The US Department of Justice (DOJ) and 38 state attorneys general have launched a legal action against Google, accusing the tech giant of abusing its dominant position in online search to increase profits, eliminate competition, and stifle innovation. The case revolves around Google's agreements with smartphone manufacturers and other firms, which allegedly strengthen its search monopoly. By accumulating more user data, Google can improve its products and retain more users, thereby reinforcing its market position.

The significance of this case is particularly high for Google and its parent company, Alphabet, as Google search generated$83 billion in revenue in the first half of 2023, accounting for 57% of Alphabet's total revenue and virtually all its profits.

The outcome of the case also holds significant stakes for the DOJ. Firstly, the DOJ needs to prove that Google is indeed a monopoly. The DOJ must demonstrate that Google is abusing its dominant position. Google contends that users have plenty of choices and opt for Google due to its superior product.

Repercussions from this lawsuit go beyond the immediate outcome of the trial. A defeat for the DOJ would undermine the aggressive approach to regulating the tech industry pursued by the DOJ and the Federal Trade Commission (FTC) under President Joe Biden's administration.

Why does it matter?

The outcome of this trial could have significant implications for Google's business practices and the broader landscape of regulating and scrutinizing big tech firms. The case will set a precedent for future trustbusting actions and investigations targeting other tech giants such as Meta, Amazon, and Apple.

Source: Reuters