The ruling found that Google hoards an 89.2% share of the market for general search services, which increases to 94.9% on mobile devices.
A U.S. judge ruled on Monday that Google violated antitrust law, spending billions of dollars to create an illegal monopoly and become the world's default search engine, the first big win for federal authorities taking on Big Tech's market dominance.
A judge ruled that Google has been unlawfully exploiting its dominance over competing companies Monday by stifling innovation in an effort to maintain dominance over the search engine industry. The lawsuit wrapped up nearly a year after the trial between the US Justice Department and Google first began.
US District Judge Amit Mehta of the US District Court for the District of Columbia issued the decision after reviewing a year’s worth of evidence including testimonies from top executives at Google, Microsoft and Apple. Google and the DOJ presented their closing arguments in early May, AP reported.
"The court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly," U.S. District Judge Amit Mehta, Washington, D.C., wrote. Google controls about 90% of the online search market and 95% on smartphones.
The "remedy" phase could be lengthy, followed by potential appeals to the U.S. Court of Appeals, District of Columbia Circuit and the U.S. Supreme Court. The legal wrangling could play out into next year, or even 2026.
Shares of Alphabet fell 4.5% on Monday amid a broad decline in tech shares as the wider stock market cratered on recession fears. Google advertising was 77% of Alphabet's total sales in 2023.
Alphabet said it plans to appeal Mehta's ruling. "This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available," Google said in a statement.
U.S. Attorney General Merrick Garland called the ruling "a historic win for the American people,” adding that "no company - no matter how large or influential - is above the law."
White House press secretary Karine Jean-Pierre said the "pro-competition ruling is a victory for the American people," adding that "Americans deserve an internet that is free, fair, and open for competition."
“After having carefully considered and weighed the witness testimony and evidence, the court reaches the following conclusion: Google is a monopolist and it has acted as one to maintain its monopoly,” Mehta wrote in his 277-page ruling. The company paid billions of dollars a year to device makers like Apple and Samsung to have Google installed as the default search engine on those devices.
The ruling is perhaps the biggest antitrust decision of the modern internet era and could fundamentally alter how consumers use the internet. It could also hint at how other antitrust suits will play out against tech giants like Amazon, Apple, and Meta*, which owns Facebook, Instagram and WhatsApp.
The US battled Microsoft in a similar antitrust suit during the 1990s. “This is the most important antitrust case of the century, and it’s the first of a big slate of cases to come down against Big Tech,” said Rebecca Haw Allensworth, a professor at Vanderbilt University’s law school. “It’s a huge turning point.”
Google is well known for its search engine – so much so that the name of the company has become synonymous for the act of online search. Google’s search engine handles about 8.5 billion searches per day across the world which is nearly double that of 12 years ago. The result of the suit will undoubtedly present a major blow to Google which generated nearly $240 billion in revenue last year.
Kent Walker, Google’s president of global affairs, said the company intends to appeal the ruling. The company also faces a separate federal antitrust case over ad technology that will go to trial next month.
Meanwhile the Consumer Choice Center, a lobbying group, has accused the US of “drifting toward the anti-tech posture of the European Union, a part of the world that makes almost nothing and penalizes successful American companies for their popularity.”
BILLIONS PAID
The logo for Google is seen at the Google Store Chelsea in Manhattan, New York City, U.S., November 17, 2021. REUTERS/Andrew Kelly/File Photo Purchase Licensing Rights Mehta noted that Google had paid $26.3 billion in 2021 alone to ensure that its search engine is the default on smartphones and browsers, and to keep its dominant market share.
"The default is extremely valuable real estate," Mehta wrote. "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."
He added, “Google, of course, recognizes that losing defaults would dramatically impact its bottom line. For instance, Google has projected that losing the Safari default would result in a significant drop in queries and billions of dollars in lost revenues.”
The ruling is the first major decision in a series of cases taking on alleged monopolies in Big Tech. This case, filed by the Trump administration, went before a judge from September to November of last year.
"A forced divestiture of the search business would sever Alphabet from its largest source of revenue. But even losing its capacity to strike exclusive default agreements could be detrimental for Google," said Emarketer senior analyst Evelyn Mitchell-Wolf, who said a drawn-out legal process would delay any immediate effects for consumers.
In the past four years, federal antitrust regulators have also sued Meta Platforms (META.O), Amazon.com (AMZN.O) and Apple (AAPL.O), claiming the companies have illegally maintained monopolies.
Those cases all began under the administration of former President Donald Trump.
Senator Amy Klobuchar, a Democrat who chairs the Senate Judiciary Committee's antitrust subcommittee, said the fact that the case spanned administrations shows strong bipartisan support for antitrust enforcement.
"It's a huge victory for the American people that antitrust enforcement is alive and well when it comes to competition," she said. "Google is a rampant monopolist."
When it was filed in 2020, the Google search case was the first time in a generation that the U.S. government accused a major corporation of an illegal monopoly. Microsoft settled with the Justice Department in 2004 over claims that it forced its Internet Explorer Web browser on Windows users.
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