Google Antitrust Case Draws Sports Industry Eyes With Digital Rights in Play

The U.S. Department of Justice has brought a historic case against Google for, in the words of Attorney General William Barr, “unlawfully maintaining a monopoly in general search services and search advertising in violation of the U.S. antitrust laws.”

If successful, the lawsuit could dramatically alter users’ internet experience—including for sports fans and the industry that competes for their time and dollars.

There’s no denying Google’s prevalence. According to Justice Department calculations, the Mountain View, Calif.-based company accounts for 88 percent of general search engine queries in the U.S. and 94 percent of searches on mobile devices. Google is so pervasive that its name has become a verb.

The legal question is not whether Google has obtained a dominant share of the search engine market. It’s how the company reached this lofty status, the strategies it employs to stay ahead and how the consumer is ultimately affected.

One set of curious onlookers of U.S. v. Google will be those in the sports industry.

“I’m sure leagues are watching [the case] with a keen eye,” Frank Vuono, co-founder and partner of 16W Marketing, tells Sportico in a phone interview. “Google is so prolific it penetrates every level of sports.”

Vuono, who has decades of experience negotiating sports naming rights, sponsorship and licensing deals, believes leagues will pay particular attention to how the case influences Google bidding for media distribution contracts: “You have to consider Google as a viable contender for rights agreements as they get renegotiated—and leagues are looking for more and more digital competition.” If Google and other large technology companies are forced to operate on smaller scales or in disintegrated pieces, Vuono warns that leagues might lose out on competition.

He adds that leagues have eyed partnerships with large technology companies in recent years. This is especially true of the NFL, which has partnered with Microsoft in anticipation of artificial intelligence and “dipped the waters” with Amazon for Thursday night distribution of games.

Vuono also sees athletes as having a vested stake in the litigation. He notes that more of them use YouTube to distribute their personal brand and content.

Changes to Google could impact sports in still other ways. Take advertisements that appear in search results: Pro leagues, apparel and sneaker companies pay for their digital shops to appear as ads on the first page. These companies also rely on search engine optimization techniques to “game” results. Those methods might not work, or work as well, with Google forced to reorganize.

The esports industry also has a vested stake. Google has partnered with video game companies to make YouTube the exclusive streaming partner for live broadcasts. One such deal was announced in January between Google and Activision Blizzard, the publisher behind Overwatch League and Call of Duty League.

Last but not least, fans also use Google to get information. While they don’t need Google to, well, “Google”, a change in how they search might not be well received—a point Google’s attorneys will be sure to mention.

The sports industry will have much to watch. The 64-page complaint details the government’s portrayal of Google’s vast “scheme” to unlawfully dominate, and the company’s willingness to pay billions of dollars to sign “exclusionary agreements” is key. These agreements secure Google as the default search engine for products made by Apple, LG, Motorola, Samsung, AT&T, T-Mobile, Mozilla, Opera and other tech companies. While users can ordinarily change search engine default settings, “they rarely do,” the Justice Department contends. Under the government’s theory, Google has obtained “de facto exclusivity”.

The complaint also rebukes Google for employing pre-installation contracts. These contracts require manufacturers to preload bundles of Google apps—including Google Play, search engine Chrome, Gmail, Maps and YouTube. In some instances, these apps can’t be deleted. The Justice Department calculates that Google’s use of pre-installation agreements “cover almost all Android devices sold in the United States.”

Google, armed with a market value of $1 trillion, is accused of manipulating its so-called “search monopoly” to the tune of $40 billion annually in advertisers’ payments. Google then shares advertising revenue with distributors, who pledge to favor Google’s search engine. The alleged result: massive entry barriers for possible rivals. This is especially true, the Justice Department maintains, for “small, innovative search companies that cannot afford to a pay a multibillion-dollar entry fee.”

To illustrate this dynamic, the Justice Department highlights DuckDuckGo, a subscription-based search engine that contains no advertisements and doesn’t track users. As portrayed by government attorneys, DuckDuckGo faces insurmountable hurdles by having to play in the same arena as Google. Competing search engines are allegedly deprived of “access, at scale, to consumers, advertisers or data.” The Justice Department insists this is bad news for consumers who are denied the fruits of meaningful competition.

The filing of a federal antitrust lawsuit is merely the first step in a multiyear battle. Google, of course, has the financial wherewithal to wage a spirited defense. The company will contend that the marketplace remains competitive and that its success is a reflection of superior quality. To that point, expect Google to stress that consumers simply like its products and services, both of which are mostly free and constantly innovating.

In a blog post, a Google spokesperson not only ridicules the case as “deeply flawed” but warns it could “make it harder for people to get the search services they want to use.” Google maintains the Justice Department has willfully misconstrued consumer preferences. “People,” the spokesperson insists, “use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.” U.S. District Judge Amit Mehta, whose 131-page antitrust opinion in 2015 blocked a proposed merger between Sysco and U.S. Foods, is presiding over U.S. v. Google.

While the case has only begun, Google has reason to worry about potential ramifications. Should the Justice Department prevail, Judge Mehta would be tasked with ordering a corrective plan. The Justice Department warns that without sufficient remedies, “Google will continue executing its anticompetitive strategy, crippling the competitive process, reducing consumer choice and stifling innovation.” To that end, the government seeks unspecified “structural relief” to “cure” Google’s supposed monopolies.

In the context of an antitrust dispute, “structural relief” is an ominous expression. Google and its extensive array of properties could be dissolved into independent competing companies.

Google wouldn’t be the first behemoth to suffer such a fate. At its height, Standard Oil controlled approximately 90 percent of the U.S. oil refining business. The federal government argued the company had illegally blocked competition from access to pipelines and unlawfully undercut rivals through selective price cutting and rebates. The U.S. Supreme Court agreed, and Standard Oil was broken up into competing entities.

There are other unwelcome possibilities for Google. An adverse ruling could amplify calls to regulate Google, Amazon, Facebook and similar websites as public utilities. Big tech has arguably become so essential to everyday life that it is comparable to electricity and natural gas. Public utilities are closely regulated and are required to serve the public good.

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