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Google's antitrust probe from state AGs extends to search, Android companies



WASHINGTON – The 50 attorneys investigating Google are preparing to expand their antitrust probe beyond the company's advertising efforts to delve deeper into search and Android businesses, people familiar with the matter told CNBC. come as politicians on both sides of the aisle, including President Donald Trump, are increasingly releasing on Silicon Valley. Meanwhile, Democratic presidential candidate Elizabeth Elizabeth Warren has asked Big Tech companies to break up.

The attorneys – who represent 48 states, Puerto Rico and Washington, DC – want to write lawsuits known as civilian investigative claims, or to support the inquiries, the people said. One of the people warned that the subpoenas might not be served immediately.

So far, the investigation has explicitly focused on Google's advertising business.

Texas Attorney General Ken Paxton, who leads the probe, announced the investigation at a News conference in September that emphasized Google's dominance in the advertising market and the use of consumer data.

The state has already served Google with CIDs for more information on the company's advertising business.

However, at a recent meeting with several attorney generals participating in the probe, Paxton expressed his support for extending the probe's scope to Google's search and Android businesses. Other states will conduct the searches of search and Android separately, the people said. However, it was not clear which states would look at these businesses.

A spokesman for the Texas attorney asked about the scope of the probe, CNBC referred to a comment made in early October: "At this point, the multistate investigation is focused solely on online advertising, but that will always be facts we discover as the investigation will determine where the investigation ultimately leads. "

Google declined to comment. Ahead of Paxton's announcement of the probe in September, Google's senior vice president for global affairs, Kent Walker, wrote a blog post that said the company would cooperate with government investigations.

Developments in state investigations highlight the extent to which states and their attorneys generally intend to investigate the technology conglomerate, said the people familiar with the case.

States can be more aggressive in antitrust investigations than federal regulators, because they are less constrained by lobbying and political forces that consume Washington, DC. States are also typically more constrained on resources than the federal government, though states have committed to share resources in Google research.

Google's parent, Alphabet, has a market value of more than $ 900 billion, making it one of the most valuable companies in the world. Because much of the offer is free to the user, it can be difficult to prove breach of antitrust, which is usually shown with a clear impact on pricing. The Ministry of Justice's anti-trust chief, Makan Delrahim, has indicated in public speeches that quality, innovation and other factors can be considered.

DOJ, which heads its own Big Tech antitrust probes, has served CIDs on "past antitrust investigations in the United States and elsewhere," Google said in a securities filing this summer.

Previous federal investigations of Google have ended with a whimper. In 201

3, the FTC completed a nearly two-year investigation by Google, culminating in an agreement in which the company said it would remove restrictions on the ad platform to make it easier for advertisers to manage campaigns across competing platforms . In 2010, the government concluded an investigation into the agreement to acquire mobile advertising network AdMob, and concluded that the agreement would probably not harm the competition in mobile advertising.

But more recently, politicians on both sides of the aisle have cast a new spotlight on Big Tech. Warren, one of the leading Democratic candidates for president, has vowed to break the giants in Silicon Valley. Trump, a Republican, tweeted in August with no evidence that Google "manipulated" votes in the 2016 election.

Search is at the heart of Google's business, where Google collects both ad revenue and data. Critics argue that it also uses the feature to promote its own products and services. The internet giant has launched a number of features in recent years, such as reviews, maps and travel bookings that benefit from internet traffic. The EU fined Google $ 2.7 billion in 2017 to provide favorite treatment for its "Google Shopping" service. Google appeals the decision.

However, this remedy has not slowed Google's expansion into new offerings. The company is pushing further into the health care system with its proposed acquisition of Fitbit, and announced earlier this week that it will start offering checking accounts next year.

Google's Android mobile operating system is now a foothold in the mobile market. Google requires manufacturers of phones and tablets that use Android to also pre-install the Google app store and other apps like Gmail, Google Maps and Chrome browser, making competing services at a disadvantage. About 80% of smart mobile devices run on Android, according to the European Commission.

Following a record $ 5 billion fine from EU regulators over Android antitrust abuse, Google said it would allow EU users to choose their default search engine when setting up their Android device and stop packing their apps on Android phones.

With this track record, the lawyers investigating Google probably already have a broad vision of the case they want to pursue against Google. They will use their CID requests to search for material such as email and strategy documents to support that view, while looking for evidence of clearly anti-competitive behavior. The queries can be a means of filling in gaps in evidence, or a tactic to build up pressure on a company in the hope of forcing a settlement.

Sometimes investigations and inquiries can dig up disturbing material. The previous FTC investigation of Google's search methods found evidence of skewed results in favoring its own products, according to documents previously unintentionally released to The Wall Street Journal in 2015.

Google is already pushing back against the first CID request from Texas. The company filed an order against Texas requesting protection against disclosing certain confidential information requested. Google said it was concerned that outside consultants brought in to help with the investigation had ties to Microsoft and could use the confidential information to help its rivals.

– Lauren Feiner reported from CNBC's headquarters in Englewood Cliffs, New Jersey.

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