What you need to know
- The U.S. Department of Justice has accused Google of stifling competition in the search engine market by paying "enormous sums."
- The allegation was made during the first hearing ahead of DOJ’s antitrust lawsuit trial that's set to take place next year.
- Google's contracts with Apple, Samsung, and other big companies are in trouble if the DOJ wins the court battle.
The U.S. Department of Justice has accused Google of anti-competitive practices for paying large sums of money to major tech companies in order to maintain its dominance in the search engine market.
During a hearing in Washington, D.C., DOJ attorney Kenneth Dintzer raised concerns about Google's deals with big phone makers and network carriers in the United States to make Google Search the default search engine, Bloomberg reports.
"Google invests billions in defaults, knowing people won’t change them," Dintzer told Judge Amit Mehta. "They are buying default exclusivity because defaults matter a lot."
However, the exact amount wasn't disclosed. Dintzer has argued that Apple, Samsung, Motorola, and other phone makers are paid large sums to keep Google Search dominant on their products. An investment note from Bernstein analyst Toni Sacconaghi claimed last year that Google could pay nearly $15 billion to be the default search engine on Apple products.
The Mountain View-based search giant also has contracts with the big telecom carriers AT&T, Verizon, and T-Mobile to preload its search engine on new handsets, including many of the best Android phones.
These contracts are viewed as anti-competitive, shutting out other search engines. It also allows Google to gather a treasure trove of user data, which powers its advertising empire. While users have the option to change the default search engine on their phones, most people don't bother to do that at all.
On the other hand, Google’s attorney John Schmidtlein has refuted the DOJ's claims, arguing that the company faces competition from dozens of search engines.
"You don’t have to go to Google to shop on Amazon. You don’t have to go to Google to buy plane tickets on Expedia," Schmidtlein said. "The fact that Google doesn’t face the same competition on every query doesn’t mean the company doesn’t face tough competition."
A hearing for the DOJ’s antitrust lawsuit trial is scheduled for some time next year. For Samsung and other smartphone giants, the lawsuit means they could lose billions of dollars if Google is ordered to end these default search contracts.
