Google to Cite Rivals and Privacy in U.S. Lawsuit Defense

(Bloomberg Businessweek) -- Google is expected in the coming days to be hit with the biggest U.S. antitrust lawsuit since the government went to battle with Microsoft Corp. two decades ago. Officially, the company hasn't laid out its legal arguments yet. But piecing together submissions to other antitrust authorities, executive blog posts, and congressional testimony gives a picture of Google's strategy.

Justice Department investigators have been probing whether the Alphabet Inc.-owned company uses its dominance of online search, web browsers, and advertising technology to unfairly block out rivals, pressure businesses into buying more ads, and benefit the rest of its digital empire, people familiar with the investigation have said.

Google has already sought to discredit the foundation of these arguments. “We don't agree that we're dominant. We don't agree that there isn't a ton of choice,” Don Harrison, head of corporate development, said during a Sept. 15 congressional hearing. Although Google controls about 90% of the search engine market, consumers get information online in other ways as well: They look for news on Twitter, gift ideas on Pinterest, and products on Amazon.com, the company has argued. This is a common tactic in antitrust cases. Regulators try to define a market narrowly to illustrate a lack of competition, while corporations create a universe of rivals that's as wide as possible.

Google has also leaned on another major theme in tech regulation as a defense: privacy. Sometimes the company has to change its services to limit sharing of consumer data online or improve user privacy in other ways. That can hurt rival businesses. Google executives have privately complained about being stuck in a “damned if you do, damned if you don't” situation. If the company shares less data, advertising rivals and partners shout antitrust. If it opens up, privacy advocates cry foul.

In January, Google said its Chrome browser would eliminate trackers used to measure ad performance within two years, because consumers don't like being followed around the web. Chrome is the most used U.S. browser, so that would represent a seismic shift for the industry; and dozens of rival ad-tech providers have had to rush to find alternate ways of operating or risk becoming obsolete. Most of Google's business is less reliant on these trackers, which means it's set to gain at the expense of smaller competitors with fewer ways of targeting and measuring data. It's also used privacy to defend its decision to limit rival ad-tech providers from accessing its YouTube platform, the world's largest online video service.

Google's ad-tech business handles almost every part of the process of buying and selling display ads online. Competitors, advertisers, and publishers have complained that its tools don't always plug in easily with products from other companies, pushing the entire ecosystem toward Google.

In a May 2019 report to the Australian Competition and Consumer Commission, a lawyer for the company used 67 footnote-filled pages to argue that its ad-tech business supports competition rather than quashes it. Individual competitors or customers may feel certain actions are unfair, but that's because Google has to balance it all, the report said. Benevolent keeper of the internet is a role Google repeatedly assumes in its defense. Search, YouTube, Maps, and Gmail are all free for ordinary users and directly benefit small businesses, Chief Executive Officer Sundar Pichai told a congressional hearing in July.

The pandemic's forcing more businesses online has become part of this argument, too. “Nearly one-third of small-business owners say that without digital tools they would have had to close all or part of their business during Covid,” Pichai said. He characterized his ad-tech empire almost as if it were a charity set up for the good of the broader internet. “It's a low-margin business for us,” the CEO said. “We do it because we want to help support publishers.”

©2020 Bloomberg L.P.