Your "friend" obviously is completely unfamiliar with anti-trust laws
I will point you to the definition and why it's illegal (the fact google does this is indisputable as far as I'm aware, it's just a matter of if they can bribe their way out of it right now with the FTC):
http://en.wikipedia.org/wiki/Competition_law
Please note this area in particular:
"banning abusive behavior by a firm dominating a market, or anti-competitive practices that tend to lead to such a dominant position. Practices controlled in this way may include predatory pricing, tying, price gouging, refusal to deal, and many others."
Not only is what google is doing illegal, it is the kind of stuff that gets companies broken into pieces (Microsoft in the early 90s comes to mind immediately)
Please see the chief complaints and who they're being lodged by. The EC is not taking this as a "joke" or something google can "legally" do:
http://gulfnews.com/business/econom...google-with-formal-anti-trust-probe-1.1027759
Not to mention their data mining practices being potentially highly illegal by FCC regulations, their anti-trust practices are truly without caveat. They are the fundamental definition of this kind of illegal act.
I highly doubt the US government will take necessary actions, however, but Oracle's suit is something that can hit google where it hurts at least... if the verdict goes their way.