Federal Judge rules Google monopolized Search Market
A U.S. judge found Google violated antitrust laws through its dominance of online search and related advertising markets.
U.S. District Judge Amit Mehta ruled that Google illegally maintained a monopoly over online search and search advertising, marking a significant victory for the U.S. Department of Justice in its antitrust case against the tech giant. The decision comes nearly four years after the lawsuit was initially filed in October 2020, challenging Google's dominance in the search market.
According to the ruling, Google controls approximately 90% of the online search market overall and 95% on smartphones. Judge Mehta highlighted that Google paid $26.3 billion in 2021 alone to ensure its search engine remained the default option on smartphones and browsers, effectively maintaining its market dominance.
The court concluded that "Google is a monopolist, and it has acted as one to maintain its monopoly." This judgment represents the first major antitrust decision against a Big Tech company in recent years, potentially setting a precedent for ongoing cases against other industry giants like Meta, Amazon, and Apple.
The ruling also delved into the financial aspects of Google's agreements. According to court findings, in 2022 alone Google paid an estimated $20 billion to Apple for default placement on Safari. This amount was described as "nearly double the payment made in 2020, which was then equivalent to 17.5% of Apple's operating profit."
Judge Mehta's ruling focused on Google's exclusive distribution agreements with browser developers, mobile device manufacturers, and wireless carriers. These agreements ensured Google's position as the default search engine on various platforms, effectively foreclosing opportunities for competitors. The court found that these practices substantially contributed to Google's maintenance of monopoly power in two relevant markets: general search services and general search text advertising.
The judge noted the importance of default settings in maintaining Google's market position. According to the ruling, "Even if a new entrant were positioned from a quality standpoint to bid for the default when an agreement expires, such a firm could compete only if it were prepared to pay partners upwards of billions of dollars in revenue share and make them whole for any revenue shortfalls resulting from the change."
The decision highlighted Google's internal projections, which estimated significant losses if the company were to lose its default status on popular platforms. For instance, the ruling mentions that "Google has projected that losing the Safari default would result in a significant drop in queries and billions of dollars in lost revenues."
This case represents the first time in nearly two decades that the U.S. government has successfully prosecuted a major corporation for maintaining an illegal monopoly. The last comparable case was settled in 2004 when Microsoft reached an agreement with the Department of Justice over claims that it forced Internet Explorer on Windows users.
The ruling paves the way for a second trial to determine potential remedies. These could include requiring Google to cease paying smartphone manufacturers billions of dollars annually to set its search engine as the default on new devices. Such measures could potentially open up opportunities for competing search engines to gain market share.
The case against Google is part of a broader effort by U.S. antitrust regulators to address alleged monopolies in the tech industry. In the past four years, federal authorities have also filed lawsuits against Meta Platforms, Amazon, and Apple, claiming these companies have illegally maintained monopolies in their respective markets.
Google's search business has been a major driver of its revenue and market valuation. Alphabet, Google's parent company, reported over $162 billion in Search+ revenues for 2022. The company's market capitalization has reached over $2 trillion, making it one of the world's most valuable companies.
The ruling also addressed Google's practices in the advertising technology market. While Judge Mehta found that Google does not have monopoly power in the broader search advertising market, he did conclude that the company possesses monopoly power in the narrower market for general search text advertising.
Industry experts suggest this decision could have far-reaching implications for the tech industry and how companies approach market dominance. It may also influence ongoing antitrust investigations and lawsuits against other major tech firms.
Google will appeal the decision. The company has consistently maintained that its success is due to the quality of its products and that users choose its services because they prefer them, not because they lack alternatives.
Luís Daniel Rijo
The next phase of the case will focus on determining appropriate remedies to address Google's anticompetitive conduct. This process could potentially reshape the search engine market and impact how tech companies negotiate deals with device manufacturers and browsers.
Key facts from the ruling
Google controls about 90% of the online search market and 95% on smartphones
Google paid $26.3 billion in 2021 to maintain its default search engine status
The court found Google monopolized both general search services and general search text advertising markets
Deals with Apple, Mozilla, and Android manufacturers deemed anticompetitive
Judge Mehta ruled that Google's exclusive distribution agreements with browser developers, mobile device manufacturers, and wireless carriers were anticompetitive
The decision paves the way for a second trial to determine potential remedies
This is the first major antitrust ruling against a Big Tech company in recent years