On Monday I joined attorneys general from around the country on the steps of the U.S. Supreme Court to announce Alaska’s participation in a multistate, bipartisan investigation of Google’s business practices. The attorneys general are assessing whether Google’s conduct violates federal and state antitrust laws. Fifty attorneys general representing 48 states, the District of Columbia, and Puerto Rico are participating in the investigation. Fifty attorneys general coming together in a bipartisan manner like this sends a strong message to Google.
As Alaskans, we occupy a unique and important place on the globe. Many people do not realize that Alaska is both the westernmost and easternmost state in the union — our Aleutian chain crosses the international dateline. We sit at the crossroads between North America and the Pacific Rim, making our products and services especially valuable worldwide. But our distance from major population centers presents challenges, too. Connecting with the rest of the world through the internet is essential to the functioning of our economy and to the well-being of our small businesses and fellow Alaskans.
Many of Alaska’s most vibrant small businesses depend on advertising a wide range of products and services on the internet — from the best seafood in the world to world class travel destinations. Our local newspapers, blogs, and online magazines similarly depend on internet advertising to sustain their operations. Allegations of unfair or illegal anticompetitive conduct that threatens to harm Alaskans’ ability to market their businesses requires thorough investigation, and if warranted, legal enforcement action.
In the case of Google, the states’ attorneys general are concerned that this single company’s apparent control of so much of the online advertising market, and the processes by which buyers and sellers of advertising connect to one another and set prices, presents the potential for illegal anticompetitive conduct. In a well-functioning free market, ad prices will be set by supply and demand, and innovation in technology will flourish. Our small businesses and consumers are the beneficiaries of that system because prices remain low while incentives to compete and innovate remain high.
Problems occur, however, when a single company, or a handful of companies, control a market to such an extent that prices can be artificially inflated and new competitors stopped before they can secure a foothold. Federal and Alaska’s antitrust laws are designed to prevent that from happening. Our antitrust laws do not tolerate the mind-set displayed by Howard Hughes who once said, “We don’t have a monopoly. Anyone who wants to dig a well without a Hughes bit can always use a pick and shovel.”
What sparked this investigation? In 2017 the European Union found that Google had, for many years, violated European antitrust law by rigging its general search results to favor its own comparison shopping service over rivals. The European Union found that Google painstakingly executed a strategy to increase its search-ad revenue by making it both possible and necessary for merchants to raise prices to consumers. Google makes money by selling ads placed next to its free search results. Google thus, the European Union found, created a list of rival comparison shopping sites that it would artificially lower in the general search results, despite the fact that most internet users preferred the comparison shopping sites. The European Union imposed a fine of about $2.7 billion on Google for its anticompetitive activity.
The states’ attorneys general are currently investigating the extent of Google’s dominance of the online advertising market, but that is not necessarily the only place our investigation will lead. Conduct related to internet searches as well as the collection and retention of personal data may later become additional subjects of the investigation.
We are blessed in Alaska with a dynamic and growing small-business community and with strong laws to protect our businesses’ ability to operate and compete on a level playing field. It is my intention to deploy the resources of the Alaska Department of Law, in conjunction with the attorneys general of nearly every other state, to ensure that the largest companies in the world do not use their dominance in a manner that harms Alaska’s businesses and consumers.
Kevin Clarkson is attorney general for the state of Alaska.