A US judge on Monday ruled in a landmark anti-trust case that Google has maintained an illegal monopoly with its dominant search engine.
District Court Judge Amrit Mehta ruled that Google’s search engine has been illegally exploiting its dominance to squash competition and stifle innovation, in a decision against a ‘big tech’ giant that could alter how the sector operates in future.
Mehta found that the company had a monopoly for search and for text ads through exclusive distribution agreements that made it the ‘default’ option that people were likely to use on devices.
After reviewing reams of evidence that included testimony from top executives at Google, Microsoft and Apple, including Google CEO Sundar Pichai during last year’s 10-week trial, Mehta issued his potentially market-shifting decision three months after the two sides presented their closing arguments in early May.
‘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.
A US judge ruled on Monday that Google has been illegally exploiting its dominance to squash competition in a landmark anti-trust case. Google CEO Sundar Pichai (pictured) gave testimony during a 10-week trial last year
Google’s president of global affairs said the company intends to appeal District Court Judge Amrit Mehta’s findings. Pictured: Googleplex – Google Headquarters office buildings
Google ‘enjoys an 89.2 per cent share of the market for general search services, which increases to 94.9 per cent on mobile devices,’ the ruling said.
Mehta said Google had paid billions to ensure it was the default search engine on smartphones and browsers.
The internet behemoth ‘has a major, largely unseen advantage over its rivals: default distribution,’ he wrote.
US Attorney General Merrick Garland, the country’s top prosecutor, hailed the ruling as a ‘historic win for the American people’.
‘No company, no matter how large or influential, is above the law,’ he defiantly added.
‘The Justice Department will continue to vigorously enforce our antitrust laws’.
Kent Walker, Google’s president of global affairs, said the company intends to appeal Mehta’s findings.
‘This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available,’ Walker said.
He also pointed out that Mehta concluded Google is the industry’s highest quality search engine, particularly on mobile devices, after the judge said: ‘Google is widely recognized as the best (general search engine) available in the United States’.
‘Given this, and that people are increasingly looking for information in more and more ways, we plan to appeal,’ Walker said.
‘As this process continues, we will remain focused on making products that people find helpful and easy to use.’
Mehta’s ruling focused on the billions of dollars Google spends every year to install its search engine as the default option on new cellphones and tech gadgets.
In 2021 Google spent more than a staggering $26billion to lock in those default agreements, Mehta said in his ruling.
Google fired back against those allegations, noting that consumers have historically changed search engines for various reasons.
It remained to be seen what remedies or damages the judge might order in the landmark case.
The potential outcome could result in a wide-ranging order requiring Google to dismantle some of the pillars of its internet empire, or preventing it from paying to ensure its search engine automatically answers queries on the iPhone and other devices.
Or, the judge could conclude only modest changes are required to level the playing field.
‘Google’s loss in its search antitrust trial could be a huge deal, depending on the remedy,’ said Emarketer senior analyst Evelyn Mitchell-Wolf.
Mehta’s ruling focused on the billions of dollars Google spends every year to install its search engine as the default option on new cellphones and tech gadgets
‘A forced divestiture of the search business would sever Alphabet from its largest source of revenue,’ she added, referring to Google’s parent company.
Even losing the option of making exclusive deals to be the default option on browsers, smartphones or computers would hurt Google, according to the analyst.
But in one possible good sign for Google, Mehta concluded in his ruling that the tech titan’s violation of the Sherman Act did not have ‘anticompetitive effects.’
Justice department lawyers argued that Google achieved and perpetuated its dominance, and strangled rivals, through these default deals that also expanded to Samsung and other device makers.
‘The biggest winner from today’s ruling isn’t consumers or little tech, it’s Microsoft,’ said Chamber of Progress CEO Adam Kovacevich.
‘Microsoft has underinvested in search for decades, but today´s ruling opens the door to a court mandate of default deals for Bing.’
The trial was the first time the US Department of Justice has faced a big tech company in court after Microsoft was targeted during the late 1990s in an antitrust lawsuit accusing it of abusing the dominance of its Windows operating system on personal computers to lock out competition.
If Mehta decides to limit or ban Google’s default search deals, it could also squeeze Apple’s profits.
Although parts of his decision were redacted to protect confidential business information, Mehta noted that Google paid Apple an estimated $20billion in 2022, doubling from 2020.
The judge also noted Apple has periodically considered building its own search technology, but backed off that after a 2018 analysis estimated the company would lose more than $12billion in revenue during the first five years after a break-up with Google.
Google’s payments have helped Apple’s steadily growing services division, which generated $85billion in revenue during the company’s last fiscal year.
It comes after Apple in March was also sued by the US Department of Justice and 15 states alleging the iPhone maker monopolized the smartphone market, hurt smaller rivals and drove up prices.
The California-based firm is also under regulatory scrutiny in Europe and was earlier this year hit with a $2billion fine for thwarting competition from music streaming rivals through restrictions on its App Store.
The European Commission in June determined that App Store’s rules breached the Digital Marketing Act (DMA), the first such charge by the regulator under the new rules.
Other lawsuits include a class action filed on March 1 in San Jose, California federal court accusing the company of monopolizing the market for cloud storage in its mobile devices.
Meta was also found to have breached the DMA in June after the EU regulator notified the company that its pay or consent advertising model, already the target of privacy regulators and activists’ ire, was not in line with regulations.
It was then slapped with a record $1.3billion fine by its lead EU privacy regulator in May 2023 over its handling of user information and given five months to stop transferring users’ data to the US.
The US Federal Trade Commission also filed a long-anticipated anti-trust lawsuit against Amazon.com in September, charging the company with harming consumers with higher prices.