A U.S. judge handed Google a major legal blow on Monday, August 5th, ruling in a landmark antitrust case that the tech giant has maintained a monopoly with its dominant search engine.
The court decision against a leader in ‘big tech’ could alter how the sector operates in the future.
District Court Judge Amit Mehta found that Google had a monopoly on internet searches and text ads through exclusive, paid distribution agreements that made it the “default” option that people were likely to use on devices.
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.
The internet giant “has a major, largely unseen advantage over its rivals: default distribution,” wrote Mehta in his ruling.
The antitrust trial—pitting U.S. prosecutors and nearly a dozen states against Google—ended in May.
“This victory against Google is a historic win for the American people,” said US Attorney General Merrick Garland. “No company—no matter how large or influential—is above the law.”
Google will appeal the verdict, according to its global affairs president Kent Walker.
Walker pointed out that Mehta concludes Google is the industry’s highest-quality search engine, particularly on mobile devices.
“Given this, and that people are increasingly looking for information in more and more ways, we plan to appeal,” Walker said.
“As this process continues, we will remain focused on making products that people find helpful and easy to use.”
It remains to be seen what remedies or damages the judge might order in the case.
In possible good news for Google, Mehta concluded in his ruling that the tech titan’s violation of the Sherman Act did not have “anticompetitive effects.”
“Google’s loss in its search antitrust trial could be a huge deal— depending on the remedy,” said Emarketer senior analyst Evelyn Mitchell-Wolf.
“A forced divestiture of the search business would sever Alphabet from its largest source of revenue,” she added, referring to Google’s parent company.
Mitchell-Wolf expects a drawn-out appeals process to delay any immediate effects of the verdict on consumers or advertisers.
Even losing the option of making exclusive deals to be the default option on browsers, smartphones or computers would hurt Google, according to the analyst.
Google’s search business will be hampered if the generative artificial intelligence wielded by Microsoft’s Bing and OpenAI budding “SearchGPT” ramp up competition.
“The biggest winner from today’s ruling isn’t consumers or little tech, it’s Microsoft,” said Chamber of Progress CEO Adam Kovacevich:
Microsoft has underinvested in search for decades, but today’s ruling opens the door to a court mandate of default deals for Bing.
The trial was the first time the U.S. Department of Justice has faced a big tech company in court since Microsoft was targeted more than two decades ago over the dominance of its Windows operating system.
Mehta presided over several months of testimony late last year that saw Google CEO Sundar Pichai and other top executives take the stand.
At the heart of the government’s case were the massive payments made by Google to Apple and other companies to keep its world-leading search engine as the default on iPhones, smartphones, web browsers, and other products.
Court testimony revealed that these payments reach the tens of billions of dollars every year to keep its prime real estate on Apple hardware or the Safari and Mozilla browsers.
Justice Department lawyers argued that Google achieved and perpetuated its dominance—and strangled rivals—through these default deals that also expanded to Samsung and other device manufacturers.
