By Tom Galvin
August 13, 2020 at 5:00 am ET
Google’s founding mission was to “organize the world’s information and make it universally accessible and useful.” But there’s always been one exception: the details of its legal troubles. That is important to remember as the U.S. Department of Justice and state attorneys general are reportedly on the cusp of formally announcing antitrust and consumer protection investigations against the tech giant.
Google faces a broad array of investigations: abusing its advertising clout, disadvantaging would-be competitors, manipulating its search engine and exploiting its Android operating system to benefit itself over others. No less than the Department of Justice, 49 state AGs, the European Union, the House of Representatives, and the Federal Trade Commission are probing the company’s conduct.
Last month’s hearings in the House of Representatives didn’t help matters. Lawmakers threw some haymakers at Google CEO Sundar Pichai and many left a mark, particularly questioning focused on whether Google pushed its own products and services onto the first page of search results, and others down in the process.
Google’s cadre of Washington insiders must see what’s coming. So, it should come as no surprise that Google is turning to its old standby: settlement. Word is the company has turned to its go-to outside lawyer, John Harkrider, in an attempt to reach a deal with the DOJ (and potentially state AGs) before prosecutors announce their findings and file a lawsuit. Harkrider has handled previous Google settlements, including with the FTC.
In 2011, the company faced its biggest legal threat to date: evidence that it aided Canadian pharmacies illegally marketing drugs in the United States. The case started when David Anthony Whitaker helped the Federal Bureau of Investigation launch an undercover investigation into how Google helped him overcome safeguards against the illegal sale of drugs.
Google founder Larry Page was in the prosecutor’s sights. DOJ official Peter Neronha told The Wall Street Journal, “Larry Page knew what was going on.” Faced with this real threat, Google agreed to pay $500 million to settle the investigation.
And the playbook was born: pay the fine, keep moving forward. Since 2011, the tech giant racked up more than $10 billion in U.S. and European fines for, among other things, allegedly abusing its dominant position in search and operating systems, violating children’s privacy laws and unfairly favoring its own services over rivals. The fines don’t seem to make a dent: In some cases, Google’s stock price went up upon news the company was able to buy itself out of trouble.
This playbook matters because of what’s at stake: consumer safety and the future of small businesses that struggle to compete in a Google world. The company seems to routinely treat issues such as jihadists using its platform to recruit and spread terrorist propaganda, the sale and promotion of illegal opioids, stolen credit cards and counterfeits as a PR problem, not a consumer safety or internet security issue.
Which gets us back to the current investigations. Can Google buy its way out of them? Yes and no. At the federal level, Google can settle allegations that it’s harmed consumers by writing a check. It’s done so in the past, for example in the FTC case involving children’s privacy. It could do the same at the state level with attorneys general. A portion of the $500 million settlement in the overseas pharmacy case went to Rhode Island to close the state’s investigation.
But Google cannot use its $100 billion in cash to make it antitrust problems go away, at least not on the federal level. And that is certainly what Google fears the most, especially when it comes to its control over the online advertising market. Google not only buys and sells advertising, but manages the exchange, or trading market, where the ads are bought and sold. That gives it remarkable insight into everyone else’s behavior that it can use to its advantage.
In June, Google was sued by advertisers for creating “an illegal monopoly by eliminating competition in digital display advertising.” To underscore how important this market is, Google gets 82 percent of its revenue primarily from search and display advertising.
How the DOJ and state AGs deal with Google’s hold over how online advertising is bought and sold will be a litmus test for whether regulators are serious about changing behaviors that hamstring Google’s competitors, whether they are giants such as Yelp or smaller businesses. And these decisions flow down Google’s operations to affect how it approaches bad actors who want to use its platform to peddle drugs and fake COVID vaccines.
Google laywer John Harkrider’s job, reportedly, is to get the case settled before the DOJ makes formal charges. This time, it will take more than a big check to get that done.
Tom Galvin is executive director of the Digital Citizens Alliance and is focused on raising awareness about issues such as piracy and malware, the illegal online sale of opioids, steroids and other prescription drugs, and the blurring of the lines between the Dark Web and mainstream digital platforms.
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