Judge Rules That Google Is Running an Illegally Monopolized Market. Here’s What Comes Next.
In a landmark ruling that could reshape the tech landscape, a federal judge dealt a major blow to Google on Monday, finding that the search behemoth illegally monopolized the online search market. The decision hands the US Department of Justice (DOJ) a historic win in its first major antitrust case against a tech titan in over 20 years — and sets the stage for a potential breakup of one of the world’s most powerful companies.
The verdict is in: In his 286-page ruling, Judge Amit Mehta determined that Google’s $26B in payments to make its search engine the default option on smartphones and web browsers effectively blocked competitors from the market. “Google’s distribution agreements foreclose a substantial portion of the general search services market and impair rivals’ opportunities to compete,” Mehta wrote. He also found that Google’s monopoly power has allowed it to consistently raise online advertising prices without consequences.
- Alphabet shares slipped 5% yesterday on the news, while Apple, which could lose billions in payments from Google, also fell nearly 5%.
- The judge ruled that Google has a monopoly over search text ads, though not the broader market for general search advertising.
Breaking Up is Hard to Do
While many have speculated about a potential breakup of Google, antitrust expert Eric Posner believes that’s unlikely. Courts are often reluctant to advocate for the wholesale dismantling of defendants, he noted at an industry conference last year after the trial started. Instead, the DOJ may seek “conduct remedies” that target specific monopolistic practices, such as Google’s default search agreements with device makers like Apple.
- The court could require Apple to offer users a more explicit choice of default search engines or void the contracts altogether.
- Microsoft’s late 1990s antitrust battle with the DOJ, which led to requirements to make it easier for consumers to access other web browsers, could provide a roadmap.
Collateral damage: Advertisers and other parties harmed by its practices could seek damages through additional lawsuits. “There’s very likely to be follow-on private litigation by people who have been harmed by Google’s behavior, which may be you guys where you can ask for damages,” Posner told a crowd of media buyers. How this impacts Google will be clarified at a later date when Mehta plans to hold a separate trial to decide the changes required.
