US takes aim at Google with antitrust lawsuit as the screws tighten on big tech

It’s Europe that’s led the charge against big tech when it comes to the persistent allegations of anti-competitive behaviour levelled at its monopolistic titans.

This has inevitably created a certain amount of tension with the US, the home of Silicon Valley, where the authorities have largely sat on the sidelines as the EU’s competition commissioner, Margrethe Vestager, and her team have made the running, handing down multibillion euro fines that are now being appealed.

With the Trump administration’s Department of Justice (DoJ) filing suit against Google, however, there’s the sense of a crack in the damn.

Pushed through ahead of the US election by attorney general William Barr with an unusual degree of haste, this is the largest antitrust case brought against a tech company in two decades.

There hasn’t been anything like it since the DoJ and the attorney generals of 20 US states, plus the District of Columbia, fought a ding dong battle against Microsoft that took 10 years to settle.

This one isn’t likely to move much faster, which might explain the market’s “meh” reaction to the news, although another argument put forward is that considerable value would be released were Alphabet, Google’s holding company, to be broken up.

That still feels like a relatively distant possibility, albeit less distant than it was.

It’s Google’s search and advertising businesses that are in the regulators’ cross hairs. Arrangements such as the one with Apple that makes Google the default search engine have been the subject of much criticism.

Google raked in $135bn in ad revenues last year, of which search accounted for $98bn. Ads account for 83 per cent of the tech giant’s business in total.

Its characterisation of the suit as “deeply flawed” was only to be expected.

The argument that “no one is forced” to use its services is quite true, but weak. Its presence as the default on, for example, an iPhone inevitably squeezes out its already overmatched competitors. Bing? Who are they?

The question now is whether that crack in the damn leads to a burst and a rash of suits against other tech giants such as Amazon and, especially, Facebook.

The latter is the subject of a Federal Trade Commission probe and is in the midst of a fierce debate over the misinformation spread over its platform, the way it has been used to influence elections, even its potential for the incitement of violence.

Facebook has been running ads in the middle of highly rated NFL games, urging Americans to vote and directing them to its information hub. They're not fooling anyone.

The suit against Google has so far been joined only by a group of Republican-led states – others have been running parallel investigations and may yet pursue their own actions – but it is thought likely to survive the change of administration that the polls say is coming.

The discomfort over the power held by a handful of giant companies crosses party lines and while their motivations might be different, the direction of travel is the same. A Democratic administration might prove tougher still if people like senator Elizabeth Warren have anything to do with it.

The last year has seen tech company leaders hauled over the coals before the US Congress, the release of critical reports and loud calls for action to bring them to heel.

But notwithstanding all this noise, how effective will any of this prove? Well that’s the multibillion dollar question. It’s certainly party time for layers and lobbyists, and they can probably start searching for bigger homes.

The Microsoft case, accusing the software giant of operating an illegal monopoly over the PC operating system market, produced a zinger of a judgment but ended up with what critics said amounted to little more than a slap to the company’s wrist after it was appealed and settled.

The EU has proved its resolve with respect to this issue (not to mention the way big tech handles its tax affairs). Other competition watchdogs, and that includes those in the US, disappoint as often as not.