48 U.S. states launch probe into whether Google is violating antitrust laws.
Led by Texas’ Attorney General Ken Paxton, nearly every state in the union has announced an investigation into Google’s “potential monopolistic behavior.” The investigations will initially focus on whether Google’s dominance in the online advertising and internet search space has become too efficient at stomping out rivals.
“More than 90% of all online searches are Google searches.” – SYZYGY Analytics
“This is a company that dominates all aspects of advertising on the internet, as they dominate the buyer, seller and auction side,” Paxton said.
Google’s parent company, Alphabet, valued at more than $825 billion, last year reported gross revenue exceeding $137 billion with a net income of $31 billion.
The legal authorities are primarily focusing on Google’s dominance in advertising and in search.
Arkansas Attorney General Leslie Rutledge said Monday, “When my daughter is sick and I search online for advice or doctors, I want the best ones — the best advice or the best doctors — not the ones who spent the most on advertising.”
Typically, if a business can afford to consistently stay in position 1-4 in Google, they are likely providing a valuable service, though this is not a guarantee. All it takes is someone willing to bid high enough to take these positions one time, and they can enter the space with a long term advertiser, and effectively siphon some of their business.
The power of the top positions in Google cannot be overstated, not when more than 95% of clicks are going to the top 4 results.
Missouri Attorney General Eric Schmitt said in a statement, “It’s like if you were trying to buy a house, and Google owned the house, and a lot of houses on your block. And they were the buyer’s agent and also the seller’s agent. It would raise questions, certainly.”
In an article I published last week, online project management company Basecamp was complaining that Google’s paid search ads are similar to a “shakedown,” and then proceeded to run an ad in Google Ads saying, ““We’re the #1 result, but this site lets companies advertise against us using our brand. So here we are. A small, independent co. forced to pay ransom to a giant tech company.”
Jen King, the director of privacy at Stanford’s Center for Internet and Society said in a statement, “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.”
Google’s 2007 acquisition of online advertising company DoubleClick was a game changer for the tech giant, likely led to the advertising dominance we see today from Google.
“On the one hand, you could just say, ‘Well, Google is dominant because they’re good,'” King said. “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.”
One possible outcome could force Google to spin off it’s services that hold market monopolies like Search, Advertising, Youtube and possibly even Android, the most widely used phone service in the world, as separate entities.
A Google executive who was reached for statement said, “Google is one of America’s top spenders on research and development, making investments that spur innovation: 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,” he wrote.
There are currently 160 billion Google searches each month, so it’s no wonder everyone feels compelled to advertise in this space, which in many cases can be the difference between having the ability to reach customers or not.
On one hand, I don’t like the idea of starting a business that becomes so successful the government can tell me I have to split it up, negatively affecting my bottom line. On the other hand, Google has been criticized for prioritizing its subsidiaries over competitors within search results, giving them an unfair advantage in a space they control. This type of conduct can erode the trust of customers and consumers and I believe could justify some kind of action to be taken against Alphabet AKA Google.
The Department of Justice, the Federal Trade Commission and Congress are also conducting probes of Google.
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Brandon Speagle PPC Manager, Author, MDDS SYZYGY — Google Ads For Lawyers