A federal court has ruled that Google has engaged in monopolistic practices within the search and advertising sectors, violating United States antitrust laws. The verdict, delivered by Judge Amit Mehta, marks a significant legal victory for the Department of Justice (DOJ), which has continuously charged Google with using anti-competitive tactics to maintain its market dominance.
Judge's Findings and Legal Basis
Judge Mehta's assessment concluded that Google has intentionally maintained its monopoly in “general search services” and “general search text advertising.” The court's judgment indicates that Google's actions breach Section 2 of the Sherman Act, a primary antitrust law. Nonetheless, not all of the government's claims were supported; particularly, the court dismissed the assertion of Google's monopoly power in a specific segment of the advertising market.
The ruling determines Google's liability but does not specify remedies. These will be decided in subsequent legal proceedings. Potential outcomes may include required changes to Google's business practices or possibly a breakup of its search operations. Google has stated it plans to appeal the ruling. Kent Walker, President of Global Affairs at Google, acknowledged the decision but contended that it penalizes the company for providing a superior service.
Responses from Stakeholders and Broader Implications
DOJ's antitrust chief, Jonathan Kanter, hailed the decision as a significant step towards fostering innovation and safeguarding access to information. Competing search engine DuckDuckGo also welcomed the ruling but stressed that the battle against Google's practices continues. The court refuted Google's claims that its contracts with phone and browser makers, like Apple, were non-exclusionary. Judge Mehta noted that substantial revenue intake from Google discourages Apple from creating its own search engine.
Judge Mehta drew comparisons with the US v. Microsoft case, emphasizing that such conduct can be exclusionary when executed by a dominant firm like Google. He pointed out Google's enduring monopoly, highlighting an increase in market share from 80% in 2009 to 90% by 2020, while Bing's share remained under 6%. The judge stressed that even major US companies lack viable alternatives to Google, with changing default search engines leading to considerable financial losses.
Search Advertising Dynamics
In the search text advertising market, Judge Mehta identified that Google's exclusive agreements enabled it to raise prices without facing genuine competition. Google claimed its ad prices, when adjusted for quality, have decreased over time, but Mehta found this evidence unconvincing, suggesting Google's primary goal is long-term revenue.
This ruling is part of a broader antitrust lawsuit led by the DOJ, accusing Google of anti-competitive behavior to uphold its market superiority. The case is ongoing, with potential implications for Google's business practices and the regulatory framework surrounding digital markets.
An Ongoing Landmark Trial
The decision for the wider DoJ investigation was made last September and could have a huge impact on Google and its parent Alphabet. Last year, the DoJ accused the company of destroying evidence by deleting chats between employees. In November 2022, Google agreed to pay hundreds of millions of dollars to 40 states in the biggest anti-trust settlement in U.S. law.
Google argued that the failure of rivals such as Microsoft Bing was not down to its own practices but rather the failures of Microsoft. The trial also looked into Google's search ad practices. As we reported in September, the DOJ alleges that Google's market dominance allows it to hike ad prices without significant consequences. This claim is substantiated by Jerry Dischler, a Google ads executive, who testified about the company's ad pricing strategies.
Alphabet CEO Sundar Pichai and Microsoft CEO Satya Nadella have both given testimonies during the landmark trial. In his testimonies to the court, Microsoft CEO Satya Nadella suggested Google stifles Bing. Nadella revealed that Microsoft has poured a staggering $100 billion into Bing, its proprietary search engine. Nadella candidly admitted Microsoft's unsuccessful attempts to dethrone Google from this position, even after offering Apple more favorable terms.
Google reportedly pays Apple up to $20 billion per year to keep its Search engine on iPhone and other devices. However, Pichai claims this drives competition not blocks it. He reasoned that the cost-effectiveness of contending with a potential Apple-powered rival search engine or another competitor weighed in favor of retaining Google's default status on iPhones.
