Google Antitrust Case Regarding Searches (October 2020)

 Abstract

Google is an American multinational technology company that specializes in internet services and products which include online advertising technologies. Google is one of the wealthiest companies in the world and has been for a long period of time. 

Figure 1. Antitrust Case vs Google.

Google is being investigated for an issue that involved searches which is harming the consumers and the different competitors to this company. This is one of the biggest antitrust lawsuits since the Microsoft one dating back to 1998. The problem that the Justice Department has
with Google is that they feel that Google is trying to protect how dominant they are in the market by making deals with different companies like Apple. (New York Times: Google pays Apply billions of dollars a year to have its search engine set as the default option on iPhones and other devices). 

    The Justice department is also looking at the contracts that Google has with these different companies when they make the deal that requires companies like Apple to have Google as their main search engine. In order for the Justice Department to go ahead and win this case that is set forward at Google, they will need to make sure that they bring up the issue of how Google violated the Sherman Antitrust Law, while also proving that Google is the main search engine and the contracts they have with Apple. When looking at Google's defense for this case, they will put forward that they are not the dominant ones and they are one click away and anyone can go to a different search engine. Also, Google feels that they are complying with the different laws and guidelines that were put into place and they are doing everything in a correct and legal manner. 

    This paper will go into depth of these issues that are arising while also looking at the theories that were presented in this class such as Individualism, Utilitarianism, Kantianism, and Virtue Theory. While observing and looking into this case, we will go over the different issues that may be ethical and unethical by Google. Looking at both sides of the case is important, and each side will be analyzed and correlated back to the ethical theories to determine if they are ethical or not. 

Company Background

            Google is one of the biggest technology companies to this day and they began their journey back in 1995. Google's industry covers a wide range of software and hardware such as internet, cloud computing, computer software, computer hardware, artificial intelligence, and advertising. Today, Google has become one of the largest technology companies in the world and they continue to grow each year. 

Figure 2. Google Main Search Engine. 

     In the early 2000’s, Google developed a deal with AdWords which was a pay per click advertising platform that they were using. (The Street). This was the first big deal that Google had, and it was from there that the advertising side of Google began to take off. Google also incorporated Gmail, which is their email app that they use, and this came out around 2004. There w
ere also some key products that they came out with which were google maps (2005), YouTube (2005), Google Earth (2005), Google Calendar (2006), Google Finance (2006), Google Street View (2007), Google Android (2007), Google Chrome (2008), Google Voice (2009) and Google Labs in (2012). Each of these types of software has made Google one of the biggest technology companies around to this day.                                        

    Google has been moving in the right direction for many years and it has taken a while for Google to get to this stage. Creating and developing a multimillion-dollar company and industry is not easy and they have made sure to develop and create an industry that thrives. 

Case

             On Tuesday, October 20, 2020, Google was accused by the Department of Justice (DOJ) for illegally abusing the dominance of internet searches. The reason as to why the government is bringing up this issue is because the Justice Department feels that Google is taking over the marketplace by paying other companies to maintain their power. This begins to create issues in the marketplace because it does not allow other companies to be able to thrive and enter the market fairly. The Justice Department feels that they have violated the Sherman Antitrust Act and will be examined in depth in the court of law. The Sherman Antitrust Act is “a federal statute which prohibits activities that restrict interstate commerce and competition in the marketplace”. (Law-Cornell). 

Figure 3. Google Search Engine Percentage.

When looking at the online advertising, there was a profit made of $34 billion last year from Google. The New York Times article says that “this is a monopoly defense case. The government says Google is illegally protecting its dominant position in the market for search and search advertising with the deals it has struck with companies like Apple. Google pays Apple billions per year to have its search engine set as the default option on iPhones and other devices”. (Wall-Street Journal). From this statement, this is the main reason as to why there was this Antitrust law put into place. If companies were able to pay other companies freely, there would not be a chance for any new companies to come into emergence. Google would continue to pay companies like Apple millions of dollars per year, and in return, would benefit both Google and Apple. This case is a huge deal for companies like Apple and even Google because if this gets shut down, there will be large amounts of money that is potentially lost. Google profited a lot last year from this, which was about $34 billion, and the Justice Department is looking into this situation in depth. 

When looking at Google’s defense, there will be a few factors that arise. Google says that consumers can easily switch to any other search engine when they are on their phones and they feel that everything they are doing is in compliance with the Justice Department and the law. Google is one of the largest companies to this day and they do not feel that they are coercing other companies into making their search engine the main source. Google said that they are going to go at this with full force with the best attorneys that they have and if they are found guilty, they will need to change the way they operate. 

