- The Department of Justice is filing an antitrust lawsuit against Google, accusing it of illegally maintaining its monopoly by using its hefty ad revenue to engage in exclusionary contracts that block competition.
- An example of this would be Google’s arrangement with Apple to be the default browser on Safari. The Department thinks this agreement makes it impossible for competition to break through.
- Google has defended itself and says that it does make room for competition, but that consumers choose Google of their own volition.
- This is one of the largest antitrust suits against a major tech company in years and could be a long legal battle. Depending on the outcome, there could be major implications for other tech companies outside of Google.
DOJ Files Suit Against Google
The Department of Justice announced Tuesday that it is filing an antitrust suit against Google, launching one of the largest cases of its kind against a tech company in decades.
The suit will hurl multiple allegations against the tech giant, including claims that it maintains its monopoly via unlawful exclusionary and interlocking agreements and contracts that block the growth of competition. The Justice Department is claiming that the company spends billions of dollars in ad revenue to pay major phone and tech companies like Apple to make Google the default search engine on web browsers.
The lawsuit also alleges that Google has arrangements to make sure its search application is preloaded and cannot be deleted on mobile Android devices, which the department says hurts and prevents competition.
An action like this from the Justice Department has been highly anticipated for some time now. In the summer of 2019, Department officials announced a broad review of the practices of big companies, including Google. Their investigation into the company has lasted since and has included probes into several aspects of the Silicon Valley behemoth.
“An antitrust response is necessary to benefit consumers,” Jeffrey A. Rosen, deputy Attorney General said in a briefing. “If the government does not enforce the antitrust laws to enable competition, we could lose the next wave of innovation. If that happens, Americans may never get to see the next Google.”
Google’s Dominance on the Internet
The Attorneys General from eleven states will be joining the suit, and many more may decide to hop on as the legal battle continues. It could take years for this to play out and be resolved. Pending the results, it could also have major implications for other big tech companies.
Google’s dominance across the internet is prominent. According to data from Vox, when it comes to searching, the company takes up 92% of the market, with its biggest competitor, Bing, owning just a small sliver of that space. When it comes to smartphone operating systems, it takes up 85% of the market. For web browsers, it takes up 66%.
The Justice Department is not the only part of the government to recently take aim at Google. In the first week of October, a House subcommittee released a report accusing Google, as well as Facebook, Amazon and Apple, of holding and abusing monopoly power in their respective industries. That report mentioned anti-competitive contracts at Google. The House suggested that there was a “pressing need for legislative action and reform” when it comes to monopolies at major tech companies.
Google has repeatedly denied that it holds an unlawful monopoly. In a Tuesday statement, the company maintained that it allows for healthy competition and condemned the Justice Department’s choice to bring an antitrust suit forward.
“Today’s lawsuit by the Department of Justice is deeply flawed,” the statement said. “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.”
When it came to specifics in the suit, Google claimed the Justice Department was relying on “dubious antitrust arguments.” The company compared the agreements it has with companies like Apple to a cereal brand paying a grocery store to stock its boxes at eye level.
When it comes to Apple specifically, Google claims that it is the default in Safari because Apple believes Google to be the best search engine. Google also said their agreement is not exclusive and that Bing and Yahoo are also featured in Safari.
“This isn’t the dial-up 1990s, when changing services was slow and difficult, and often required you to buy and install software with a CD-ROM,” Google argued. “Today, you can easily download your choice of apps or change your default settings in a matter of seconds—faster than you can walk to another aisle in the grocery store.”
“This lawsuit claims that Americans aren’t sophisticated enough to do this. But we know that’s not true.”
While it will take several years for this case to be resolved, many are analyzing what the potential outcomes may be. The Wall Street Journal said that if Google loses, there could be court-ordered changes to its practices, potentially to create openings for new rivals. However, the lawsuit will not immediately specify specific solutions. That step will come further down the road.
If Google wins this, it could throw a wrench in the government’s growing plans to go after big tech companies. Other investigations could get complicated or foiled, and it could mean that this issue might have to move into Congress’ hands.
See what others are saying: (Vox) (Wall Street Journal) (CNN)
Amazon UK Destroys Millions in Unsold Stock a Year, Including MacBooks, Face Masks, TVs, and iPads
Amazon claims the unused products aren’t being dumped in landfills, but an investigation by ITV shows otherwise.
Amazon Destroying Unused Products
A probe by British news outlet ITV has found that one Amazon warehouse in Scotland destroys millions of unsold products every year.
It’s not just perishable items being dumped. The list of discarded products includes Macbooks, iPads, Dyson fans, unopened face masks, TVs, jewelry, unread books, and more.
One anonymous former employee told ITV that the warehouse’s target was to get rid of roughly 130,000 items per week, and on average, about 50% of the items destroyed are still unused and in their shrinkwrap.
“There’s no rhyme or reason to what gets destroyed,” the employee said.
In its investigation, ITV received documents that appeared to back up the employee’s information, with one showing 124,000 items marked to be destroyed in a single week. Meanwhile, ITV noted that only 28,000 items were labelled “donate” during that same week.
Where Are the Discarded Products Going?
It also tracked where the items went after leaving the plant. There, it found Amazon taking some electrical items to a nearby waste management system, but it says the rest was tracked to a landfill site.
Despite that, in a statement, Amazon told ITV, “We are working towards a goal of zero product disposal and our priority is to resell, donate to charitable organisations or recycle any unsold products. No items are sent to landfill in the UK. As a last resort, we will send items to energy recovery, but we’re working hard to drive the number of times this happens down to zero.”
Whether it’s telling the truth or not, what Amazon is doing isn’t illegal. In fact, the reason why it’s throwing so much out seems to be connected to its highly successful business model.
