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Justice Department to Charge Google in Antitrust Lawsuit

By Danny Vena - May 16, 2020 at 12:54PM

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The long-rumored regulatory action is finally coming to fruition.

The U.S. Department of Justice (DOJ), along with number of state attorneys general, is planning to take antitrust action against Alphabet (GOOGL -0.61%) (GOOG -0.55%) search giant Google, according to a report in The Wall Street Journal. A lawsuit could be filed as soon as this summer, according to the report, citing "people familiar with the matter."

The suit will focus primarily on the company's lucrative digital advertising business. An investigation has been ongoing since mid-2019, when the DOJ and the Federal Trade Commission (FTC) -- which share antitrust authority -- held discussions to determine which regulatory body would spearhead the action.

A gavel near a laptop with piles of 100 dollar bills and a scale nearby.

Image source: Getty Images.

Google is the dominant worldwide internet search tool, with as much as 70% of the market and as a result controls the lion's share of digital ad spending in the U.S., with an estimated 37%.

The company owns and operates the leading selling and buying platforms for online advertising, as well as the largest marketplace for consummating deals, giving it control of both sides of the equation and a big chunk of the digital ad ecosystem. There have long been claims that Google has used this situation to its advantage and has unfairly biased search results to favor its own business, thereby stifling the competition.

The company also refuses to allow ad-buying rivals to access data it collects from its Gmail and Google maps user, citing privacy concerns, giving it another advantage against the competition.

The Federal Trade Commission investigated Google in 2013, but the case was closed without action. The company made voluntary changes to its business practices at the time as a result of the investigation.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Alphabet (A shares). The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool has a disclosure policy.

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