The Justice Department accused Google of maintaining an illegal monopoly over search and search advertising, in the government’s most significant legal challenge to a tech company’s market power in a generation.
In a lawsuit, filed in a federal court in Washington, D.C., on Tuesday, the agency accused Google, a unit of Alphabet, of using several exclusive business contracts and agreements to lock out competition.
Such contracts include Google’s payment of billions of dollars to Apple to place the Google search engine as the default for iPhones. By using contracts to maintain its monopoly, the suit says, competition and innovation has suffered.
Google responded by describing the lawsuit as “deeply flawed.”
“This lawsuit would do nothing to help consumers,” the company said in a statement on its website. “To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use.”
Attorney General William P. Barr, who was appointed by President Trump, has played an unusually active role in the investigation. He pushed career Justice Department attorneys to bring the case by the end of September, prompting pushback from lawyers who wanted more time and complained of political influence. Mr. Barr has spoken publicly about the inquiry for months and set tight deadlines for the prosecutors leading the effort.
The lawsuit may stretch on for years and could set off a cascade of other antitrust lawsuits from state attorneys general. About four dozen states and jurisdictions have conducted parallel investigations and are expected to bring separate complaints against the company’s grip on technology for online advertising.
A victory for the government could remake one of America’s most recognizable companies and the internet economy that it has helped define since it was founded by two Stanford University graduate students in 1998.
But Google has long denied accusations of antitrust violations and is expected to fight the government’s efforts by using a global network of lawyers, economists and lobbyists. Alphabet, valued at $1.04 trillion and with cash reserves of $120 billion, has fought similar antitrust lawsuits in Europe.
The United States on Tuesday accused Google, a unit of Alphabet, of illegally maintaining a monopoly over search through several exclusive business contracts and agreements that lock out competition.
At a press briefing Tuesday morning, Deputy U.S. Attorney General Jeffrey A. Rosen outlined the rationale behind the case.
Mr. Rosen hailed the Google lawsuit as a “milestone” in the Justice Department’s efforts to foster competition in the internet markets, but he emphasized that this was not a stopping point — suggesting that the D.O.J. may continue to pursue other monopoly cases of technology companies.
Mr. Rosen said that Google “has maintained its monopoly power through exclusionary practices that are harmful to competition.”
“Google is the gateway to the internet and a search advertising behemoth,” he said.
Mr. Rosen said the Google lawsuit had “nothing to do” with complaints from President Trump and other Republicans that technology companies exercise political bias in policing speech on their platforms, calling it a separate worry from these “competitive concerns in the marketplace.”
The Justice Department lawyers were guarded about many aspects of the investigation, including their conversations with the company and whether they considered building out the case into other parts of Google’s business or their conversations with the company. They specifically avoided answering a question about whether the D.O.J. spoke to Larry Page, Google’s co-founder and former chief executive of its parent company, Alphabet.
The lawyers stopped short of calling for specific relief, such as pulling apart pieces of Google’s conglomerate of business lines. Remedies such as divestitures are typically reached further along in a case, experts say.
Seven states may soon file a separate antitrust lawsuit against Google, the New York attorney general, Letitia James, announced on Tuesday. That’s in addition to the 11 states that joined the U.S. Department of Justice on Tuesday in filing a lawsuit against Google, accusing it of maintaining an illegal monopoly over search and search advertising.
The attorneys general in the states that signed on to the Justice Department suit are all Republican. Ms. James and the attorneys general of Colorado, Iowa, Nebraska, North Carolina, Tennessee, and Utah said in a joint statement that they had been conducting separate but parallel bipartisan investigations into Google’s anticompetitive market behavior over the last year.
“This is a historic time for both federal and state antitrust authorities, as we work to protect competition and innovation in our technology markets,” the statement read. “We plan to conclude parts of our investigation of Google in the coming weeks.”
If the states decide to go ahead with the complaint, they would file a motion to consolidate their case with the Department of Justice’s lawsuit, and proceed to litigate the case cooperatively.
