On Monday, a federal U.S. judge declared that Google had an unlawful monopoly in the search and text advertising markets.
TakeAway Points:
- Google has been illegally holding a monopoly in search and text advertising, according to a federal U.S. judge’s ruling on Monday.
- The court focused on Google’s exclusive search agreements with Apple and Android-powered smartphones and tablets.
- In 2020, Google was the target of parallel but distinct antitrust lawsuits by the Department of Justice and a bipartisan coalition of solicitors general from 38 states and territories, headed by Colorado and Nebraska.
Google loses in Court
The landmark case from the government, filed in 2020, alleged that Google has kept its share of the general search market by creating strong barriers to entry and a feedback loop that has sustained its dominance. The court found that Google violated Section 2 of the Sherman Act, which outlaws monopolies.
The ruling marks the first anti-monopoly decision against a tech company in decades.
“Google is a monopolist, and it has acted as one to maintain its monopoly,” Judge Amit Mehta of the U.S. District Court for the District of Columbia wrote in the decision.
The Department of Justice and a bipartisan group of attorneys general from 38 states and territories, led by Colorado and Nebraska, filed similar but separate antitrust suits against Google in 2020. The suits were combined for pretrial purposes, such as the discovery of evidence.
Attorney General Merrick Garland called the decision a “historic win for the American people.”
“No company—no matter how large or influential — is above the law. The Justice Department will continue to vigorously enforce our antitrust laws.” Garland wrote in a statement.
The Court’s ruling
In its ruling, the court homed in on Google’s exclusive search arrangements on Android and Apple’s iPhone and iPad devices, saying that they helped to cement Google’s anticompetitive behavior and dominance over the search markets.
General search services, according to the court, applies to Google’s core search engine, where it traditionally competed with Yahoo. General search text advertising refers to the text ads that run alongside search results. The court ruled that in both of those areas, Google has operated as a monopoly. However, the ruling found that general search advertising is not a market so there can be no monopoly control.
Kent Walker, Google’s president of global affairs, said in a statement that the company plans to appeal the ruling. He highlighted the court’s emphasis on the quality of Google’s products.
“This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available. As this process continues, we will remain focused on making products that people find helpful and easy to use,” Walker wrote.
Alphabet shares fell more than 4% on Monday, dragged down by a broad decline in stocks worldwide.
Financial Impact
The financial implications of the ruling could be substantial for Google. The company spent around $26 billion in 2021 to be the default search engine for various smartphone makers, with Apple’s cut being about $18 billion.
In 2022, this figure climbed to an eye-watering $20 billion. The ruling could lead to changes in Google’s search-engine contracts and potentially bar the company from making future deals around its search engine.
The decision also comes at a time when other tech giants are facing similar regulatory battles. The DOJ filed an antitrust suit against Apple in March, alleging that the iPhone maker was suppressing app development and worsening the quality of cross-platform messaging.
In September, the FTC sued Amazon for inflating prices on its marketplace and overcharging smaller sellers. The agency has also sued Meta in a bid to force it to sell Instagram and WhatsApp, which it said marked a monopoly.
