A federal judge ruled that Google violated US antitrust law by maintaining a monopoly in the search and advertising markets.<\/p>\n<\/div>\n
\u201cAfter 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,\u201d according to the court\u2019s ruling<\/a>, which you can read in full at the bottom of this story. \u201cIt has violated Section 2 of the Sherman Act.\u201d<\/p>\n<\/div>\n Judge Amit Mehta\u2019s decision represents a major victory for the Department of Justice, which accused Google of illegally monopolizing the online search market. Still, Mehta did not agree with all of the government\u2019s arguments. For example, he rejected the claim that Google has monopoly power in one specific part of the ads market. He agreed with the government, however, that Google has a monopoly in \u201cgeneral search services\u201d and \u201cgeneral search text advertising.\u201d<\/p>\n<\/div>\n It\u2019s not yet clear what this ruling will mean for the future of Google\u2019s business, as this initial finding is only about the company\u2019s liability, not about remedies. Google\u2019s fate will be determined in the next phase of proceedings, which could result in anything from a mandate to stop certain business practices to a breakup of Google\u2019s search business.<\/p>\n<\/div>\n Google plans to appeal the ruling, president of global affairs Kent Walker said in a statement. \u201cThis decision recognizes that Google offers the best search engine, but concludes that we shouldn\u2019t be allowed to make it easily available,\u201d he said. \u201cAs this process continues, we will remain focused on making products that people find helpful and easy to use.\u201d<\/p>\n<\/div>\n \u201cThis landmark decision holds Google accountable,\u201d DOJ antitrust chief Jonathan Kanter said in a statement. \u201cIt paves the path for innovation for generations to come and protects access to information for all Americans.\u201d <\/p>\n<\/div>\n DuckDuckGo, whose CEO testified against Google in the trial, applauded the decision, but recognized the fight isn\u2019t over. In a statement, SVP for public affairs Kamyl Bazbaz said, \u201cThe journey ahead will be long. As we are seeing in the EU and other places, Google will do anything it can to avoid changing its conduct. However, we know there is a pent up demand for alternatives in search and this ruling will support access to more options.\u201d<\/p>\n<\/div>\n Mehta rejected Google\u2019s arguments that its contracts with phone<\/a> and browser makers like Apple were not exclusionary and therefore shouldn\u2019t qualify it for liability under the Sherman Act. \u201cThe prospect of losing tens of billions in guaranteed revenue from Google \u2014 which presently come at little to no cost to Apple \u2014 disincentivizes Apple from launching its own search engine when it otherwise has built the capacity to do so,\u201d he wrote.<\/p>\n<\/div>\n \u201cThe prospect of losing tens of billions in guaranteed revenue… disincentivizes Apple from launching its own search engine\u201d<\/p>\n<\/div>\n<\/div>\n He said the framework from the last landmark tech monopoly case, US v. Microsoft<\/em>, was in fact relevant to the current case against Google. While Google argued that, unlike Microsoft, it maintained pretty consistent actions before and after it became dominant in the market, Mehta said that\u2019s irrelevant since the same conduct can be exclusionary when done by a dominant player, even if it\u2019s not when it\u2019s done by a smaller one.<\/p>\n<\/div>\n He described \u201cGoogle\u2019s monopoly in general search\u201d as \u201cremarkably durable,\u201d writing that it increased from about 80 percent in 2009 to 90 percent by 2020. Bing, by comparison, has less than 6 percent market share, Mehta added. \u201cIf there is genuine competition in the market for general search, it has not manifested in familiar ways, such as fluid market shares, lost business, or new entrants,\u201d he wrote.<\/p>\n<\/div>\n \u201cThe market reality is that Google is the only real choice as the default GSE,\u201d Mehta wrote, referring to an acronym for general search engine. He cited a quote from Apple SVP Eddy Cue, who said during the trial that there\u2019s \u201c\u2018no price that Microsoft could ever offer [Apple] to\u2019 preload Bing.\u201d <\/p>\n<\/div>\n Mehta underscored the idea that even the largest businesses in the US have no real alternative to Google. \u201cTime and again, Google\u2019s partners have concluded that it is financially infeasible to switch default GSEs or seek greater flexibility in search offerings because it would mean sacrificing the hundreds of millions, if not billions, of dollars that Google pays them as revenue share,\u201d he wrote. \u201cThese are Fortune 500 companies, and they have nowhere else to turn other than Google.