States led by Texas target Google in new antitrust probe

Google's dominance in online search and advertising enables it to target millions of consumers for their personal data. File/AP

South Carolina is among the 50 states and U.S. territories that launched a formal investigation Monday into what they called "potential monopolistic behavior" by internet giant Google. 

The coalition, led by Texas, will look at whether the California-based technology company's control of advertising and search traffic has led to anticompetitive practices.

It's the latest effort to address whether the country's largest tech businesses have too much influence over the digital marketplace. Separately, a group of states on Friday disclosed an investigation into Facebook's market dominance. South Carolina is not among them.

The two probes widen the antitrust scrutiny of big tech companies beyond sweeping federal and congressional investigations and enforcement action by European regulators.

John A. Carlos II (copy)

South Carolina Attorney General Alan Wilson. File

South Carolina's involvement in the review of Google's business practices means its legal experts will be advising in the investigation of a company that employs about 400 workers at a Lowcountry data center, which has received financial incentives from the state and local governments.

Last year, Google announced it was investing another $600 million to expand the site near Moncks Corner, bringing its total spending at the Berkeley County campus to about $2.4 billion.

“No company, no matter how big and how powerful, is above the law, S.C. Attorney General Alan Wilson said in a statement Monday. "Every citizen has the right to the protection of his or her privacy even from internet giants. We will get to the bottom of and answer these very serious questions regarding Google’s practices." 

Google's parent company, Alphabet, has a market value of more than $820 billion and controls so many facets of the internet that it's fairly impossible to surf the web for long without running into at least one of its services. Google's dominance in online search and advertising enables it to target millions of consumers for their personal data.

Critics often point to Google's 2007 acquisition of online advertising company DoubleClick as pivotal to its ad dominance.

Europe's antitrust regulators slapped Google with a $1.7 billion fine in March for unfairly inserting exclusivity clauses into contracts with advertisers, disadvantaging rivals in the online ad business.

One outcome antitrust regulators might explore is forcing Google to spin off search as a separate company, experts say. Regulators also could focus on areas such as Google's popular video site YouTube, an acquisition Google scored in 2006.

Google has long argued that although its businesses are large, they are useful and beneficial to consumers. On Monday it referred media outlets to a Friday blob post by Kent Walker, senior vice president of global affairs.

"Google is one of America's top spenders on research and development, making investments that spur innovation," Walker wrote. "Things that were science fiction a few years ago are now free for everyone — translating any language instantaneously, learning about objects by pointing your phone, getting an answer to pretty much any question you might have."

But federal and state regulators and policymakers are growing more concerned not just with the company's impact on ordinary internet users, but also on smaller companies striving to compete in Google's markets.

"On the one hand, you could just say, 'well Google is dominant because they're good,'" said Jen King, the director of privacy at Stanford's Center for Internet and Society. "But at the same time, it's created an ecosystem where people's whole internet experience is mediated through Google's home page and Google's other products."

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Nebraska Attorney General Doug Peterson, a Republican, said at a news conference in Washington that 50 attorneys general joining together sends a "strong message to Google."

California and Alabama are not part of the investigation. The District of Columbia and Puerto Rico are. 

Experts believe the probe could focus on at least one of three areas that have caught regulators' eyes.

A good first place to look might be online advertising. Google will control 31.1 percent of global digital ad dollars in 2019, according to eMarketer estimates, crushing a distant second-place Facebook. And many smaller advertisers have argued that Google has such a stranglehold on the market that it becomes a system of whatever Google says, goes — because the alternative could be not reaching customers.

"There's definitely concern on the part of the advertisers themselves that Google wields way too much power in setting rates and favoring their own services over others," King said.

Another visibly huge piece of Google's business is its search platform, often the starting point for millions of people when they go online. Google dwarfs other search competitors and has faced harsh criticism in the past for favoring its own products over competitors at the top of search results. European regulators also have investigated in this area, ultimately fining Google for promoting its own shopping service. Google is appealing the fine.

Google's smartphone operating system, Android, is the most widely used in the world.

European regulators have fined Google $5 billion for tactics involving Android, finding that Google forced smartphone makers to install Google apps, thereby expanding its reach. Google has since allowed more options for alternative browser and search apps to European Android phones.

The U.S. Justice Department opened a sweeping investigation of big tech companies this summer, looking at whether their online platforms have hurt competition, suppressed innovation or otherwise harmed consumers. The Federal Trade Commission has been conducting its own competition probe of Big Tech, as has the House Judiciary subcommittee on antitrust.

Matt O'Brien of the AP and Mary Katherine Wildeman of The Post and Courier contributed to this report.