In the first such ruling against a tech giant in the modern internet era, Judge Amit P. Mehta of the U.S. District Court for the District of Columbia declared Google an illegal monopolist.
The case was originally brought by the Department of Justice during the Trump administration. The Biden administration continued to charge the company with illegally maintaining its monopoly by contracting with phone makers to make Google’s search tool the default on those devices.
The judge rejected some of the DOJ allegations but agreed that Google is illegally monopolizing general search services. The ruling is the biggest antitrust rebuke for a large U.S. tech company since the Microsoft trial at the turn of the last century.
The first step of any monopolization case is establishing that the company in question does indeed have a monopoly in the market in question. That, in and of itself, is not illegal, but it is a prerequisite for the charge of using that monopoly power illegally and requires defining what is and is not in that market.
The definition of the market the court accepted shows a nearly 90% market share for Google. That delineation excluded searches originating in social media apps, like TikTok, or those begun in shopping sites like Amazon, the fourth most popular website in America, and Yelp, with 12.5 million queries per week. Based on that narrower market definition, the court found that Google does in fact have a monopoly in the market for “general search.”
The court also found Google guilty of illegally maintaining that monopoly through its distribution contracts with phone-makers, like Apple and Samsung, and browser-makers, like Mozilla. Google pays billions of dollars to be the default search tool for those products. It is free and takes just moments for customers to change the search on their devices. The DOJ was successful in arguing that those defaults nevertheless violated U.S. antitrust law. The government alleged that the defaults prevented rivals from achieving the scale needed to sufficiently improve, thus harming the competitive environment in search.
In a statement, Open Markets Institute Executive Director Barry Lynn wrote, “The Google Search ruling was a long time coming and is a historic win for our antitrust enforcers and internet users everywhere.”
But critics of the decision claim that competition among rivals, like Microsoft’s Bing, for earning the default placements was undervalued in the ruling. They also point out the superior quality of Google search, which even Mehta acknowledged in his almost 300-page decision. During the weekslong trial, counsel for Google pointed out that the most searched term on search competitor Bing is “google,” indicating that when Bing is the default search tool in Microsoft products, users regularly switch to Google search.
Another criticism is that Mehta erred by using a legal standard from the Microsoft case that is not applicable in the Google case. In Microsoft, the DOJ had to meet a less stringent standard to prove anticompetitive harm because competitive threats were nascent. That same standard was applied by the judge in the Google case, even though competitors, like Bing, were well established and other factors, like inferior quality, might explain their low market share as compared to Google’s search success.
“But for Microsoft’s lighter causation standard to apply, it must also involve a nascent threat and conduct proven sufficient to prevent rivals from achieving minimum efficient scale. Arguably, neither is true in Google Search,” wrote Geoffrey A. Manne of the International Center for Law and Economics.
That alleged mistake may be used by Google in its appeal of the decision. That appeal process is expected to take years to conclude. But before that, the court will rule on remedies.
Competitors and advocates for expanding antitrust enforcement have called for the breakup of Google, but experts say that is highly unlikely. Other options, like choice screens replacing defaults on phones, are also improbable.
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The court record indicates that Google’s unlawful behavior accounts for about 10% of its market share in search. If the court forbade those distribution contracts, that would presumably remove that advantage. That would have an impact on Google, but the outlawing of those contracts and their commensurate payments to Apple (others) may be more impactful in that it denies them a revenue stream. Eliminating the potential cross-subsidy might incentivize phone manufacturers to raise the price of phones to consumers to offset those revenue losses. The practical reality of that remedy would undercut the consumer welfare aim of U.S. antitrust law.
Google’s separate antitrust trial concerning its online advertising market will begin in early-mid September.