(Bloomberg) — Online review site Yelp Inc. filed a lawsuit alleging that Google has illegal monopoly power in local search, in a sign of the legal headaches that may await the search giant following the US government’s landmark antitrust victory against the company.
Most Read from Bloomberg
Yelp claims the Alphabet Inc. unit has an unfair edge in the market for local search and associated advertising, both spaces in which the San Francisco-based company has strived to compete with its detailed reviews of restaurants, beauty parlors and other establishments. Yelp has spoken out about what it considers to be Google’s anticompetitive conduct for well over a decade. But the timing of Yelp’s lawsuit, filed just weeks after a Washington federal judge ruled that Google illegally monopolized the search market through exclusive deals, suggests that more companies may be emboldened to take action against the search leader in the coming months.
Yelp drew from US District Judge Amit Mehta’s decision to show how Google used its monopoly in the market for all-purpose search engines to dominate other spaces, Yelp General Counsel Aaron Schur said in an interview.
Mehta’s findings “really do serve as the brick-and-mortar foundation for our own claims,” Schur said. “Our case is asserting that Google has abused that illegal monopoly in general search that has already been decided by Judge Mehta, and it’s using that monopoly to self-preference that inferior content in the adjacent market of local search and also the local search advertising market.”
A Google spokesperson said in a statement that the company would “vigorously defend against Yelp’s meritless claims.”
“Yelp’s claims are not new,’’ Google said, noting that similar allegations were thrown out years ago by the Federal Trade Commission, and recently by the judge in the US Justice Department’s case. “On the other aspects of the decision to which Yelp refers, we are appealing.”
In its complaint, Yelp recounts how Google at first sought to move users off its search page and out onto the web as quickly as possible, giving rise to a thriving ecosystem of sites like Yelp that sought to provide the information consumers were seeking. But when Google saw just how lucrative it could be to help users find which plumber to hire or which pizza to order, it decided to enter the market itself, Yelp alleges.
Yelp hopes its suit will bar Google from placing its own reviews above those of competitors, Schur said.
“First and foremost we want Google to end its unlawful self-preferencing, which hurts consumers, hurts competition and hurts the businesses that pay for local search advertising,” Schur said. “That is really what we are focused on in this case.”
Yelp has fought a multi-year battle in the US and the European Union against Google, which it has long accused of maintaining an illegal monopoly over the internet search market and in particular of abusing its dominant position by putting its own reviews higher in search results than those of its rivals.
The Justice Department is now considering seeking to break up Google in what would be Washington’s first push to dismantle a company for illegal monopolization since unsuccessful efforts to break up Microsoft Corp. two decades ago. Less severe options include forcing Google to share more data with competitors and measures to prevent it from gaining an unfair advantage in AI products, Bloomberg News has reported.
Google has said it will appeal the judge’s ruling. The US plan will need to be accepted by Mehta, who would have to direct the company to comply. A forced breakup of Google would be the biggest of a US company since AT&T was dismantled in the 1980s.
In the wake of the decision, Yelp may not be the only company reassessing its options.
“I can’t speculate as to what other companies will do, but the self-preferencing that we describe in the complaint as a general matter isn’t unique to Yelp,” Schur said. “It’s not a unique story.”The lawsuit was earlier reported by the New York Times.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.
