Texas v Google: Ten states sue Google for antitrust

Ten US states have sued Google for unlawful efforts to quash competition in ad auctions, including a secret agreement with Facebook.

Pádraig Belton, Contributor, Light Reading

December 17, 2020

4 Min Read
Texas v Google: Ten states sue Google for antitrust

If you were a Silicon Valley big tech company, you could be forgiven for thinking it never rains but it pours.

Even in Texas.

Ten US states, led by the Lone Star State, have filed antitrust cases against Google, saying it abused its market position and colluded with Facebook to crush rivals.

The 130-page civil action, filed yesterday in the US District Court for the Eastern District of Texas, says Google "sought to kill competition and has done so through an array of exclusionary tactics."

These tactics, says the lawsuit, include "an unlawful agreement with Facebook, its largest potential competitive threat, to manipulate advertising auctions."

Twisting a knife by alluding to the company's former unofficial motto, "Don't be evil," Texas's attorney general Ken Paxton adds that the litigation "seeks to ensure that Google won't be evil anymore."

With Google controlling 90% of the US online ad market, it channels transactions between advertisers and hosts through an electronic exchange in which it is "pitcher, batter, and umpire, all at the same time," say the ten state attorneys general.

Facebook had considered launching a rival ad exchange, but Google instead offered it preferential access to its own market.

This last allegation, that Sundar Pichai's company gave Facebook special information and speed advantages so the social network wouldn't launch its own competing electronic exchange, is "huge, potentially worthy of criminal charges," says Lina Khan, a law professor at Columbia University who specializes in antitrust law.

The lawsuit comes a day after the EU announced it is readying new tech "rules of the road" to curb dangerous near-monopoly positions held by tech giants.

And only weeks before, the UK government said it was launching a new regulator in April 2021 with the power to suspend, block and reverse anticompetitive decisions by tech giants.

Let a hundred lawsuits bloom

The lawsuit draws on academic work done by Dina Srinavasan, a fellow at the Yale Law School.

Google is able to dominate advertising markets by engaging in trading on both sides while also controlling the exchange, conduct lawmakers prohibit in other electronic trading markets, says Srinivasan.

It also comes two months after the US Justice Department and 11 states filed another antitrust lawsuit against Google's parent Alphabet.

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While yesterday's case accuses it of a secretive deal with Facebook, the October one, in Washington DC's federal district court, accused it of a clandestine collusion with Apple that could be worth as much as $12 billion a year.

Google's anti-competitive practices could mean "Americans could never get to benefit from the next Google," says US attorney general William Barr, a Trump ally who is stepping down before Christmas.

Texas poker

"It's time for them [Google] to learn the hard way that you do not mess with Texas," adds Paxton, a 57-year-old Tea Party Republican, showboating faintly.

The case could ultimately see Google paying fines, dropping out of businesses or restructuring long-standing deals with other companies.

The states' request for a jury trial is rare in antitrust law, but if granted means a jury would be deciding damages and not "equitable relief like [company] breakup," says Professor Khan.

The ten plaintiff attorneys general in yesterday's lawsuit are all Republican.

A separate bipartisan group of 36 attorneys general, led by Colorado's Phil Weiser and including New York, is preparing to launch a separate lawsuit, which they hope to consolidate with the federal lawsuit.

But this bipartisan group had placed pressure on Paxton to step aside from the effort after he came under FBI investigation for intervening to assist a Republican donor.

Instead, Paxton and his Republican colleagues have gone it alone.

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— Padraig Belton, contributing editor, special to Light Reading

About the Author(s)

Pádraig Belton

Contributor, Light Reading

Contributor, Light Reading

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