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'This is not anti-tech': Utah, other states target Google in new antitrust probe

By Liesl Nielsen, KSL.com and Rachel Lerman and Marcy Gordon, Associated Press | Updated - Sep 9th, 2019 @ 5:08pm | Posted - Sep 9th, 2019 @ 12:19am


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WASHINGTON (AP) — Fifty U.S. states and territories, led by Texas and including Utah, announced an investigation into Google's "potential monopolistic behavior."

The Monday announcement closely followed one from a separate group of states Friday that disclosed an investigation into Facebook's market dominance. The two probes widen the antitrust scrutiny of big tech companies beyond sweeping federal and congressional investigations and enforcement action by European regulators.

Nebraska Attorney General Doug Peterson, a Republican, said at a press conference held in Washington that 50 attorneys general joining together sends a "strong message to Google."

California and Alabama are not part of the investigation, although it does include the District of Columbia and Puerto Rico. Google is headquartered in California and employs more workers there than in any other region. Google also broke ground last year on a $600 million data-center project in Alabama.

Tara Gallegos, a spokeswoman for California Attorney General Xavier Becerra, declined to confirm or deny any state investigation and would not comment on the announcement by the other states. Mike Lewis, a spokesman for Alabama Attorney General Steve Marshall, also said the state's legal team had no comment on the probe.

The news conference featured a dozen Republican attorneys general plus the Democratic attorney general of Washington, D.C., Karl Racine. Utah Attorney General Sean Reyes spoke during the conference and reiterated that the investigation was still preliminary.

"There’s no question that Google is the market-dominant player when it comes to internet search with nearly 90% of a share. And there’s nothing wrong with being the dominant player if it’s done fairly. That’s what our investigation intends to uncover: whether Google has played by the rules and acted fairly," he said. "Google is entitled to a presumption of innocence while we look at these actions."

Reyes did mention, however, that he and Racine asked the Federal Trade Commission in 2016 to reopen an investigation into Google's "alleged manipulation of search practices." The FTC did not take action at the time, but the Europen Union issued fines and sanctions "based on those very same complaints and concerns" a few years later, Reyes said.

"This is not anti-tech; it’s the opposite. This is actually for the benefit of the tech ecosystem to help level the playing field," he added.

Google's parent company, Alphabet, has a market value of more than $820 billion and controls so many facets of the internet that it's fairly impossible to surf the web for long without running into at least one of its services. Google's dominance in online search and advertising enables it to target millions of consumers for their personal data.

The state officials assembled in Washington were vague about the focus and scope of the investigation, although several, including Reyes, suggested scrutiny of the company’s dominant search and advertising businesses.

Several advocacy groups applauded the announcement, saying the power of tech companies has gone unchecked for too long. Antitrust enforcement “can help consumers and innovative competitors access markets for platforms that are more fair and more competitive,” the group Public Knowledge said in a statement.

"Every industry is affected and every citizen. I just don’t think that most people realize how much this is actually affecting them," Reyes said. "This is all about protecting innovation in the tech sector, and we’re going to do something about this and hold Google accountable and responsible."

Critics often point to Google’s 2007 acquisition of online advertising company DoubleClick as pivotal to its advertising dominance. Europe’s antitrust regulators slapped Google with a $1.7 billion fine in March for unfairly inserting exclusivity clauses into contracts with advertisers, disadvantaging rivals in the online ad business.

One outcome antitrust regulators might explore is forcing Google to spin off search as a separate company, experts say. Regulators also could focus on areas such as Google’s popular video site YouTube, an acquisition Google scored in 2006.

Google has long argued that although its businesses are large, they are useful and beneficial to consumers.

“Google is one of America’s top spenders on research and development, making investments that spur innovation,” wrote Kent Walker, the company’s senior vice president of global affairs, in a blog post Friday. On Monday, Google referred reporters to that earlier post.

“Things that were science fiction a few years ago are now free for everyone — translating any language instantaneously, learning about objects by pointing your phone, getting an answer to pretty much any question you might have,” Walker wrote.

But federal and state regulators and policymakers are growing more concerned not just with the company’s impact on ordinary internet users, but also on smaller companies striving to compete in Google’s markets.

“On the one hand, you could just say, ‘well Google is dominant because they’re good,’” said Jen King, the director of privacy at Stanford’s Center for Internet and Society. “But at the same time, it’s created an ecosystem where people’s whole internet experience is mediated through Google’s home page and Google’s other products.”

For instance, Google’s search platform is often the starting point for millions of people when they go online. Google dwarfs other search competitors and has faced harsh criticism in the past for favoring its own products over competitors at the top of search results. European regulators also have investigated in this area, ultimately fining Google for promoting its own shopping service. Google is appealing the fine.

Reyes said the issue came to his attention when local competitors of Google's ratings and review product came to him and complained that Google was using its dominance to prioritize its own product over others, like Yelp or TripAdvisor.

If Google continued playing favorites, any innovation in that sphere would be dwarfed by Google's review product, hurting both the market and the consumer by offering what may be inferior products simply because they were rated well on Google.

"(We) believed there were some serious concerns but didn't feel like we had the wherewithal, the resources, as a single state to do anything alone. We reached out to the District of Columbia, and they felt similarly and were equally concerned, but they’re a small jurisdiction also," Reyes said during an interview with KSL.com.

That's when Reyes and Racine took the issue to the FTC but never saw anything come of it until the EU fined Google a few years later.

"(But) it covers much more than just that one search issue, as we referenced today. In fact, the initial focus is on the ad marketplace," Reyes told KSL.com.

Google will control 31.1% of global digital ad dollars in 2019, according to eMarketer estimates, crushing a distant second-place Facebook. Many smaller advertisers have argued that Google has such a stranglehold on the market that it becomes a system of whatever Google says, goes — because the alternative could be not reaching customers.

“There’s definitely concern on the part of the advertisers themselves that Google wields way too much power in setting rates and favoring their own services over others,” King said.

Google’s smartphone operating system, Android, is also the most widely used in the world.

European regulators have fined Google $5 billion for tactics involving Android, finding that Google forced smartphone makers to install Google apps, thereby expanding its reach. Google has since allowed more options for alternative browser and search apps to European Android phones.

The U.S. Justice Department opened a sweeping investigation of big tech companies this summer, looking at whether their online platforms have hurt competition, suppressed innovation or otherwise harmed consumers. The Federal Trade Commission has been conducting its own competition probe of Big Tech, as has the House Judiciary subcommittee on antitrust.

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Lerman contributed from San Francisco. Matt O'Brien in Providence, Rhode Island, contributed to this report.

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