SAN FRANCISCO – A group of states led by Texas launched an investigation into Google to examine whether the Silicon Valley tech giant has gotten too big and effective at stomping or acquiring rivals.
The inquiry is the latest blow against big tech companies as antitrust investigations ramp up in the USA and around the world. A separate group of states announced an investigation into Facebook’s dominance Friday. The Department of Justice, the Federal Trade Commission and Congress are also conducting inquiries.
The Google investigation will look into the company’s dominance in online advertising and search traffic for anti-competitive behavior that harms consumers, Texas Attorney General Ken Paxton said in announcing the investigation Monday.
“Now, more than ever, information is power, and the most important source of information in Americans’ day-to-day lives is the internet. When most Americans think of the internet, they no doubt think of Google,” Paxton said in a statement.
“There is nothing wrong with a business becoming the biggest game in town if it does so through free-market competition, but we have seen evidence that Google’s business practices may have undermined consumer choice, stifled innovation, violated users’ privacy and put Google in control of the flow and dissemination of online information,” said Paxton, who leads the investigation. “We intend to closely follow the facts we discover in this case and proceed as necessary.”
The investigation, which is joined by 48 states, the District of Columbia and Puerto Rico, “will focus on Google’s dominance in the telecommunications and search engine industries, as well as the potential harm caused to consumers and the economy from any anti-competitive conduct,” New York Attorney General Letitia James said in a statement. James leads the states’ investigation into Facebook.
California and Alabama are not part of the Google investigation, Reuters reported.
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Google said it expects state attorneys general will ask it about similar investigations in the USA and internationally, Senior Vice President of Global Affairs Kent Walker wrote in a blog post Friday.
Google’s parent company, Alphabet, has a market value of more than $820 billion and controls so many aspects of the internet that it’s hard to imagine surfing the web for long without running into at least one of its services.
Google will control 31.1% of global digital ad dollars this year, according to eMarketer estimates, crushing a distant second-place Facebook.
“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,” said Jen King, director of privacy at Stanford’s Center for Internet and Society.
Critics point to Google’s acquisition of online advertising company DoubleClick in 2007 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 advertising business.
Another huge piece of Google’s business is its search platform, often the starting point for millions of people when they go online. Google dwarfs other search competitors. European regulators fined Google for promoting its own shopping service. Google appealed the fine.
Google has long argued that although its businesses are large, they are useful and beneficial to consumers.
“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 outcome antitrust regulators might explore is forcing Google to spin off search as a separate company, she said.
Google’s smartphone operating system, Android, is the most widely used in the world.
European regulators fined Google $5 billion for tactics involving Android, finding that Google forced handset makers to install Google apps, thereby increasing its reach. Google has since allowed more options for alternative browser and search apps to European Android phones.
It’s possible U.S. states won’t follow in Europe’s footsteps. They could focus on areas such as the popular video site YouTube, which Google acquired in 2006.
Google executive Walker emphasized that the company’s products help people every day.
“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.
Contributing: Mike Snider, USA TODAY