Did Google and Facebook abuse their monopoly in their competitive markets?

Well, one way or the other, Google never fails to update us with the happening news headlines, isn’t it? This time, Google was the one making the headlines. A few days back, the Attorney General of Texas i.e.; General Ken Paxton filed a lawsuit against Alphabet Inc’s Google. The lawsuit was more of a claim that Google allied with Facebook (which is considered to be its top-notch rival) for a deal which is certainly illegal in its nature to manipulate the auctions for all the advertising that takes place online. 

Certainly, this industry of online advertising is something that is already dominated by these two companies which is the major reason why it’s considered to be unfair. The lawsuit filed in Texas read clearly that, “Any collaboration between these two competitors dealing on such a high level should have set off the loudest alarm bells in the terms of antitrust compliances, but apparently, it did not.”

• Basically, it is a group of few Republican-led US states that have initiated an antitrust action against both the companies where it claims majorly that Google by entering this contract with Facebook has abused its monopoly over the industry of the online advertising market. 

• Why it appears to be less of a genuine contract and more of collaboration to strengthen their power is because of the fact that both Google and Facebook sculpt and reinforce its profits on an average and it resulted into pouring in of several numbers of lawsuits.

• What makes this collaboration even more controversial is the fact that Google had come out of a case a few months back where it was alleged of using a web of contracts and partnerships only to put a bar on the rival search engines. The same allegations were made when it apparently entered in a contract with Apple; however, Apple denied any such allegations.

According to Ken Paxton, Google has used its monopoly over the online ad industry to control the pricing and also engaged in the collusions to rig the auctions and that amounts to absolute violation of justice. This suit was filed by the Ken Paxton lead group which filed the suit in the federal court in the Eastern District of Texas that focuses upon its advertising exchange that handles automated bidding and placement for a huge chunk of advertising that exists around the web. 

Many researchers have claimed about the involvement of Google in selling technology both for buyers and sellers of advertising and an ad running exchange on the other hand that clashes with the interests of financial markets. There is a need for structural separation that is felt like needed to restrict the scope that Google widens from time to time.

Elimination of the competition

With the execution of the current deals, the fact becomes undeniable that once Google enters the online advertising world, it is definitely going to become the dominant player in that manner and it would be all we are going to see around the display ad space. By entering into this arena, Google imposed a one-exchange-rule on publishers that prevents them from sending their inventory to any other distinct ad exchanges, as alleged by the plaintiffs.

• Google has given us some instances in the past where it comes up with an alternative to overshadow an element or a technology that has been invented with a potential to take over its dominance in a certain arena. 

• Like in the past, when header bidding was a thing and it was initiated with an idea of the first of its own type in the market, Google came up with its own Exchange Bidding system. 

• However, when accusations were put on it, they contended it to be programmed to exclude competition from exchanges in various possible ways, like diminishing ability of the other exchanges to identify users that are related to publisher’s ad space in auctions and charging publishers an additional fee for selling inventory in non-Google exchange. 

According to one of the interviews of VP of market insights, “The idea is Google is able to exercise control over the entire process, and its massive scale enables it to get more revenue, but also reduce competition.”

A matter of concern

As a matter of fact, the collusion between Google and Facebook is yet to be affirmed in a documentary manner, but, if the internal documents somehow convey the idea of this collusion between Google and Facebook, then it envisages Google and provides more credibility to the claims that are outlined or made in the aforementioned compliant. If the court provides a formal verdict, it might include damages, or the structural changes that are suggested above, so ultimately it would mean that Google sells off certain parts of it as business or any change to certain ad policies. The fact which is quite well-known is that Google has vast resources at its disposal and it would do whatever it can to win, and if this does not happen for Google, it is also capable of negotiating a settlement.

Facebook on the other hand has been charged with the infringement of antitrust laws by 48 attorneys general coming from both the parties in the lawsuit that has been the centre of attention of every news headline. This suit headed by Mr. Paxton claims these Social media companies of a ‘year-long course of anti-competitive conduct’ that also includes strategic buying up of rivals and it somehow threatens the monopoly and cutting the services to put the rival developers down in the market.

Conclusion

Sterling says, “The collection of these suits against these massive companies reflects the consensus in the political circles, in Congress and at the state level. The lawsuit we are talking about is not just a legal step taken but also an acknowledgement that Google in the recent days has become so powerful that there is actually none stronger in the market to its competition. Even if there are potential competitors, it sure knows well to get them on their side so they don’t become their competitors.