Google - "monopoly"

Specifically, Judge Amit Mehta called Google a "monopoly" in a 286-page ruling on Monday (August 5), concluding that the company had violated US antitrust law.

This is considered a landmark victory for the US Department of Justice in a historic trial for the internet sector. It is expected to curb the dominance of Big Tech in general, and Google in particular, in cyberspace.

The ruling comes after a weeks-long trial in which the US Justice Department argued that search giant Google paid tens of billions of dollars a year in anticompetitive deals with carriers, browser developers and device manufacturers – most notably Apple. These payments – amounting to more than $26 billion in 2021 – helped Google become the default search engine.

Google - which holds more than 90% of the online search market - argues that it has faced fierce competition in the field and that its success is due to the quality of its products.

US Attorney General Merrick Garland called the ruling "a historic victory for the American people. No company - no matter how large or influential - is above the law."

Jonathan Kanter, head of the US Justice Department's antitrust division, said "this landmark decision holds Google accountable" and "paves the way for innovation for future generations and protects access to information for all Americans."

Kent Walker, president of global affairs at Alphabet, Google's parent company, said the company would appeal. The ruling "recognizes that Google provides the best search engine, but concludes that we should not be allowed to make it easy."

How much damage will Google suffer?

The trial will now move into a second phase, where the court will determine what remedial action Google will take. The Justice Department has not yet specified what penalty it will impose, but it is likely to focus on limiting Google’s ability to reach settlements in the case.

Google's multi-year deal with Apple to make Google the default search engine on the iPhone's Safari browser has long drawn scrutiny, with court documents showing that Google paid Apple $20 billion in 2022 alone.

Another issue in the case is contracts Google has entered into over the years with browser developer Mozilla, phone makers Samsung, Motorola and Sony, as well as telecom carriers AT&T, Verizon and T-Mobile.

Judge Mehta said that thanks to the aforementioned exclusive distribution contracts, “the sheer scale of Google’s query volume… compared to its competitors is staggering.”

The ruling will have a major impact on Google’s core business. The company generated $175 billion in revenue from search advertising last year, more than half of its total revenue of $307 billion. By comparison, Microsoft’s Bing generated about $12 billion from search advertising, giving it a market share of less than 5%.

Judge Mehta concluded that “Google’s distribution agreements significantly inhibit the market for search services and undermine the ability of rivals to compete.” Alphabet shares fell 4.6% on Monday amid a broader sell-off in U.S. markets.

Hoang Hai (according to FT, Reuters, AP)