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Texas AG: Consumers ultimately pay a price for ‘free’ Google searches

Grete Suarez
Producer

Google (GOOGL) is facing a new antitrust probe brought on by almost every state attorneys general in the U.S., barring California and Alabama.

Leading the investigation is Texas attorney general Ken Paxton, who told Yahoo Finance’s YFi PM that pressuring the tech giant is a broadly bipartisan effort.

“This has bubbled up from Democrat, Republican from small states, big states… we’re all interested in what’s going on with Google,” said Paxton.

The Lone Star’s top legal official intends to take aim at Google’s advertising practices, but the scope will depend on the information they find.

“The facts are going to lead us to the place that we should go,” he added.

One of Paxton’s gripes is that Google brings in about $117 billion per year in advertising — and while consumers think otherwise, it really does cost them to use its search platform.

“Some of these consumers think searching on the Internet is free - it’s not free,” Paxton argued, simply because the search giant dominates so much of the market.

Major global digital ad sellers (Source: eMarketer)

Web users “ultimately pay it, they just don’t realize they’re paying a lot higher prices than maybe they should, because there’s very little competition for Google in this market,” he said.

According to a study by eMarketer, as of this February, Google’s digital advertising revenue towers over Facebook (FB) and China’s Alibaba (BABA). Paxton believes this has to do with how the way Google operates in that market.

“They’re literally operating as a buyer, seller, and exchange in all of these transactions related to advertising, which makes it difficult for any competition to be a part of,” said Paxton.

The attorneys general antitrust probe announcement comes just days after the tech giant confirmed the Justice Department has requested records related to its prior antitrust investigations. Paxton said their probe is independent from the federal agency, and they mean business.

“There aren’t many other investigations that involves especially this scope and magnitude that involves 50 different attorney general,” he said.

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Grete Suarez is producer at Yahoo Finance for YFi PM and The Ticker. Follow her on Twitter: @GreteSuarez

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