The Department of Justice sued Google on Tuesday, accusing the tech giant of maintaining an illegal monopoly over search and search advertising. The lawsuit, filed in a federal court in Washington, D.C., on Tuesday, is the government’s most significant legal challenge to a tech company’s market power in a generation.
Here’s how business leaders, policymakers, academics and antitrust experts are reacting to the news.
Senator Josh Hawley, Republican of Missouri, who launched an antitrust investigation of Google when he was Missouri’s attorney general, tweeted about the suit:
This will be the most important antitrust suit in a generation. As the first state attorney general in the country to launch an antitrust investigation of @Google, I applaud this suit as desperately needed and long overdue. #BigTech’s free pass is over https://t.co/ivniS8xHFg
— Josh Hawley (@HawleyMO) October 20, 2020
David Cicilline, a Democratic congressman and the chairman of the House Judiciary antitrust subcommittee, said in a tweet that he released a report three weeks ago detailing steps Google had taken to maintain and expand its monopoly power. “This step is long overdue,” he wrote, referring to the lawsuit. “It is time to restore competition online.”
Senator Tom Cotton, Republican of Arkansas, also weighed in on Twitter:
Google’s anticompetitive conduct is harming the public and American business. I commend the Department for finally holding Google accountable.
When it comes to big tech, this is just the beginning. Winter is coming.https://t.co/b8Nl5nnehc
— Tom Cotton (@SenTomCotton) October 20, 2020
Tim Wu, a professor at Columbia Law School who specializes in antitrust issues, pointed out in a Twitter post that the Justice Department’s case against Google is similar to its case against Microsoft. “The Justice Department is showing that it isn’t just Silicon Valley who clones successful products: they’ve basically cloned the Microsoft case and added Google’s name to it,” he wrote.
Luther Lowe, senior vice president of public policy at Yelp, in his tweet warned against characterizing the lawsuit as a “partisan vendetta by the Trump Administration”:
Some might try to characterize today’s filing as a partisan vendetta by the Trump Administration. That is the false narrative Google wants you to hear. The House Antitrust Subcommittee report was signed by all Ds and there are 2 bipartisan state AG groups doing their own G cases. https://t.co/7dTZ5QhQn8
— Luther Lowe (@lutherlowe) October 20, 2020
Avery Gardiner, a consumer advocate and a senior fellow at the Center for Democracy and Technology, a nonprofit organization focused on influencing technology policy, wrote on Twitter that the Department of Justice’s statistics show that it “didn’t bring even a single case for alleged abuse of monopoly power” from 2010 to 2020, except for in 2011 when there was one case.
George Slover, senior policy counsel at Consumer Reports, said that the increasing dominance of platforms like Google over digital commerce and communications is concerning for people across the political spectrum. “These powerful online platforms that connect us all on the internet must be held accountable, and competition must be protected,” Mr. Slover said in a statement.
Representative Jim Jordan, Republican from Ohio, applauded Attorney General William P. Barr’s decision to file the lawsuit in his tweet about the Google suit:
In a lengthy post on Google’s website on Tuesday, Kent Walker, senior vice president of global affairs, set out the company’s response to the Justice Department’s lawsuit, which he labeled “deeply flawed.”
“This lawsuit would do nothing to help consumers,” Mr. Walker wrote. “To the contrary, it would artificially prop up lower-quality search alternatives, raise phone prices, and make it harder for people to get the search services they want to use.”
The post detailed Google’s rebuttals to the suit:
Google’s agreements with Apple and other device makers and carriers to surface its search product were no different from those that many other companies have, it said. “Other search engines, including Microsoft’s Bing, compete with us for these agreements,” Mr. Walker wrote.
Consumers are using Google because they want to, not because they have to, the company said. It said other search engines, such as Bing or Safari, were easily available for download if people chose to use them instead.
Mr. Walker said in the post that the lawsuit was wrong about how Americans use the internet. “It claims that we compete only with other general search engines. But that’s demonstrably wrong. People find information in lots of ways: They look for news on Twitter, flights on Kayak and Expedia, restaurants on OpenTable, recommendations on Instagram and Pinterest,” he wrote.
