A federal judge ruled that Google violated US antitrust law by maintaining a monopoly in the search and advertising markets.
“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,” according to the court’s ruling, which you can read in full at the bottom of this story. “It has violated Section 2 of the Sherman Act.”
Judge Amit Mehta’s 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’s 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 “general search services” and “general search text advertising.”
It’s not yet clear what this ruling will mean for the future of Google’s business, as this initial finding is only about the company’s liability, not about remedies. Google’s 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’s search business.
Google plans to appeal the ruling, president of global affairs Kent Walker said in a statement. “This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available,” he said. “As this process continues, we will remain focused on making products that people find helpful and easy to use.”
“This landmark decision holds Google accountable,” DOJ antitrust chief Jonathan Kanter said in a statement. “It paves the path for innovation for generations to come and protects access to information for all Americans.”
DuckDuckGo, whose CEO testified against Google in the trial, applauded the decision, but recognized the fight isn’t over. In a statement, SVP for public affairs Kamyl Bazbaz said, “The 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.”
Mehta rejected Google’s arguments that its contracts with phone and browser makers like Apple were not exclusionary and therefore shouldn’t qualify it for liability under the Sherman Act. “The prospect of losing tens of billions in guaranteed revenue from Google — which presently come at little to no cost to Apple — disincentivizes Apple from launching its own search engine when it otherwise has built the capacity to do so,” he wrote.
“The prospect of losing tens of billions in guaranteed revenue... disincentivizes Apple from launching its own search engine”
He said the framework from the last landmark tech monopoly case, US v. Microsoft, 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’s irrelevant since the same conduct can be exclusionary when done by a dominant player, even if it’s not when it’s done by a smaller one.
He described “Google’s monopoly in general search” as “remarkably durable,” 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. “If 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,” he wrote.
“The market reality is that Google is the only real choice as the default GSE,” 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’s “‘no price that Microsoft could ever offer [Apple] to’ preload Bing.”
Mehta underscored the idea that even the largest businesses in the US have no real alternative to Google. “Time and again, Google’s 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,” he wrote. “These are Fortune 500 companies, and they have nowhere else to turn other than Google.”
On search text advertising, Mehta wrote that Google’s exclusive agreements enabled it to raise prices on that product “without any meaningful competitive constraint.” While Google argued that the price for its search text ads, when adjusted for quality, has decreased, Mehta wrote that evidence “is weak.” That’s because even Google has recognized how difficult it is to determine “the value of an ad to its buyer,” he wrote. “This 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.”
Beyond the monopoly questions, Mehta declined to impose sanctions on Google for failing to preserve chat messages relevant to the case — something the Justice Department characterized as destroying evidence. The requested sanctions “do not move the needle on the court’s assessment of Google’s liability.” But Mehta said the decision “should not be understood as condoning Google’s failure to preserve chat evidence ... Google avoided sanctions in this case. It may not be so lucky in the next one.”
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’s antitrust lawsuit against Microsoft and its next tech anti-monopoly case against Google, filed in 2020, several more such cases quickly followed.
Amazon, Apple, and Meta 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 over a separate challenge of its advertising technology business. That makes Mehta’s decision in this case even more consequential for how other judges may consider how to apply century-old antitrust laws to modern digital markets.
Related
- US v. Google: all the news from the search antitrust showdown
Mehta oversaw a 10-week trial in the Google search case last fall, which culminated in two days of closing arguments in early May. The trial, which took place in DC District Court, convened many big players in Silicon Valley, including Google CEO Sundar Pichai, Microsoft CEO Satya Nadella, and Apple executive Eddy Cue.
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.
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’t index the web (such as Amazon).
One of the most significant revelations from the case was the size of Google’s 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 with Apple. In 2022, Google paid Apple $20 billion for the default position.
During closing arguments, Mehta homed in on those payments, wondering how other players in the market could possibly displace Google from that position. “If that’s what it takes for somebody to dislodge Google as the default search engine, wouldn’t the folks that wrote the Sherman Act be concerned about it?”
The next antitrust trial between the DOJ and Google is set to begin on September 9th in Virginia. That case will focus on whether Google has illegally monopolized digital advertising technology.
