Google sued by 38 states for alleged abuse of search dominance

A bipartisan coalition of states sued Alphabet Inc.’s Google, alleging broad antitrust violations in the online search market, marking the third U.S. case against the search giant in two months.

The lawsuit, led by eights states including Colorado, Iowa and New York, marks the latest escalation of the antitrust battle against Google. It comes a day after 10 Republican state attorneys general led by Texas sued the company for anticompetitive practices, and follows an October complaint by the Justice Department.

“Never before have so many states and the federal government come together to challenge a company with such power,” Iowa Atty. Gen. Tom Miller said in a statement Thursday. “Google has more data on consumers, and more variety of information, than perhaps any entity in history.”

The lawsuit, filed by 38 attorneys general, accuses Google of illegally monopolizing internet search and search advertising through a series of anticompetitive contracts and conduct, hurting consumers and advertisers in the process.

Google countered in a blog post that it has improved search results in ways that many world regulators had previously deemed pro-competitive.

“This lawsuit seeks to redesign search in ways that would deprive Americans of helpful information and hurt businesses’ ability to connect directly with customers,” said Adam Cohen, Google’s director of economic policy. “We look forward to making that case in court.”

The Justice Department and 11 Republican state attorneys general sued Google on Oct. 20 in the most significant monopolization case in more than two decades. That case focuses on Google’s agreements with Apple Inc. and other partners to provide Google search as a default to users.

The Texas-led case focuses on Google’s control over the technology that delivers display ads across the web. It alleges that Google reached an illegal deal with Facebook Inc. to persuade the social media giant to back off from competing in this market.

Colorado Atty. Gen. Phil Weiser said during a virtual news conference that the new case goes beyond the Justice Department’s complaint. Unlike that suit, the states are targeting Google’s conduct in specialized search services, such as local queries, saying the company made it harder for users to access information from rival providers. Weiser said the states will move to consolidate the suit with the federal case.

“Probably the most comparable case is 20 years ago, the Microsoft case,” Nebraska Atty. Gen. Doug Peterson told reporters during the news conference. “We’re in a new time, a new era.”

The antitrust case against Microsoft Corp., which began in 1998 and focused on deals to distribute its software and operating systems, helped set the terms for competition in the emerging internet industry.

Antitrust actions against large technology platforms have escalated dramatically in the final weeks of the year. The Federal Trade Commission and a group of more than 45 states led by New York filed a pair of lawsuits recently against Facebook alleging the social media giant thwarted competition to protect its monopoly. The suits sought court orders to unwind Facebook’s acquisitions of Instagram and WhatsApp.

Critics have accused Google of using its dominance of the online search market to steal other companies’ content for its own results and starve competitors of vital traffic. They also say it has made acquisitions in online ads and video that reduced competition, and locked up key distribution channels on browsers and mobile operating systems.

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Google argues that its search engine is popular and free, that rankings are driven by consumer needs and that prior deals passed regulatory scrutiny.

Google has said that the U.S.-led search case is “deeply flawed” and called Wednesday’s filing “meritless” and “inaccurate.” The company argues that platforms’ agreements for prime placement before consumers are common in many markets and don’t prevent users from switching to competitors.

Google also says it faces stiff competition from companies including Amazon.com Inc. for the most profitable searches, which show consumer intent to purchase goods and command greater advertiser dollars.

Like the Justice Department complaint against Google, the new state case targets the distribution deals Google reached with Apple and mobile carriers that the states say illegally cut off competition from other search providers. Those agreements have made Google the de facto search engine on nearly all mobile devices in the U.S., the states said.

The states also accuse Google of illegally monopolizing search by cutting off traffic to specialized search providers that focus on a particular commercial segments such as travel, local businesses and shopping. Those search services rely on Google to get customers and represent a potential threat to Google’s dominance, particularly because their niche offerings are attractive to advertisers, the states said.

Instead of competing fairly against those companies, Google used its gatekeeper role to exclude them, according to the complaint. Google limits the kind of ads those search providers can buy to attract customers. It also blocks certain companies from appearing in Google’s OneBox feature, which typically provides a map and listings, the states said.

“Google’s decision to degrade access to such opportunities for specialized vertical providers lacks any legitimate business justification and is for the purpose and effect of excluding rivals,” they said.

Yelp, which has long complained about Google’s conduct, cheered the states’ lawsuit.

“For nearly a decade, Yelp’s small public policy team has openly advocated for heightened antitrust scrutiny of Google’s behavior, so it is gratifying to see Google finally brought to justice for this specific conduct,” said Luther Lowe, a Yelp public policy executive.