The Justice Department’s antitrust lawsuit against Google comes two weeks after Democratic lawmakers on the House Judiciary Committee released a sprawling report on the tech giants that accused Google of having a monopoly over online search and the ads that come up when users enter a query.
“A significant number of entities — spanning major public corporations, small businesses and entrepreneurs — depend on Google for traffic, and no alternate search engine serves as a substitute,” the report said.
The lawmakers also accused Apple, Amazon and Facebook of abusing their market power. The scrutiny reflects how Google has become a dominant player in communications, commerce and media over the last two decades. It controls 90 percent of the market for online searches, according to one estimate. That business is lucrative: Last year, Google brought in $34.3 billion in search revenue in the United States, according to the research firm eMarketer. That figure is expected to grow to $42.5 billion by 2022, the firm said.
In the 449-page report, lawmakers said the four companies had turned from “scrappy” start-ups into “the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.”
To mend the inequities, the lawmakers recommended restoring competition by effectively breaking up the companies, emboldening the agencies that police market concentration and throwing up hurdles for the companies to acquire start-ups. They also proposed reforming antitrust laws, in the biggest potential shift since the Hart-Scott-Rodino Antitrust Improvements Act of 1976 created stronger reviews of big mergers.
The Justice Department on Tuesday filed an antitrust lawsuit against Google, accusing the company of maintaining an illegal monopoly over search and search advertising.
The government was joined by 11 states, all with Republican attorneys general: Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina and Texas.
U.S. stocks rose on Tuesday, the day Speaker Nancy Pelosi has set as a deadline for reaching an agreement with Republicans on an economic stimulus package. The S&P 500 was up more than 1 percent.
Investors have watched the on-again, off-again talks closely in recent weeks, holding out hope for government spending that would support jobless Americans, small businesses, industries that have been hit hardest by the coronavirus pandemic, and state and local governments.
Stocks received an early afternoon lift, following Ms. Pelosi’s appearance on Bloomberg TV, during which she sounded optimistic notes on the possibility of striking a deal on additional stimulus before the election.
Ms. Pelosi said a new bill is being written. “Hopefully by the end of the day today, we’ll know where we all are,” she said.
Even with Ms. Pelosi’s instructions to work toward a deal, the odds remained long that Democrats and the Trump administration could enact a plan before the Nov. 3 election. If differences over funding levels and policy issues could be resolved, there are still Senate Republicans to contend with, who are unlikely to approve a spending package as large as the one under discussion.
Shares of the big tech companies rose even as the Department of Justice filed an antitrust lawsuit against Google, accusing the company of maintaining an illegal monopoly over search and search advertising. The suit had been widely expected. Shares of Alphabet, Google’s parent company, were up more than 2 percent.
Some European stock indexes were pushed higher on Tuesday by a spate of positive earnings, which helped quell anxiety in markets about rising coronavirus cases and new social restrictions, including national lockdowns in Ireland and Wales. Reckitt Benckiser, the British owner of cleaning brands such as Dettol and Lysol, reported a jump in revenue on Tuesday. Logitech, which makes other computer hardware such as keyboards, said its quarterly sales exceeded $1 billion for the first time in the three months that ended in September. Logitech’s share price jumped more than 20 percent in European markets.
Shares in the Swiss bank UBS rose 2.5 percent after the firm said its profit nearly doubled in the third quarter compared to a year ago, because of an increase in trading revenues and growth in its wealth management business. The gains follow a similar pattern on Wall Street, where banks saw increases in trading offsetting a slump in their consumer businesses. UBS said it would give “less senior” employees a one-off bonus equal to one week’s pay, which it expects to cost about $30 million.
Speaker Nancy Pelosi of California set a Tuesday deadline for a compromise stimulus deal that could be considered before the election.
She instructed key Democratic lawmakers on Monday to work with top Republicans to try to resolve critical differences holding up a broad agreement with the Trump administration.
