Skift Take

There is no telling how this U.S. Department of Justice lawsuit will turn out, and there likely will be years of legal wrangling. Unlike European Union actions to date, this U.S. lawsuit does address some of the concerns of Google's travel industry competitors.

Get ready for years of maneuvering as the U.S. Department of Justice, along with 11 states, filed a lawsuit Tuesday alleging that Google wields “monopoly power” in general search, and abused it through “anticompetitive and exclusionary distribution agreements.”

Importantly, although mentions of “travel” and travel companies such as Expedia and Priceline, are sparse in the lawsuit, it does seem to address some travel industry concerns over the way Google preferences its own businesses such as Google Hotels and Google Flights, although these are not specifically referenced.

In addition to charging Google with violations of the Sherman Act in antitrust, the following is a key section of the lawsuit for travel companies seeking to level the playing field as regards Google Hotels, Google Flights, and its emerging vacation rental and tours and activities businesses.

“Google’s monopoly in general search services also has given the company
extraordinary power as the gateway to the internet, which it uses to promote its own web content and increase its profits. Google originally prided itself as being the “turnstile” to the internet sending users off its results pages through organic links designed to connect the user with a third-party website that would best“answer” a user query. Over time, however, Google has pushed the organic links further and further down the results page and featured more search advertising results and Google’s own vertical or specialized search offerings.

“This, in turn, has demoted organic links of third-party verticals, pushing these links “below-the-fold” (i.e., on the portion of the SERP that is visible only if the user scrolls down) and requiring them to buy more search advertising from Google to remain relevant. This raises their costs, reduces their competitiveness, and limits their incentive and ability to invest in innovations that could be
attractive to users.”

In addition, the lawsuit points out that investors have been reluctant to invest in startups that would compete with Google’s general search advertising monopoly.

The 64-page lawsuit (embedded below) filed in federal court in Washington, D.C., will be a landmark case, and takes place as as the U.S. Department of Justice, Federal Trade Commission, Congress, and numerous states are investing not only Google’s practices, but also those of Facebook, Amazon, and Apple.

Google’s Reaction

In a blog post Tuesday, Google characterized the lawsuit as “deeply flawed” and “dubious.”

The post from Kent Walker, Google’s senior vice president of global affairs and chief legal officer, said in part: “Google Search has put the world’s information at the fingertips of over a billion people. Our engineers work to offer the best search engine possible, constantly improving and fine-tuning it. We think that’s why a wide cross-section of Americans value and often love our free products.

“Today’s lawsuit by the Department of Justice is deeply flawed. People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.
This lawsuit would do nothing to help consumers. 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 Google statement focused on its relationship with Apple, Microsoft, and Android device-makers, and doesn’t focus or mention its issues with the travel industry or other verticals.

Relief in Travel?

The lawsuit could potentially provide some relief to travel advertisers, which feel the burden over Google’s monopoly over what the Justice Department characterized as the $50 billion annual search markets. Firms such as Booking Holdings and Expedia Group spend billions of dollars globally on Google advertising, and Google is a much-have advertising vehicle for the gamut of travel companies around the world.

“The anticompetitive effects of Google’s exclusionary agreements outweigh any procompetitive benefits in this market, or can be achieved through less restrictive means,” the lawsuit alleged. In addition to the federal government, other plaintiffs included the states of Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, South Carolina, and Texas — all of which President Trump carried in the 2016 election.

The lawsuit is vague its view of potential remedies in general search, search advertising, and text advertising, arguing to enjoin Google from engaging in anticompetitive practices, and calling for “preliminary or permanent relief necessary and appropriate to restore competitive conditions in the markets affected by Google’s unlawful conduct.”

The plaintiffs likewise did not specify now much monetary relief they are seeking.

While the lawsuit could potentially reign in certain of Google’s anticompetitive practices in travel, it does not appear to address any of the widespread calls for breaking up big tech, nor tackle President Trump’s calls to overturn the Community Decency Act provisions that shield platforms from liability over their content.

Seth Kalvert, Tripadvisor’s general counsel, welcomed the lawsuit, and said it could be a building block for blunting Google’s role from taking advantage of its gatekeeper position to the detriment of consumers and competitors.

“The problem is well-documented: Google is leveraging its dominance in general search to divert unknowing consumers to its other businesses at the expense of competition,” Kalvert said. “Today’s announcement from the Department of Justice and State Attorneys General confirms that they are seeking to put an end to these anticompetitive tactics. Quite simply, the charges brought today are a win for consumers. They provide the framework for meaningful action to stop Google from leveraging its gatekeeper position to benefit its owned services and increase its profits at the expense of competition and consumers.

“We are prepared to cooperate with US competition authorities as they work to preserve the best of the internet – transparency, the wisdom of crowds, and vibrant competition that promotes the development of high-quality product and services.”

Why This Is Taking Place

Travel industry competitors have called out Google for years over its monopolistic practices in turning its dominance in search into preferential treatment for its own Google Flights and Google Hotels, for example. Google is also digging deeper into its in-house vacation rental and tours and activities businesses.

Metasearch sites such as Tripadvisor and Kayak, as well as online travel agencies like Expedia, have been deeply and adversely impacted by Google’s tactics as it pushed free, organic links way down the page or screen, topped off pages dominated by paid ads, and placed its own travel pages high in the display.

The U.S. Federal Trade Commission probed Google on antitrust matters in 2011 and 2012, and although the commission’s bureau of competition staff advocated suing Google over its ripping off of Tripadvisor and Yelp user reviews, the FTC basically stood down.

Similarly, although the European Union has leveled nearly $8 billion in fines against Google since 2017 and 2018 for anticompetitive practices in its shopping vertical and restrictions on Android device manufacturers, it has yet to take action against Google’s travel business practices.

In 2018, the Trump administration starting attacking Google for alleged media bias, but the Justice Department investigation has apparently broadened to address Google’s practice of manipulating search engine results pages to push organic results into relative oblivion a few pages off the screen, and to divert traffic to its own verticals in areas such as flights, hotels, experiences, restaurants, and careers, for example.

The third quarter of 2019 brought Google’s tactics into particular focus with both Expedia and Tripadvisor publicly stating that Google’s actions adversely impacted their respective financial results. Expedia Group CEO Mark Okerstrom, along with his chief financial officer, were forced out of the company a few weeks later.

Expedia declined to comment on the lawsuit on Tuesday.

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Tags: antitrust, doj, flights, google, hotels, litigation, online travel

Photo credit: The U.S. Department of Justice and 11 states filed an antitrust lawsuit against Google. Associated Press

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