UPDATED 20:19 EST / SEPTEMBER 03 2019

POLICY

State attorneys general target Google in new antitrust probe

Google LLC will be investigated by more than half of America’s state attorneys general over possible antitrust violations, according to a report today in the Washington Post.

The Post cites “three people familiar with the matter” as saying the investigation will be officially announced at a press conference on Sept. 9. It’s not clear if Google will be investigated alone, or if other tech firms such as Amazon.com Inc. and Facebook Inc. could also be targeted.

Tech firms have come under increased scrutiny in recent months over possible antitrust violations. In July, the Justice Department launched a broader antitrust probe into U.S. technology companies including Google, Amazon, Facebook and also Apple Inc. over similar allegations. And the House Judiciary Committee earlier this year said it was carrying out a “top-to-bottom” probe into the same companies.

“We continue to work constructively with regulators, including attorneys general, in answering questions about our business and the dynamic technology sector,” Google said in a statement when asked to comment on today’s report.

The investigations center around claims that big tech firms such as Google are abusing their positions by collecting vast amounts of data on users and using their deep pockets to buy out any rivals and maintain their market dominance, to the detriment of consumers.

Patrick Moorhead of Moor Insights & Strategy told SiliconANGLE that he believed Google was the primary target of most state attorneys general. But the likes of Apple, Amazon and Facebook could also be singled out, he said.

“I expected these probes as the states many times piggyback on federal investigations by the DOJ and FTC,” Moorhead said. “Amazon is in the best position as it has less than 10% of all retail sales. Walmart’s fiscal 2019 revenue was $514 billion while Amazon’s retail and entertainment revenues were $207 billion for calendar 2018.”

Google has been subject to similar investigations by U.S. officials in the past, but has always managed to come out unscathed. In 2013, for example, the Federal Trade Commission looked into allegations the company was providing biased search results that favored its own products and services, but ultimately decided there was no wrongdoing.

Google might not be so lucky this time around though, said analyst Charles King of Pund-IT Inc. He told SiliconANGLE that collaborating states have a good track record when it comes to investigating big industries accused of wrongdoing.

“Previous targets of state investigations include the tobacco industry in the 1990s, and Standard and Poors for faulty mortgage bond ratings and foreclosure practices following the real estate crisis last decade,” King said. “If the rumors are correct, it will signal the beginning of what’s likely to be a long, complex and expensive process for Google and any other tech companies that are targeted.”

Google has previously been hit with some big fines across the water by European regulators. In 2018, for example, it was fined a record $5 billion by the European Union for unfair business practices around its Android operating system. That was because of Google’s requirement that smartphone manufacturers preload many of its apps and services onto their devices in order to use the software.

And last March the European Commission slapped the company with a $1.7 billion fine for “abusive” online ad practices. According to the commission, Google was exploiting its dominance of the ad market by preventing rivals from placing advertisements on some third-party websites.

“Google is used to regulatory scrutiny but it typically comes from Europe,” said Constellation Research Inc. analyst Holger Mueller. “So it will be interesting to see the scope and size of the regulatory troubles Google is getting into this time. Another thing to watch is how prosecutors operate on the inadequate legal framework in the U.S., which hasn’t caught up with digital economy.”

Photo: Omni/Flickr

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