A US judge has ruled that Google violated antitrust law by spending billions of dollars to create an illegal monopoly and become the world’s default search engine.
This marks the first big win for federal authorities taking on Big Tech’s market dominance.
Monday’s ruling sets course for a second trial to determine potential fixes, including a possible break of Google parent Alphabet, which would shift the paradigm of online advertising that Google has dominated for years.
“The court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly,” US District Judge Amit Mehta, Washington, DC, wrote in the ruling.
Google controls around 90% of the online search market and 95% on smartphones.
Shares of Alphabet fell 4.5% on Monday amid a broad decline in tech shares as the wider stock market cratered on recession fears. Google advertising was 77% of Alphabet’s total sales in 2023.
Despite the US District Court ruling, Google will not go down without a fight as its parent, Alphabet announced plans to appeal Mehta’s ruling.
“This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available,” Google said in a statement responding to the ruling.
Mehta noted that Google had paid USD 26.3 billion in 2021 alone to ensure that its search engine is the default on smartphones and browsers, and to keep its dominant market share.
“The default is extremely valuable real estate,” Mehta wrote.
“Even if a new entrant were positioned from a quality standpoint to bid for the default when an agreement expires, such a firm could compete only if it were prepared to pay partners upwards of billions of dollars in revenue share and make them whole for any revenue shortfalls resulting from the change.”
The judge added, “Google, of course, recognizes that losing defaults would dramatically impact its bottom line. For instance, Google has projected that losing the Safari default would result in a significant drop in queries and billions of dollars in lost revenues.”
Meanwhile, an analyst has said that this “forced divestiture” would sever Alphabet from its largest source of revenue and added that Google losing its capacity to strike exclusive default agreements could be detrimental as well.
Google is the most recent target of federal antitrust regulators, who, in the past four years, have also sued Meta Platforms, Amazon.com, and Apple, claiming the companies have illegally maintained monopolies.
“It’s a huge victory for the American people that antitrust enforcement is alive and well when it comes to competition,” said Senator Amy Klobuchar, a Democrat who chairs the Senate Judiciary Committee’s antitrust subcommittee.
“Google is a rampant monopolist,” she added.
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