U.S. sues Google, says breakup may be needed

It's the biggest government action against Silicon Valley in a generation.

The Department of Justice and 11 states filed a lawsuit against Google on Tuesday, accusing the search giant and its $1 trillion parent company Alphabet of abusing its dominance to muscle out rivals.

In terms of remedies - the DOJ said nothing is off the table, including a breakup of the internet search and advertising company.

Google, which has become so ubiquitous and synonymous with search that it has become a verb, said the lawsuit "is deeply flawed" adding that people use Google because they want to, not because they are forced to.

Wedbush Securities analyst Dan Ives sees this as a watershed moment not just for Google but for Silicon Valley as a whole.

"It's a major shot across the bow from the DOJ, and I think this is a serious step up in the move on the antitrust front as we've seen, the Beltway versus Big Tech and the DOJ throwing their hat in the ring definitely, I think, steps this up from a risk profile. This is sort of, I think, the first step of what we're going to see, a broader pressures against big tech with Google front and center."

Tuesday's lawsuit brings to mind the battle between the government and Microsoft in the 1990s, which some say ushered in the internet age by limiting Microsoft's reach on personal computers. It is also reminiscent of the 1974 case against AT&T, which lead to ITS break-up into regional operators.

This lawsuit, which has been long in the making, marks a rarity in Washington..it brings together The Trump administration and progressive Democrats...but for different reasons.

Liberal firebrand Senator Elizabeth Warren has called on Big Tech companies to be broken up for becoming so large they squash competition and limit consumer choice.

Republicans, on the other hand, claim big tech companies, including Google's parent Alphabet, are biased against them and stifle the spread of conservative voices on their platforms.

Tech companies have repeatedly denied those claims.

The lawsuit comes more than a year after the Justice Department and Federal Trade Commission began antitrust investigations into four big tech companies: Amazon.com, Apple, Facebook Inc and Google.

Shares of Google edged higher in volatile trading as investors view the lawsuit as the beginning of a long process.

Video Transcript

- It's the biggest government action against Silicon Valley in a generation. The Department of Justice and 11 states filed a lawsuit against Google on Tuesday, accusing the search giant and its $1 trillion parent company, Alphabet, of abusing its dominance to muscle out rivals. In terms of remedies, the DOJ said nothing is off the table, including a breakup of the internet search and advertising company.

Google, which has become so ubiquitous and synonymous with search that it has become a verb, said the lawsuit is, quote, "deeply flawed," adding that people use Google because they want to, not because they are forced to. Wedbush Securities analyst Dan Ives sees this as a watershed moment not just for Google, but for Silicon Valley as a whole.

DAN IVES: It's a major shot across the bow from the DOJ. And I think this is a serious step up in the move on the antitrust front as we've seen the [INAUDIBLE] big tech. And the DOJ throwing their hat in the ring definitely, I think, steps this up from a risk profile. But this is sort of, I think, the first step of what we're going to see of broader pressures against big tech, with Google front and center.

- Tuesday's lawsuit brings to mind the battle between the government and Microsoft in the 1990s, which some say ushered in the internet age by limiting Microsoft's reach on personal computers. It is also reminiscent of the 1974 case against AT&T, which led to its breakup into regional operators.

This lawsuit, which has been long in the making, marks a rarity in Washington. It brings together the Trump administration and progressive Democrats, but for different reasons. Liberal firebrand Senator Elizabeth Warren has called on big tech companies to be broken up for becoming so large, they squash competition and limit consumer choice.

Republicans, on the other hand, claim big tech companies, including Google's parent, Alphabet, are biased against them and stifle the spread of conservative voices on their platforms. Tech companies have repeatedly denied those claims.

The lawsuit comes more than a year after the Justice Department and Federal Trade Commission began antitrust investigations into four big tech companies, Amazon, Apple, Facebook, and Google. Shares of Google etched higher in volatile trading as investors viewed the lawsuit as the beginning of a long process.