US Justice Department's case against Google to focus on search engine dominance

Washington

THE Department of Justice's impending lawsuit against Google has narrowed to focus on the company's power over Internet search, a decision that could set off a cascade of separate lawsuits from states in ensuing weeks over the Silicon Valley giant's dominance in other business segments.

In presentations to state attorneys-general starting on Wednesday, the department is expected to outline its legal case centred on how Google uses its dominant search engine to harm rivals and consumers, said four people with knowledge of the plan; they spoke on condition of anonymity because the details were confidential.

Meeting with the state attorneys-general is one of the final steps before the Department of Justice (DOJ) files its suit against Google, they said. Its action against Google is set to be narrower than what some states and several career lawyers in the department had envisioned.

The DOJ also investigated Google's reach in ad technology and how the company prices and places ads across the Internet.

But in an effort to file a case by the end of September, the agency decided to pick the piece that was furthest along in legal theory and that it felt could best withstand a potential challenge in court.

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The department has not written the final draft of its complaint against Google, and the document is expected to change over the next few days to reflect internal deliberations and input from constituents like the state attorneys-general.

Suing Google would fulfil a push by Attorney-General William Barr to take action against a tech giant around the end of September, an effort that has taken on greater urgency ahead of the Nov 3 election, as President Donald Trump fights for a second term.

The DOJ and 48 states agreed to open their investigations into Google's dominance a year ago as a bipartisan effort, but the last-minute jostling about what is included in the cases and how they should play out has exposed political fault lines.

The department is seeking support of the search case and is set to file a lawsuit even without bipartisan support from state attorneys-general, two people with knowledge of the plan said.

On Wednesday, Republican state attorneys-general will attend a meeting with Mr Trump and Mr Barr over concerns of censorship by social media companies, said two sources with knowledge of the plan.

If Mr Barr brings the case by the end of this month, he will override lawyers who worked on the investigation and who said they needed more time to bring what they considered to be a strong lawsuit.

Mr Trump has supported efforts to restrain the power of Amazon, Apple, Facebook and Google.

Last summer, the DOJ and Federal Trade Commission opened antitrust investigations into the four tech companies, which, when combined, are valued at more than US$5 trillion. The investigations were buttressed by state investigations and a separate House inquiry into alleged monopoly abuses by the four giants.

The DOJ and Google declined to comment.

The department's complaint could come as early as next week and is expected to start a multipronged battle against Google, the search giant owned by Alphabet. While details are still being completed, the DOJ's case on search is expected to focus on Google's agreements with other companies like Apple, which set its search engine as the default option for users on iPhones and other devices. Those agreements give Google's search engine an advantage over other rivals.

The complaint is expected to be followed by other antitrust actions against Google by the end of the year, said the sources who have knowledge of the plans by the DOJ and states.

Separately, an investigation by state attorneys-general of Google's behaviour in digital advertising - the source of virtually all of Alphabet's US$34 billion in annual profit - is nearly complete.

That investigation, led by Ken Paxton, the Republican attorney-general of Texas, is expected to result in a suit accusing Google of using tactics that have undermined competition in the market for online advertising, a person briefed on the inquiry said.

That suit, the person said, should be ready to be filed soon, with the DOJ potentially joining as a plaintiff, but with Texas taking the lead. A spokesperson for Mr Paxton did not immediately respond to a request for comment.

There is also the potential for an additional, broader suit by the states led by Phil Weiser, the Democratic attorney-general of Colorado. It would include more wide-ranging allegations of Google using its dominance of the search market to favour its shopping and other services, the source said.

That investigation is still in progress and a case, if filed, would come later than the other two, the person said. Mr Weiser's office declined to comment.

Google controls about 90 per cent of web searches globally, and rivals have complained that it extended that power by making its search and browsing tools the defaults on many smartphones. Google also captures about a third of every dollar spent on online advertising, and its ad tools are used to supply and auction ads that appear across the Internet.

The contracts Google reaches with other tech companies to serve as a default search engine have already attracted attention internationally, in inquiries that may provide a preview into the argument by the DOJ.

Britain's Competition and Markets Authority said in a report this summer that the scale of Google's payments to mobile phone makers like Apple for its search engine to be the default on those devices was "striking and demonstrates the value that Google places on these default positions". The regulator also found that those agreements were "a barrier to expansion for other search engines". NYTIMES