfrog the EU.”