US Federal Court Declares Google “A Monopolist”

Earlier this month, a U.S. Federal judge delivered a significant ruling, stating that Google violated an antitrust law. The court's ruling asserted "Google is a monopolist, and it has acted as one to maintain its monopoly. It has violated Section 2 of the Sherman Act."

United States v. Google LLC (2020)

To provide some context, the case—United States v. Google LLC—was initiated by the U.S. Department of Justice (DOJ) in October 2020. The DOJ accused Google of unlawfully monopolizing the search engine and search advertising markets, violating the Sherman Act of 1890. This isn't the only antitrust battle Google is facing; another ongoing case, United States v. Google LLC (2023), accuses the tech giant of monopolizing the ad tech market.

This isn’t the first case of its kind. Back in 1999, the Department of Justice filed a landmark antitrust case against Microsoft, accusing the company of violating the Sherman Act by trying to eliminate competitors’ platforms, like Netscape. Microsoft lost the case, and although the DOJ attempted to break up the company, it was eventually settled instead.

This doesn’t make the current Google 2020 antitrust case any less significant. The ruling has already sparked conversations about what this could mean for Big Tech as a whole, as similar antitrust actions might be taken against other major companies.

The case officially began in September 2023 under Judge Amit Mehta. It's a bench trial, meaning that the case is decided by a judge alone, without the involvement of a jury. The court produced a 286 page document which ultimately argues that Google’s dominance in the search engine market is not simply a result of the company’s shrewd business decisions, but a result of its default distribution practices.

Google Pays Hefty Sums to Support Its Dominance.

The document alleges that Google uses distribution contracts with device manufacturers, like Apple and Samsung, and web browser companies, like Mozilla, to maintain its lead in search engines.

In 2021, for example, Google paid more than $26 billion to ensure they got “default placement at the key search access points” and an agreement that its partners won’t “preload any other general search engine on the device.” Put simply– most devices in the United States come preloaded with Google, making it tough for its competitors like Bing, Yelp, and DuckDuckGo to reach users.

The document highlights Google’s massive control over the search engine market, noting that it held 80% of the market in 2009, growing to 90%, and around 95% on mobile devices by 2020. This doesn’t just help its popularity, but its revenue.

Google's alleged control extends to another crucial area: advertising revenue. Compared to its competitors, Google has “extraordinary volumes of user data” from search queries, making it a top choice for advertisers. This gives them a significant revenue advantage over competitors. In 2021 Google made about $47 billion in advertising revenue, compared to Bing that made less than $12 billion a year later.

Google’s Small Win

The DOJ also accused Google of monopolizing the ads that show up in search results and inflating their prices. Judge Mehta agreed that “Google has used its monopoly power to charge higher-than-normal prices for search ads” and agreed that Google holds a monopoly in the General Search Text Ad market. However, he ruled that Google doesn’t have a monopoly over the market for search advertising.

He also decided not to penalize Google for not saving employee chat messages that were important to the case. In essence, Judge Mehta expressed that any negative evidence against Google found within these messages would not change the court’s conclusion about Google’s lack of monopoly power in the market for search ads.

Google to Appeal Court’s Decision

Google has countered that its search engine is the most popular simply because it's the best option out there. Kent Walker, Google’s President of Global Affairs, announced that the company plans to appeal the decision. Walker stated on X, “This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available…Given this, and that people are increasingly looking for information in more and more ways, we plan to appeal. As this process continues, we will remain focused on making products that people find helpful and easy to use.”

What the Ruling Means for Google and the Industry

It’s unclear what this ruling will mean for Google just yet. The next phase of the case will focus on determining the appropriate remedies to address Google’s perceived monopolistic behavior. These remedies could include anything from structural changes, such as breaking up parts of the company, to behavioral changes, like changing its business practices to encourage more competition.

On the other hand, any changes that occur will likely be underwhelming and fall short of what Google’s competitors hope for. When the European Commission fined Google €4.3 billion in 2018 for antitrust violations, Google responded by offering EU users a choice screen to select their preferred search engine. Later, they auctioned off spots on this screen, allowing rivals to bid for placement. Ironically, this model ended up benefiting Google, much to the frustration of its competitors.

Google’s competitors are hoping for a “strong remedy”, as Yelp CEO Jeremy Stoppelman put it. They believe that decisive action is needed to address Google's dominance and self-preferential behavior. DuckDuckGo, in particular, wants the court to prohibit Google from buying default status and wants a team of independent experts to monitor the remedy proposed by the court, to make sure Google doesn’t find a loophole or some way to itself an unfair advantage.

Regardless, as this case moves forward, it's a big moment not just for Google, but for the future of competition in the tech industry. We’ll keep an eye on how things progress and share any updates with you.