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Google hit by antitrust probe from 50 attorneys general

The investigation will focus on the search giant's dominance in digital advertising.

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Google is being investigated by 50 attorneys general from 48 states, Washington, DC, and Puerto Rico.

Stephen Shankland/CNET

Texas Attorney General Ken Paxton on Monday announced an antitrust investigation into Google, with the participation of 50 attorneys general. The probe comes as Silicon Valley faces increasing scrutiny from the government over what critics say are monopolistic business practices. 

The investigation will be a bipartisan operation conducted by the attorneys general of 48 states, Washington, DC, and Puerto Rico. The only two states not participating in the probe are California, where Google is based, and Alabama. Paxton said the group had just recently sent Google a demand for information. 

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"It's an investigation to determine the facts," Paxton said during a press conference outside the US Supreme Court building in Washington, DC. "Right now it's about advertising, but the facts will lead where they lead." 

The announcement was made by a small group of attorneys general including Paxton, Karl Racine of Washington, DC, and Doug Peterson of Nebraska. Paxton said his office will serve as the head of a leadership team for the investigation, which will meet about the probe every week. Each state can be as involved as it wants to be. "It will be a very open process," Paxton said.

For now, the probe will focus on Google's dominance in digital advertising. But the attorneys general also hinted the investigation could become broader, extending to other businesses of Google's parent company, Alphabet. They mentioned smartphones and online video. (Google owns YouTube.)

Headlines have swirled recently about federal regulators clamping down on big tech, but a probe at the state level could also mean major headaches for Google. In the past, state attorneys general have taken on the tobacco and mortgage lending industries, forcing reform in both.

Google is already in the regulatory spotlight. On Friday, the search giant said it had sent information about its previous antitrust investigations to the US Department of Justice. The company also said it was prepping for similar questions from state attorneys general, as Monday's announcement loomed. 

The broad participation by the attorneys general signals a powerful united front from the states -- with two notable exceptions: Alabama and California, where Google is headquartered. Alabama Attorney General Steve Marshall's office didn't respond to requests for comment. In a statement, the office of California Attorney General Xavier Becerra said, "California remains deeply concerned and committed to fighting anticompetitive behavior. The office declined to comment further in order to "protect the integrity of potential and ongoing investigations."

In the past, though, California has shown a willingness to regulate the tech giants in its backyard. In February, during his state of the state speech, Gov. Gavin Newsom suggested imposing a "data dividend" that would charge tech companies for using residents' personal information.  

Google is the clear leader when it comes to digital advertising in the US, with more than 37% of the market, according to eMarketer. Facebook trails at No. 2 with more than 22%. But while Google has a commanding advantage, rivals like Amazon have chipped away at its lead in recent years. The e-commerce giant owns almost 9 percent of the market. 

When it comes specifically to search advertising revenue, however, Google is the clear juggernaut. Google owns almost 75% of the search advertising market, according to eMarketer, while its nearest competitor, Microsoft, follows far behind at almost 7%.

Big tech scrutinized 

Meanwhile, the government has ratcheted up scrutiny of the tech industry as a whole. The Justice Department in July announced an antitrust probe into the tech industry more broadly, targeting Google, Apple, Facebook and Amazon. Meanwhile, House Democrats in June announced their own investigation into tech giants, meant to explore whether the companies are engaging in "anti-competitive conduct." 

Reached for comment on Monday, Google only pointed to a statement Friday by Kent Walker, senior vice president of global affairs, that acknowledged the antitrust scrutiny from the Justice Department and state attorneys general. "We have always worked constructively with regulators and we will continue to do so," Walker wrote. "We look forward to showing how we are investing in innovation, providing services that people want, and engaging in robust and fair competition." 

On Friday, New York Attorney General Letitia James announced a similar probe into Facebook. The investigation -- which will involve other states including Florida, Colorado and Iowa -- will focus on "Facebook's dominance in the industry and the potential anticompetitive conduct stemming from that dominance," James' office said in a statement.

Google is no stranger to government investigations. Six years ago, the FTC wrapped up a probe of the company looking into allegations of search bias. The commission decided unanimously at the time that Google wasn't violating any antitrust laws.

Google has also faced antitrust pressures from regulators in Europe. In March, the search giant was hit with a $1.7 billion fine from the European Commission for "abusive" online ad practices. The commission said Google exploited its dominance by restricting its rivals from placing their search ads on third-party websites. 

Last year, the EU's executive arm fined Google a record $5 billion for unfair business practices around Android, its mobile operating system. The investigation focused on Google's deals with phone manufacturers, requiring them to preload specific Google apps and services onto Android phones. 

On Monday, Google's rivals praised the move by state attorneys general to investigate the search giant. 

"It is heartening to see the news today that nearly every state attorney general in the country has joined a historic and bipartisan investigation into these illegal and anticompetitive practices," Yelp's Luther Lowe, senior vice president of public policy, wrote on Monday. "Yelp will continue to assist with this investigation in whatever way we can."

Originally published Sept. 9, 11:07 a.m. PT.
Update, 12:33 p.m.: Adds comment from Yelp and digital advertising market stats. 1:16 p.m.: Adds comment from the California attorney general and request for comment from the Alabama attorney general. Correction, 5:27 p.m.: Clarifies that a statement came from Xavier Becerra's office and not from the Calfornia attorney general himself.