\u201d<\/p>\n<\/div>\n On search text advertising, Mehta wrote that Google\u2019s exclusive agreements enabled it to raise prices on that product \u201cwithout any meaningful competitive constraint.\u201d While Google argued that the price for its search text ads, when adjusted for quality, has decreased, Mehta wrote that evidence \u201cis weak.\u201d That\u2019s because even Google has recognized how difficult it is to determine \u201cthe value of an ad to its buyer,\u201d he wrote. \u201cThis evidence does not reflect a principled practice of quality-adjusted pricing, but rather shows Google creating higher-priced auctions with the primary purpose of driving long-term revenues.\u201d<\/p>\n<\/div>\n Beyond the monopoly questions, Mehta declined to impose sanctions on Google for failing to preserve chat messages relevant to the case \u2014 something the Justice Department characterized as destroying evidence. The requested sanctions \u201cdo not move the needle on the court\u2019s assessment of Google\u2019s liability.\u201d But Mehta said the decision \u201cshould not be understood as condoning Google\u2019s failure to preserve chat evidence … Google avoided sanctions in this case. It may not be so lucky in the next one.\u201d<\/p>\n<\/div>\n The decision is the first in a wave of tech monopoly cases brought by the US government in recent years. While two decades passed between the Department of Justice\u2019s antitrust lawsuit against Microsoft and its next tech anti-monopoly case against Google, filed in 2020, several more such cases quickly followed. <\/p>\n<\/div>\n Amazon<\/a>, Apple<\/a>, and Meta<\/a> all now face their own monopolization lawsuits from the US government, and Google will go to trial against the DOJ a second time this fall<\/a> over a separate challenge of its advertising technology business<\/a>. That makes Mehta\u2019s decision in this case even more consequential for how other judges may consider how to apply century-old antitrust laws to modern digital markets.<\/p>\n<\/div>\n Mehta oversaw a 10-week trial in the Google search case last fall, which culminated in two days<\/a> of closing arguments<\/a> in early May. The trial, which took place in DC District Court, convened many big players in Silicon Valley, including Google CEO Sundar Pichai<\/a>, Microsoft CEO Satya Nadella<\/a>, and Apple executive Eddy Cue<\/a>. <\/p>\n<\/div>\n The DOJ argued that Google illegally monopolized the general search advertising market by effectively cutting off key distribution channels for rivals through exclusionary contracts. For example, Google has deals with browser makers like Mozilla and phone manufacturers like Apple and Samsung to make its search engine the default on their products. Google also makes default status for some of its apps a condition of access to the Play Store for phone makers using its Android operating system.<\/p>\n<\/div>\n Google argued throughout the trial that it has not acted anticompetitively and that its large market share is a result of creating a superior product that consumers enjoy. It contended that the Google search business should be compared to a much larger range of peers than the government proposed in its market definition, suggesting it competes directly with other platforms where search is a big part of the business, even if they don\u2019t index the web (such as Amazon).<\/p>\n<\/div>\n One of the most significant revelations from the case was the size of Google\u2019s payments to Apple to secure the default search engine spot on iPhone browsers. An expert witness for Google let slip that the company shares 36 percent of search ad revenue from Safari<\/a> with Apple. In 2022, Google paid Apple $20 billion for the default position<\/a>.<\/p>\n<\/div>\n During closing arguments, Mehta homed in on those payments, wondering how other players in the market could possibly displace Google from that position. \u201cIf that\u2019s what it takes for somebody to dislodge Google as the default search engine, wouldn\u2019t the folks that wrote the Sherman Act be concerned about it?\u201d<\/p>\n<\/div>\n The next antitrust trial between the DOJ and Google is set to begin on September 9th<\/a> in Virginia. That case will focus on whether Google has illegally monopolized digital advertising technology.<\/p>\n<\/div>\n<\/div>\n