Texas and 9 other U.S. states accuse Google of a monopoly.
Google Monopoly Complaints
The nine American states that have filed a complaint against Google are Texas, Connecticut, Illinois, Maine, California, New Hampshire, Rhode Island, Arizona, Georgia, Maryland, Wisconsin and Washington. The complaints detail how Google and other search engines artificially inflate search results to prevent users from finding the information they are looking for.
In turn, advertisers who bid on search terms will only be shown results from Google or one of its partner search engines if their ads are clicked. This artificial market inflation eliminates competition and distorts search results in favor of advertisers, resulting in less traffic to legitimate sites. The complaint also says that Google has refused to adopt simple solutions to eliminate this problem. As a result, he is violating US antimonopoly laws and is guilty of anti-competitive behavior.
Texas and nine other states claimed that Google was involved in an illegal agreement with certain advertisers. The complaint specifically names Google AdWords, which Google currently owns. According to the complaint, Google AdWords advertisers could not reasonably be able to pay for traffic without using this system. In fact, Google is accused of having an illegal agreement with advertisers to limit their freedom of speech and deny them from gaining control over the content of the advertising campaigns they would use. Advertisers will only be paid when they have actual clicks on their ads.
What is the reason for the accusation?
The complaint further states that Google AdWords has abused its market power by conditioning payments it receives for advertising campaigns with restrictive terms and conditions. For example, it is not allowed to limit the number of ads displayed on a web page or change the bidding format. It is also not allowed to change the minimum cost price that advertisers charge. In addition, users are not allowed to charge excessive fees or favor their own products and services over those of competitors.
On Wednesday, the European Commission released a report in the search engine optimization industry that alleged that Google was guilty of anti-competitive behavior. The Commission’s investigation found that Google was engaging in anti-competitive behavior by limiting the time that online publishers could spend searching for high-quality keywords. The Commission also claimed that Google AdWords had conspired with other companies in the form of search results.
What Google thinks about it
Google denied the allegations, saying the search results are based on real keywords entered by real people. Google proposed changes to the algorithm used by its search engine to prevent this type of activity, however, these changes were not adopted by the Commission due to the lack of sufficient evidence of damage.
The Texas lawsuit is one of the first clashes between Google and a major online publisher over the power of Google AdWords. In the lawsuit, the plaintiff, Texas Reply Publishers LLC, claimed that Google misused its power over Adwords to monopolize the free market for online publishers. If the free market were a baseball game, Google would be the home team, throwing, catching and throwing the ball. Google positions itself as the home team, or at least that was its strategy, to dominate the free market, preventing other publishers from establishing themselves freely in the market.
On Thursday, Google received its response to its complaints in an FCC complaint. The Google Response Statement can be found below. Google stated, “The complaint is based on a misunderstanding of how Google AdWords works.” Google’s response to this complaint states that they never placed ads on sites that promoted only one advertiser. Google also pointed out that they do not restrict where the ads appear and that they have allowed two advertisers to appear side by side on the same web page.
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Complaints filed in Texas and nine other U.S. states claimed that Google Monopoly caused the advertising price to be too high and not allow reasonable competition. Some publishers lost thousands of dollars, and some even failed. Google claims that the complaints are without merit, and that the complaints were made before Google became an official program. Google plans to appeal the complaint. It remains to be seen whether Google will succeed in the feature.
The question is, does Google’s search advertising platform give you enough market power? Only time will tell. In the meantime, what is quite clear is that Google’s monopolization charge is unfounded, and that there is no chance of that happening. In addition, according to studies, Google has the largest market share of any technology company in the world.
So, while others may want to claim that Google’s unmatched market power gives them the ability to charge what they want, the company has the ability to lower the price on almost all advertising products when needed, and the only way to publisher to benefit from these benefits is allowing Google to do so.