The lawsuit against Google is just the tip of the iceberg

It is difficult to know how this legal action will take against Google, but it is expected to be the first of others against Facebook, Amazon and Apple.

The US government filed charges against Google on Tuesday, accusing it of violating competition law to preserve its monopoly in the online search and advertising business. Although up until now European regulators were leading the fight against the power accumulated by American big tech, this lawsuit marks the biggest challenge presented by American regulators against a tech giant in years and sends a clear message to these companies that the mood has also turned against them at home. And that scrutiny on its business practices will intensify both within the US and in other geographies.

The lawsuit comes after more than a year of investigation and focuses on the billions of dollars that Google pays each year to ensure that its search engine is installed as the default option on browsers and devices such as mobile phones. The US Department of Justice said those agreements have helped ensure that Google, which was a startup just two decades ago, is today the “guardian of the Internet.”

Although this legal action against Google suggests that the case could be the first of others against Apple, Amazon and Facebook, also under the scrutiny of regulators, it is not clear what consequences the lawsuit could have for Google and what scenarios would be feasible: Will Google win the legal battle, will the case be closed with a heavy sanction, will the company split?

For Enrique Dans, professor at IE Business School, the demand will, in general, be short-lived. First, because the approach it makes and the infractions it indicates “are very unimportant”: “That Google pays other companies to position its search engine on certain devices or browsers, for example, is something very insignificant: the product promotes is free, and if it stops doing it and those companies place another, users will quickly put the Google search engine back on their site ”.

Nor is it clear that nothing will move until the result of the US elections in which Biden will probably win is known, “and the states that have joined the lawsuit are all Republicans, which will imply that there is not much interest in the administration for pursuing a lawsuit like this. ” Dans’s view on this point is not shared by many analysts, who warn that for the first time Democrats and Republicans are going hand in hand in the face of the power amassed by big tech.

But for this expert, the fact that this demand may end up not giving rise to significant changes does not mean that it is not, at least in its essence, correct: “Google is a monopoly, it acts as such, and above all, it has become that from which at first he fled like the plague. More and more, Google is becoming a portal like those of the 90s. It is no longer a search engine, but a page that aspires to you to spend a lot of time in it, moving between its results, its maps, its comparators and other services . That Google is today a monopoly is something that few doubt. The problem is that the DoJ, with a lawsuit like the one it has raised, is not going to be able to do much to prevent it.

Fernando Aparicio, CEO of Amvos Digital, believes that the action taken against Google is the only defensive movement left to the American economy, where any startup is either bought or copied by the big boys. “The relevant thing here is that the consumer has already chosen and until companies emerge that seduce him as the GAFA have done, this situation will not change. And aspirants like Uber, Tesla & Cia have a lot to grow and, above all, to diversify their sources of income ”.

The novelty of the case for Aparicio is that this is the first step taken by the US to curb the power of the technological giants in decades and ensures that it will not be the last, “since Google has de facto lost the relevance it has in the market from the US for the hostile takeover that Amazon has de facto made, because in the last five years it has stolen the start of the digital consumer journey “. His feeling, in any case, is that it will be very difficult for them to chop up the company and that it will end in some kind of substantial financial penalty.

Aparicio maintains that the demand for Google is the tip of the iceberg, since the real impact on the economy, he says, is Amazon from the point of view of market dominance. “Facebook is also in the eye of the hurricane for more than justified reasons for a long time.”

But is the lawsuit against Google or any other tech giant late if it occurs? The answer is not unanimous. What Google’s claim does seem to show, according to Dans, is that the US antitrust legislation has been a caricature of itself several decades ago, and that it needs a major revision. “Let us remember that antitrust legislation should not penalize the success or growth of a company, but rather the actions it takes to prevent others from freely competing with it. As long as this in-depth review does not take place, the result of this type of lawsuit will be more temporary, and will continue to be the same: a little significant touch of attention, some slight correction, and little else, whether for Google or for other companies ”.

What this demand probably does, according to this expert, is to hinder future acquisitions of both Google and other tech giants. “Regulators are much more sensitive to the issue, their level of understanding of the industry will increase, and these types of operations will be scrutinized and permission will be denied on more occasions.” Logically, this will harm a big tech used to acquiring or copying everything that is interesting in the industry, which will force them to do more things for themselves. But beware, because this can have another unwanted impact. According to Dans, many startups see being acquired by big tech as their golden dream, and if this possibility is undermined, the stimulus to create innovative services may be less.

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