This is one of the largest antitrust cases to hit the news since the Microsoft case. Reporters say that this Google case is very much like the Microsoft one that happened well over a decade ago. Microsoft was trying to monopolize the personal computer industry during the 90’s, and it was not allowing other competing companies to be able to step in. Microsoft ended up losing the case and there were multiple issues such as tampering evidence that occurred throughout. This case also lasted years and the case did not turn out to what many people would have thought would happen. The deal that the Justice Department and Microsoft came up with was that Microsoft would have to share its application programming interfaces with other third-party companies to allow them to compete in the market. Microsoft also needed to appoint three individuals that would need to be able to access the different records and systems of Microsoft so that they could make sure they would stay in compliance with the deal that they made.  

If these two cases are anything alike, it will not look good for the outcome of Google. Google will most likely have to go at this case in full and if they are found guilty, appeal it, and then if they are found guilty after that, come up with a deal with the Justice Department. There are no answers to the Google case at this moment in time but comparing this case to Microsoft will give us a better insight of what may occur in the future for Google. This case will be a long hard-fought battle and both sides will need to be able to provide credible information to win the case. 

 Companies’ Shareholders and Consumers

Figure 4. Google from Shareholders and Consumers View.

            Google's shareholders and the consumers could potentially be affected by this in the long run. Even though there is no definite decision that will be made soon, people are looking down the road to see the potential effects from both sides if Google were to be found guilty. Google is going full force when looking to fight this case because this could lead to millions of dollars lost if they are found guilty.  If we go back to the Microsoft case, if Google ends up having the same outcome, this could create an emergence of new companies while also losing the company millions of dollars in revenue for years to come. There is no determining as to whether this case will vary from Microsoft, but the worst-case scenario is that Google will be sued in the court of law and will have to pay a fine. 

Shareholders are the biggest ones at stake because if the company loses money, then the shareholders will also lose money. If Google loses, they will need to cut off any deals that they have with companies like Apple. Google will then need to cut their ties off with Apple (i.e.: paying them to have Google as the main search engine), which will then lead to money lost in advertising which comes from the consumers. As stated previously, Google made around $34 billion from online advertising, and that was due to them being the major search engine on every iPhone and apple product that was produced. In the end, it is important that the company addresses the issue and is honest with the shareholders and fixes any of the issues to make them happy.

Individualism

            When looking at the Individualist theory, the only goal for the company is to profit, so the only obligation of that businessperson is to maximize profit for the owner or the stakeholders within the law of the land. If an individualistic were to look at this case, they would agree with Google that they are maximizing profit for the company and the shareholders, but it may not be under the law of land. Google said that they did abide by what the DOJ has in place for the rules and regulations regarding these antitrust issues. Google used the money to pay Apple to have their product as the main line and if consumers wanted to change the search engine, they could. I know from my personal experience, that if I did not want Google as my main search engine, that I could change it in my settings of my phone. 

            On the other hand, though, there can be the side of this case where Google does not abide by the law of the land which is the Sherman Antitrust act. This act was put into place in the 1890’s so that there could be competition in the marketplace. Even though Google maximized profit, they did not follow the law of the land because they paid Apple to have them as their main search engine for users. If there was a certain measure that allowed users to access other search engines instead of Google, then this may have been fine. But, if we look at Microsoft's case, this will go against this theory because Google would have violated the law of the land which was the Sherman Antitrust Act. 

Utilitarianism 

            From a Utilitarianism view, this looks at maximizing the happiness in yourself and others and all people and stakeholders’ matter. One could say that Google was paying Apple so that they could take over the market and have an advantage over competitors. So, this could lead to the unhappiness of other companies and basically, they are not allowing consumers to use other products that are out there. Microsoft's case, which is being compared to Google in this instance, said that they felt they were being sued only because other companies were upset that they were thriving and doing well and other companies in their industry were not. This shows that there were many people out there that felt that Microsoft was violating the free marketplace and this correlates with the predicament Google is in right now. So, from this, this would go against this theory, due to it creating unhappiness of other companies around the world and in the marketplace. 

            On the customer side of this, Google could say that they are looking out for their customers when they said that if they are found guilty in this case, that the web browser would go from free to having a price behind it. From the shareholders standpoint, they are maximizing the happiness of their stakeholders because they are profiting from this and making billions of dollars. If Google is to be found guilty, this would lead to unhappiness from the shareholders and this would go against this theory.  Each side of this theory is observed in depth to the way that it will make different individuals happy or unhappy. 

Kantianism

            From a Kantian viewpoint, they say that people should act rational and not act inconsistent in their own actions or consider themselves exempt from rules. One could say that Google uses the consumers as a mere means and other companies around them as a mere means. Google is not allowing other companies to operate in the free market, and they are using their power to pay Apple and other companies to keep their software as the main search engine. Google knows that they are one of the richest companies around, so paying other companies allows them to take control of the marketplace and not allow any competitors. There is a lot of money that comes from advertising and they are not acting rational according to the law. Google is then able to gain consumers and create a massive cash flow for them ($34 billion for Google last year). If Google were to let the market work free, rather than paying other companies to have their software, it would allow other companies to make money and be successful. 

