- Washington insiders figured out the DOJ would take the lead on a probe into Google when Federal Trade Commission staff began deferring to their colleagues over at the Justice Department.
- The probe will look at “everything,” our source says, including adtech, privacy, Android, and search.
- The Microsoft investigation in the 1990s and the European Union’s recent multibillion-dollar discipline against Alphabet will generate the background music.
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Washington DC insiders began to realise that the US Department of Justice would follow the European Union by opening its own antitrust investigation into Google’s market dominance when they tried to talk to their contacts at the Federal Trade Commission — which also looks at monopoly complaints — and were told by staff there to go to the DOJ instead.
A source familiar with both agencies’ activities told Business Insider that he recently began hearing rumors that the Trump Administration was moving closer to a formal probe of Google’s parent company.
The rumors were based on the notion that, after the two agencies decide who will move into action, they refer sources to the lead agency. So he requested a meeting at the FTC to find out what was going on. Sure enough, he was told to approach the DOJ instead.
Our source — who has a very good track record of obtaining insider gossip from antitrust regulators in DC — said that he believes a formal investigation is now inevitable. “If we’re having a conversation that means a probe is happening,” is how he characterized the attitude of Trump administration staff involved. The FTC will likely handle an Amazon probe instead, our source speculates.
As far as our source knows, the investigation will be open to look at “everything” about Google. “Adtech, privacy, even the flagship search product,” our source believes.
Google did not respond to a request for comment.
The FTC has been down this road before. In 2017, the FTC declined to pursue Google on antitrust issues even though its own staff found that Google was “scraping” content from others’ sites and “demoting rival offerings” in favor of its own properties in search results, according to leaked documents from the FTC.
By contrast, the European Commission levied a series of massive fines on Alphabet for abusing its market dominance. It fined Google €1.5 billion ($1.69 billion) for forcing sites to use AdSense; €2.4 billion ($2.7 billion) for promoting its own shopping sites above others in search results; and €4.3 billion ($5 billion) for abusing the dominance of Android.
“The FTC prematurely closed the investigation” in 2017, but “Europe did a deeper probe,” our source says. “That changed the zeitgeist around what governments are doing.”
The DOJ will likely also be guided by the work it did in the 1990s during its antitrust investigation of Microsoft. That, too, revolved around the complicated question of whether a company can be abusing its marketplace position or harming consumers if it gives its products away for free.
At that time, Microsoft’s products had been challenged by smaller companies such as Netscape, WordPerfect, and Lotus. Microsoft managed to strangle those companies by bundling its own software — Explorer, Word, and Excel — into Windows products, which was the dominant consumer computing platform at the time.
Our source says he believes Google’s mobile search product is in a similar position to Microsoft in the 1990s, in principle. Most searches now take place on mobile, and Google dominates mobile platforms. When it delivers search results, Google’s own sites are usually displayed as the topmost results and users have to scroll down to get the “organic” results that actually reflect the top sites competing equally on the open web. That down-ranking of non-Google sites can make it difficult for new businesses to gain marketplace traction in search.
The ultimate question is whether the DOJ can “create an environment where one company is not able to kill startups in their crib,” the source says.
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