The directive came after she and Steven Mnuchin, the Treasury secretary, held their latest talks, speaking for nearly an hour by phone. The two “continued to narrow their differences,” said Drew Hammill, a spokesman for Ms. Pelosi. He added that “the speaker continues to hope that, by the end of the day Tuesday, we will have clarity on whether we will be able to pass a bill before the election.”
Ms. Pelosi and Mr. Mnuchin are scheduled to speak again at 3 p.m. on Tuesday, according to a person familiar with their plans.
The odds of a last-minute deal remain long, with Democrats and the Trump administration still haggling over funding levels and policy issues. Even if they could agree, Senate Republicans have all but ruled out embracing a plan anywhere near as large as the more than $2 trillion package under discussion.
If such a deal were struck, Senator Mitch McConnell, Republican of Kentucky and the majority leader, said the chamber would consider it, but he also made a point of scheduling two separate votes in the coming days on narrower bills of the kind senators in his party are more willing to accept. One would revive a lapsed federal loan program for small businesses and the other would provide $500 billion for schools, testing and expired unemployment benefits.
President Trump has insisted in recent days that he wants to spend more than the $2.4 trillion Ms. Pelosi has put forward in negotiations, and claimed he could easily cajole enough Senate Republicans into supporting an agreement of that size — a notion that many of them have told his top deputies would never happen.
While Britain struggles to get its national test-and-trace system running more efficiently, travelers will be able to get rapid coronavirus tests at an airport for the first time. Fliers leaving Heathrow Airport in London can get a rapid test for 80 pounds ($104). Starting Tuesday, people going to Hong Kong can take a pre-departure test to meet entry requirements there, the airport said.
The service will initially be offered for four weeks and passengers must book it ahead of time. The tests will be done by private-sector nurses, with results expected within an hour.
Heathrow, Britain’s largest airport, has been urging the government to allow it to offer more testing, particularly to arrivals, in an effort to boost travel. Heathrow argues that on-site testing would limit the need for two-week quarantines for people arriving in Britain. Government ministers have disagreed.
As an international hub, Heathrow Airport typically sees more than 80 million passengers a year. But during the pandemic, governments have introduced a range of travel restrictions, and passengers have been wary of venturing too far from home, causing overseas travel to plummet. The airport said 1.2 million passengers traveled through it in September, down 82 percent compared with 2019.
Heathrow hopes its new program could be the start of a more expansive testing regime in the airport. For now, the airport will offer a test known as LAMP, which is not as sensitive as PCR testing, used by the country’s national health service. PCR tests can detect active infections even before symptoms appear, though with a daylong turnaround. Heathrow plans to add antigen tests, another type of rapid testing, later.
The airport also said that travelers to Italy would be able to use the test, but Collinson, one of the companies administering the plan, said it was still in talks with the Italian government, the BBC reported.
The German auto industry is bouncing back strongly from the pandemic as customers make purchases they postponed earlier in the year, earnings reports by BMW and Daimler indicate. Strong economic growth in China, a crucial market for both vehicle makers, has also helped.
But analysts say the miniboom may not last. Infections in Europe and the United States are surging, endangering sales in those two essential car markets. The profit figures “look too good to be sustainable,” Tim Rokossa, an analyst at Deutsche Bank, said in a note, referring to Daimler.
BMW said late Monday that its free cash flow, a measure of profit, quadrupled to 3 billion euros, or $3.6 billion, in the third quarter compared to the same period last year. Daimler said last week that operating profit rose to €3 billion in the quarter from €2.7 billion a year earlier.
Neither company disclosed net profit in the preliminary earnings reports. Daimler will issue a detailed earnings report on Friday and BMW will do so on Nov. 4.
German carmakers have a strong influence on the economic fate of Europe. Cars and trucks are Germany’s biggest export, and German carmakers buy components from all over the continent.
WASHINGTON — Berkshire Hathaway, the conglomerate owned by Warren Buffett, will pay $4.1 million to the Treasury Department to settle allegations that the company and one of its Turkish subsidiaries violated American sanctions against Iran, department officials said Tuesday in a statement.
