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MarketWatch First Take: Antitrust lawsuits against Google portray the ‘evil’ company its founders once cautioned against

Sixteen years after Google's IPOs, two major antitrust lawsuits filed against it detail a bevy of anticompetitive behavior, painting a powerful and yes, evil, company. Read More...

When Google went public in 2004, a famous letter from its founders accompanied the regulatory filing.

“Don’t be evil,” began an oft-quoted section of the letter by co-founders Larry Page and Sergey Brin. “We believe strongly that in the long term, we will be better served — as shareholders and in all other ways — by a company that does good things for the world even if we forgo some short-term gains. This is an important aspect of our culture and is broadly shared within the company. “

Sixteen years later, and one year after those founders suddenly and unexpectedly took their leave from the company’s daily operations, a series of antitrust lawsuits filed against Alphabet Inc.’s GOOGL, -0.95% GOOG, -0.86% Google in the U.S. detail a bevy of anticompetitive behavior, painting a powerful and, yes, evil company.

“Google has expanded its business far beyond search and dropped its famous ‘don’t be evil’ motto,” contends a lawsuit filed by Texas Attorney General Ken Paxton and nine other states this week. “The Supreme Court has warned that there are such things as antitrust evils. This litigation will establish that Google is guilty of such antitrust evils, and it seeks to ensure that Google won’t be evil anymore.”

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That lawsuit describes troubling behavior, from collusion and favoring Facebook Inc. FB, -0.43% in the internet advertising market to serious disregard for consumers’ data privacy, whereby Google received access from Facebook to the encrypted messages, photos and videos of Americans using WhatsApp, a messaging application owned by Facebook.

Facebook itself last week was hit with antitrust lawsuits, when the Federal Trade Commission and 48 states filed a case against the social network. Among the remedies the FTC and AGs seek is the separation of Instagram and WhatsApp from Facebook, a potential punishment that may be seen as difficult to execute because of how their systems are entwined.

In addition to the alleged collusion with Facebook in the advertising market, Google is also accused of monopolistic tactics in the search market, reminiscent of Microsoft Corp.’s MSFT, +0.06% actions against the upstart browser Netscape in the 1990s. The allegations in the second suit, filed on Thursday by the AGs in Colorado, Nebraska and 36 other states, seek, as one remedy, to prohibit Google from continuing its current behavior.

For more: Big Tech was built by the same type of antitrust actions that could now tear it down

The descriptions of Google’s behavior may persuade many people to agree with a statement issued Thursday by the advocacy group Public Citizen: “Google must be stopped.”

But therein lies the problem. What actually can be done when, as Google itself states in a response to the lawsuit, “redesigning Google Search this way would harm the quality of your search results … at the expense of businesses like retailers, restaurants, repair shops, airlines and hotels whose listings in Google help them get discovered, and connect directly with customers”?

As many attorneys have argued, it is difficult to impossible to prove antitrust involving a free product that offers benefits to consumers. And even the most blatant actions by Google to harm competition may not lead to actual consequences.

“Collusion cases are often difficult to prove unless you have clear evidence that the parties agreed to something that clearly restrains competition in a well-defined market,” Donald Polden, dean emeritus and professor at Santa Clara University’s School of Law, told MarketWatch in an email. “For the last 30-40 years, the conservatives on the U.S. Supreme Court have made it more difficult for plaintiffs, including the government, to show collusion or conspiracy to restrain competition.”

He also noted that in the Texas case, Facebook appears to be more of a customer than a rival of Google, which allegedly provided information that let Facebook manipulate the results of ad auctions so it could win bids.

“Here, it appears that Facebook is the ‘customer’ rather than a competitor,” Polden said, adding that other claims contend that Google monopolized the ad-exchange market. “It would appear that Facebook is a victim of Google’s monopoly in a market that Facebook is a big consumer of such services and products.  If that is so, why isn’t a very big ‘victim’ of the monopoly bringing a suit? “

The staggering number of suits that have unfurled against both Google and Facebook leave many questions unanswered, but the legal road ahead looks tough. The only thing that is clear right now is that none of these cases are going to end anytime soon, and the ending may not be as damaging as the politicians seeking retribution against Big Tech’s evil actions seek.

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