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Has Google strayed from its ‘do no evil’ mantra? Utah’s Sean Reyes among 50 A.G.s who will investigate

Utah Attorney General Sean Reyes, with a bipartisan group of state attorneys general, speaks to reporters in front of the U.S. Supreme Court in Washington on Monday, Sept. 9, 2019. A bipartisan coalition of 48 states along with Puerto Rico and the District of Columbia said Monday it is investigating whether Google’s search and advertising business is engaged in monopolistic behavior. It follows a Friday announcement of a similar multistate probe targeting Facebook.
Manuel Balce Ceneta, Associated Press

SALT LAKE CITY — Has search giant Google strayed from its corporate mantra of “do no evil?”

Utah Attorney General Sean Reyes joined colleagues from across the country on the steps of the U.S. Supreme Court Monday in announcing a coordinated investigation that will explore the question of whether Google has crossed the line of legality on how it manages its vast online advertising empire.

Reyes said that while Google is entitled to a presumption of innocence, there is ample evidence to begin the process of determining, via investigation, whether the company has “played by the rules and acted fairly.”

“The question for us today is whether Google has strayed from its founding principles to not do evil in its search and relentless drive to be the market-dominant player,” Reyes said. “That is what our investigation together, bipartisan, jointly will uncover.”

The bipartisan inquiry, which will include participation from 48 state attorneys general as well as the attorneys general of the District of Columbia and Puerto Rico, will focus on Google’s advertising business and paid ad placements that appear in search results.

California and Alabama are the only two states not participating. Texas Attorney General Ken Paxton will lead the effort.

In response to a Deseret News request for comment on the announcement, a Google spokesman referred to a statement published last Friday on the company’s blog page.

“Google’s services help people, create more choice, and support thousands of jobs and small businesses across the United States,” wrote Kent Walker, Google senior vice president of global affairs. “Google is one of America’s top spenders on research and development, making investments that spur innovation: 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.

“At the same time, it’s of course right that governments should have oversight to ensure that all successful companies, including ours, are complying with the law.”

Monday’s announcement continues the cascade of investigations currently focusing on big U.S. tech firms that also includes a separate effort launched last Friday by a smaller group of state attorneys general that will focus on Facebook, as well as federal-level inquiries already underway by the Federal Trade Commission and U.S. Department of Justice. Congress has also been grilling representatives of Google, Facebook, Apple and Amazon in hearings exploring potential anticompetitive conduct. Collectively, the efforts have attracted support from elected officials on both sides of the aisle in a rare bridging of the current political divide.

Reyes told the Deseret News following the announcement that Google accounts for almost 90% of global search inquiries and that dominance is not in and of itself illegal or inherently anticompetitive. But he said that level of power could be leveraged in ways that would cause harm not only to consumers but even current and yet-to-be-conceived future tech companies.

“When you’re that big and that dominant and that pervasive, you have to be that much more careful about the actions you take,” Reyes said. “There is evidence that not only has Google not been hyper-careful, but potentially very deliberate and purposeful about using their dominance to preclude others from being able to play in that space.”

Reyes also noted his concerns about potential misuse of power by big tech companies goes back years and cited a 2016 letter he co-signed with D.C. Attorney General Karl Racine appealing to the Federal Trade Commission to investigate allegations that Google was manipulating search results to the detriment of competition. While the FTC took a pass on the request, officials from the European Union launched their own investigation which eventually led to the assessment of some $1.7 billion in fines against Google.

Reyes said lawyers and paralegal staff from his office, along with himself, will be participating in the investigative effort, which began Monday with a civil investigative command issued to Google. He expects the work to be accommodated under his current budget appropriation and said one of the advantages of so many participants in the effort is the ability to share costs and workload of what is likely to be a protracted process.

Reyes and over 40 other state attorneys general co-signed a letter in June outlining issues they share with how big tech firms operate, following a conference on antitrust issues in Omaha, Nebraska in July. The 27-page document went to the FTC, which along with the Justice Department, is tasked with antitrust oversight in the U.S.

It noted that companies like Google and Facebook, that give away their products, have created new challenges for enforcement and regulation under current statute.

”Recent antitrust enforcement in technology markets has often failed to meaningfully evaluate non-price aspects of competition such as innovation, consumer choice and privacy,” the letter reads. “Recent comments by Makan Delrahim, antitrust chief at the United States Department of Justice, reaffirm the commitment of government antitrust enforcers to utilize current antitrust doctrine to address consumer harm in zero-price markets.”

Google expects state prosecutors will ask it about past similar investigations in the U.S. and internationally, Walker wrote in his Friday blog post.

Google’s parent company, Alphabet, has a market value of more than $820 billion and controls so many aspects of the internet that it’s hard to imagine surfing the web for long without running into at least one of its services.

Google will control 31.1% 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,” said Jen King, the director of privacy at Stanford’s Center for Internet and Society.

Critics often point to Google’s 2007 acquisition of online advertising company DoubleClick as pivotal to its advertising 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 advertising business.

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 have also investigated here — ultimately fining Google for promoting its own shopping service. Google is appealing the fine.

Google has long argued that although its businesses are large, they are useful and beneficial to consumers. But it appears regulators are growing more concerned not just with the effects on regular internet users, but on smaller companies as well.

“On the one hand, you could just say, ‘Well Google is dominant because they’re good,’” King said. “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.”

Jessica Melugin, associate director of nonprofit, Libertarian think-tank Competitive Enterprise Institute, characterized the multistate Google investigation as “high-profile activism” and warned the investigation could have negative, downstream impacts on new tech business efforts.

“These state attorneys general are expanding the power of their office and stretching the limits of what constitutes an antitrust violation,” Malugin said in a statement. “This sort of high-profile activism may benefit state A.G.s’ political ambitions, but impose harmful costs on consumers, businesses and the economy.

“The mere threat of legal penalties — and the environment of over-caution it engenders — also has a chilling effect on entrepreneurs. Such opportunity costs are impossible to measure.”

Contributing: Associated Press