Treasury officials said that Berkshire Hathaway’s Turkish subsidiary Iscar Kesici Takim Ticareti ve Imalati Limited Sirket, known as Iscar Turkey, allegedly sold 144 shipments of goods — including cutting tools and disposable inserts — from December 2012 to January 2016 to two intermediary companies knowing they would be resold in Iran.
The transactions, valued at $383,443, violated U.S. sanctions that prohibit American companies from doing business with Tehran. Treasury officials said that Iscar Turkey violated Berkshire’s compliance policies and also “took steps to obfuscate its dealings with Iran, including concealing these activities from Berkshire.”
Iscar Turkey is a unit of IMC International Metalworking Cos., which is based in Israel. In 2006, Berkshire Hathaway bought 80 percent of IMC for $4 billion. In 2013, it bought the remaining 20 percent for $2 billion.
Representatives from Berkshire Hathaway did not immediately respond to a request for comment.
The settlement comes as part of the Trump administration’s effort to exert pressure on Iran, including reimposing sanctions and enforcing penalties on companies that do business with Tehran.
Earlier this month, the Treasury Department imposed sanctions on 18 Iranian banks, effectively locking Iran out of the global financial system and further cratering its already collapsing economy.
The Trump administration last month also unilaterally restored international economic penalties on Tehran that much of the rest of the world has refused to enforce. It also said it was reimposing United Nations sanctions against Iran over the fierce objection of American allies, in part to keep a global arms embargo in place beyond its expiration date of Oct. 18.
The Federal Reserve’s top financial regulator said global officials are digging into what contributed to a near-meltdown of the financial system in March and have pointed to lightly regulated financial players as central to the problem.
As pandemic-spooked investors sold securities and poured into cash in March, critical parts of the financial system came under immense strain. Problems even spilled into the Treasury market, which is at the core of the United States and global financial systems, prompting the Fed to step in with large-scale bond purchases and a number of other market rescues to avert an even broader collapse.
“While central bank action succeeded in restoring market functioning, this support does not address the underlying vulnerabilities spotlighted by the Covid event,” Randal K. Quarles, the Fed’s vice chair for supervision, said in a speech on Tuesday. He noted that the crisis “revealed a banking system that withstood this shock quite well with limited official sector support, and a nonbank system that was significantly more fragile.”
Nonbanks, often called shadow banks because they operate outside of the traditional regulatory system, are a catchall group of lenders, funds and intermediaries that play a critical role in global markets. They required extensive help from the Fed earlier this year to avert catastrophe as credit markets seized up and investors rushed to cash out, leaving companies struggling to roll over short-term debt and funds scrambling to meet redemptions.
Mr. Quarles said that the Financial Stability Board, a global group of regulators that he leads, will publish a report in November that will both diagnose what went wrong and highlight areas for potential reform.
“We know already that work needs to be done to improve the resiliency of money market funds before the vulnerabilities in these funds amplify another shock,” Mr. Quarles said. Money market funds, where investors can park their savings to earn a slightly higher return, saw major outflows in spite of reforms following the 2008 financial crisis that were meant to prevent such runs.
Mr. Quarles said early analysis of the coronavirus-tied financial shock has already “revealed a number of issues that may have caused liquidity imbalances or propagated stress,” though questions about the funding that supports key government debt markets remain, including “the role of leveraged investors and dealer capacity to intermediate in these markets.”
The unwinding of a highly leveraged and widely used hedge fund trade centered on Treasury securities seems to have contributed to problems in March, based on some early analyses.
While the Fed generally approaches financial stability questions from the perspective of bank safety and soundness, Mr. Quarles made it clear in his speech that global overseers need to look further afield in the months ahead.
“The interconnectedness of our financial system means that it is not enough to understand the vulnerabilities arising from the banking sector,” Mr. Quarles said Tuesday. “We must also understand vulnerabilities in the nonbank sector and how shocks are transmitted to or from the nonbank sector.”