“Many vendors choose to house their products in Amazon’s vast warehouses,” ITV explained. “But the longer the goods remain unsold, the more a company is charged to store them. It is eventually cheaper to dispose of the goods, especially stock from overseas, than to continue storing the stock.”
As climate activist Sam Chetan-Welsh told ITV, “It’s just an unimaginable amount of unnecessary waste. It’s absolutely shocking. Each of these items requires natural resources and carbon emissions and human labor to make.”
“That is why as long as Amazon’s business model relies on this kind of disposable culture, they’re just going to expand, things are only going to get worse, and that is why we need the government to step in and set legislation immediately.”
The report has raised questions about how prevalent this destruction practice is and continues to be at other warehouses — especially given past reporting. In fact, as Prime Minister Boris Johnson said, “It sounds incredible to me and an indictment of a consumerist society. If it’s as you say, we will look into it.”
“Obviously, we don’t like stuff going to landfill under any circumstances that’s why we have the landfill tax and landfill credit scheme, and everything else,” the prime minister added. “I’m afraid it’s one of those things we’re just going to have to look into and get back to you.”
Europe’s Soccer Championship Ends Investigation Into Whether Player’s Rainbow Armband Is “Political”
The Union of European Football Associations will continue a probe into potential discrimination at its matches in Hungary, which passed a major anti-LGBTQ+ bill last week.
Pride Armband Isn’t Political, UEFA Says
The Union of European Football Associations (UEFA) has agreed that a rainbow armband worn by German soccer player Manuel Neuer is not political in nature, according to the German Football Association (GFA).
Neuer wore the band at two official matches during UEFA’s Euro 2020 Championship and once during a friendly match with Latvia to show support for the LGBTQ+ community during Pride month.
Sunday, multiple outlets reported that UEFA was investigating Neuer’s armband as potentially political, possibly because LGBTQ+ rights have become somewhat of a flashpoint topic since the start of the tournament. Since UEFA does not allow players and teams to participate in “political demonstrations” at events, there were concerns the GFA could be hit with a fine.
Later Sunday, the GFA said UEFA would consider the armband “a sign of support for diversity and thus for ‘good cause,’” and because of that, the team would not face any disciplinary action.
Discrimination Investigation at Hungary Games
The same day outlets reported the investigation into Neuer’s armband, they also reported that UEFA was investigating two matches in Hungary for potential discrimination.
At the first match, an anti-LGBTQ+ banner was spotted in the crowd. At the second, Hungarian fans marched with banners that called on players to stop kneeling to protest racism.
Both events come as Hungary passed a bill against “LGBT propaganda” last week. Notably, that law bans the promotion or portrayal of homosexuality and gender reassignment.
In protest of Hungary’s new law, Munich’s mayor has asked the UEFA to allow the city to light up its stadium in rainbow colors on Wednesday when the German and Hungarian teams square off.
See what others are saying: (ESPN) (The Athletic) (Mirror)
Initial Unemployment Claims See First Rise Since April as Fed Estimates Faster Inflation Growth Than Previously Predicted
The Fed also announced that it expects to raise interest rates in 2023, a year earlier than its previous prediction.
Unemployment Claims Rise
The Labor Department reported Thursday that, for the first time in nearly two months, weekly initial unemployment claims increased.
For the week ending on June 12, 412,000 people filed first-time claims. That’s an increase of 37,000 from the previous week’s estimate of 375,000. It’s also the highest that new claims have been in a month.
Still, there are positive signs that the labor market is improving. For example, while last week’s continuing claims were largely unchanged from the previous week, the four-week moving average for continuing claims fell to its lowest level since March 2020.
The Federal Reserve is also optimistic about the labor market eventually returning to form despite the country still being short 7 million jobs. Following a two-day meeting, the central bank predicted that the unemployment rate could fall back to pre-pandemic levels by 2023.
It also expects economic growth to hit 7% this year, up from the 6.5% it predicted in March.
Inflation Will Grow Faster Than Expected
At its meeting, the Fed said it now believes inflation will climb higher than it had previously estimated just three months ago. In March, it predicted inflation would rise about 2.4% this year. As of Wednesday, it’s expecting a 3.4% jump.
That comes on the heels of a report from the Labor Department last week that indicated consumer prices climbed at their fastest rate since 2008 year-over-year in May. Like economists explained then, the Fed said it expects this rise in consumer prices to be temporary.
While the Fed expects the prices for some goods and services to continue to increase over the next few months because of issues such as supply bottlenecks, it also said it believes the labor market will continue to grow since the economy is finally coming out of its massive, pandemic-induced downturn in spending.
Still, as Fed Chair Jerome Powell warned Wednesday, “Shifts in demand can be large and rapid. Inflation could turn out to be higher and more persistent than we expect.”
Powell added that the central bank will keep a close eye on inflation and that it would respond quickly if inflation becomes broader or more persistent than current estimates.
Interest Rates Stay at Historic Lows… For Now
Among other key points from the Fed’s meeting was its decision to move up a projection for an initial interest rate hike from 2024 to 2023. Notably, it also said there could be two rate hikes in 2023.
That then caused some major stock indices like the Dow Jones to initially stumble, though the markets were more mixed Thursday. That’s likely at least partially because the Fed kept internet rates near a historically low zero for the time being, as expected.
Some Republican lawmakers, such as Sen. Rick Scott (Fl.), have argued that the 2023 projection is too slow, saying interest rates need to go up sooner to prevent inflation from rising too much.
In testimony before a Senate committee on Wednesday, Treasury Secretary Janet Yellen said the inflation situation is being monitored “very, very carefully” and that while prices are rising, they’re also moving back toward “normal” levels.