In a significant legal victory for the U.S. Department of Justice (DOJ), a federal judge has ruled that Google has illegally monopolized the online search market. This decision marks the first major antitrust case against a tech giant in over two decades. Judge Amit Mehta, presiding in Washington, found that Google’s $26 billion in payments to make its search engine the default option on smartphones and web browsers effectively blocked competitors from gaining a foothold in the market.
Judge Mehta’s 286-page ruling stated that Google’s distribution agreements, which make its search engine the default on various platforms, have significantly hindered competitors' ability to compete. He noted that these agreements have allowed Google to maintain its monopoly power and consistently raise prices for online advertising without facing meaningful competitive constraints. This monopoly has enabled Google to increase the prices of its text ads, which appear at the top of search results, driving significant revenue for the company.
The DOJ and a group of states had argued that Google’s monopolistic practices involved paying billions of dollars to companies like Apple and Samsung for prime placement on their devices. This strategy has helped Google build the world’s most-used search engine, generating over $300 billion in annual revenue primarily through search ads.
While the ruling confirmed Google’s monopoly over search text ads, Mehta did not agree with all government arguments, specifically rejecting the claim that Google monopolizes general search advertising. He pointed out that competitors like Amazon and Walmart are also significant players in the advertising space on their own platforms.
This ruling solely addresses Google’s liability, with a separate trial to determine the appropriate remedies scheduled for a later date. Potential remedies could range from requiring Google to alter its business practices to the more drastic measure of breaking up its search business from other products like Android and Chrome. This would be the most significant forced breakup of a U.S. company since AT&T’s dismantling in 1984.
In another pending case, the DOJ has accused Google of monopolizing the technology used to buy, sell, and serve online display advertising. This case, set for trial in Virginia, seeks to force Google to sell some of its advertising technology products.
Throughout the trial, Google argued that its dominant market position is a result of superior products that consumers prefer. The company contended that its business practices are not exclusionary and that it competes with a broad range of platforms, including those not indexing the web, like Amazon.
One of the most notable revelations during the trial was the extent of Google’s payments to Apple, amounting to $20 billion in 2022 alone, to secure its position as the default search engine on iPhone browsers. This arrangement highlighted the financial barriers competitors face in displacing Google’s dominant position.
Judge Mehta’s decision underscores the durable nature of Google’s monopoly, noting its market share in general search increased from 80% in 2009 to 90% by 2020, with Bing holding less than 6%. He emphasized that the lack of genuine competition in the market for general search is evident through stable market shares and the absence of new entrants.
As the first in a series of tech monopoly cases brought by the U.S. government, this ruling sets a precedent for how antitrust laws may be applied to modern digital markets. The outcome of Google’s next trial in September, which will focus on its digital advertising technology, could further shape the landscape of antitrust enforcement in the tech industry.
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