Virtue Theory

Virtue theory looks at the different cardinal virtues which is courage, honesty, temperance, and justice. Each of these are important for companies to have and if there is one missing, then they will not work. When looking at this case as it pertains to Google, one could say that this case goes against virtue theory. Even though Google admits that they did nothing wrong and followed all the guidelines in place, there is an obvious issue if the Department of Justice is involved. If you look back to the Microsoft case, there was a massive antitrust issue pertaining to how Microsoft monopolized the industry. This case led to Microsoft having to make an agreement which allowed other companies to be able to perform in the marketplace without being under any type of coercion. 

 Evaluation of the Ethics Theories 

            In my opinion, based on the Microsoft case as it compares to Google, google was unethical and did not follow the rules of the land. Based on the Antitrust laws, companies are supposed to let the market act free without any type of coercion or paying of one company to another. Google should have not paid Apple and other companies to have their product as the main search engine on their products. Instead, they should have let the market work free and let the consumers decide what product they wanted to use. There are already so many users that are out there that prefer Google and their search engine, and they have gotten themselves in hot water by paying companies like Apple. 

            Google has already stated that they did nothing wrong and made sure that they followed the laws and regulations as it pertained to these Antitrust laws. This could also lead to dishonesty and it will be interesting to see how this case works out. If it correlates with the Microsoft case, Google will most likely lose and must come up with a deal with the Justice Department. These unethical issues that Google has performed could potentially lose them money, but for now, we will have to wait and see how this case turns out over the next days, months and even years. 

Action Plan 

Antitrust Laws have been around well over 100 years. Microsoft was one of the largest software companies that was hit by this law back in the 90’s. The Microsoft lawsuit allowed it so that many other companies like Google, could make themselves known, rather than one company taking over the entire marketplace. Google has been hit with the same legal issues, due to them violating the marketplace and trying to monopolize it. This can be very harmful for different companies that are in competition with Google and this case will be a long-fought case between the Justice Department and Google. The Justice Department will have to present and locate data that shows that Google has violated the Antitrust Laws and paid other companies so that they could monopolize the industry. For Google, they will need to make sure they provide credible information that they did not violate the law and that users could easily choose another search engine if they preferred. 

This case is a recently brought issue and it could take years before the final decision is made. There is a lot at stake it is important that Google provides information to not only the Justice Department, but also the shareholders of the company. If Google feels that they are going to win the case, then it will be important for them to make small changes so that they become wrapped up in an issue like this again. Doing this will help the shareholders feel that Google was acting and making sure that they were complying with the rules and regulations of the law. This will not hurt the company too much, but it will change the way that other companies compete in the marketplace. Also, if this case turns out the way Microsoft ended, Google will need to make a deal with the Justice Department to fix the issues and make it so that they comply with the laws in place. 

 Conclusion 

            Large companies have been finding themselves in hot waters by trying to work around the law. It will be interesting to see how this case is resolved in the end and if Google will be found guilty. The question that this case comes down to is how Google will be able to deal with all this controversy if they are found guilty. They will need to make sure they explain what they plan to do for their shareholders in the future while also making sure they abide by the rules that the Justice Department has them follow if they are guilty. There will need to be a new approach that Google abides by and they will most likely have to report back to the justice department as to what they are doing if they are found guilty down the road. Like Microsoft had to do, they may have individuals who gather information and observe that information to make sure they are staying in compliance and within the agreement that was made. When looking at each of the theories, each one of them looked at both sides to the issue and some agreed with the way Google operated and some did not. This all comes down to the rule of the land and what the laws are and if Google violated those Antitrust Laws that are in place. Even though there is no definite answer to this, it is important that Google complies and goes at this case with full honesty and integrity. 

References

Lohr, S. (2020, October 20). What Is Happening With the Antitrust Suit Against Google? Retrieved from: https://www.nytimes.com/2020/10/20/technology/antitrust-google.html

Kendall, B. and Copeland, R. (2020, October 20). Justice Department Hits Google With Antitrust Lawsuit. Retrieved from: https://www.google.com/amp/s/www.wsj.com/amp/articles/justice-department-to-file-long-awaited-antitrust-suit-against-google-11603195203

 Federal Trade Commission. (2020). Guide to Antitrust Laws. Retrieved from: https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws

 O’Connell, B. (2018, December 31). History of Google: How it Began and What’s Happening Beyond 2019.Retrieved from: https://www.google.com/amp/s/www.thestreet.com/.amp/technology/history-of-google-14820930

 Corporate Finance Institute. (2015-2020). Microsoft Antitrust Case. Retrieved from: https://corporatefinanceinstitute.com/resources/knowledge/strategy/microsoft-antitrust-case/

 Law Cornell. (2020). Sherman Antitrust Act. Retrieved from: https://www.law.cornell.edu/wex/sherman_antitrust_act