The US Department of Justice has found Google guilty of violating Section 2 of the Sherman Act, which now classifies the company’s search business as an illegal monopoly.
Federal judge Amit Mehta has ruled that Google illegally monopolized online searching, and while not agreeing with every DOJ charge against the search giant, issued the following statement on the matter, “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.”
In a 286-page ruling Mehta specifically calls out Google’s illegal moves to protect its ‘general search services’ and ‘general search text advertising’ platforms as cause for his ruling today.
Beyond the shockwaves of the initial ruling, it’s unclear at this moment what, if anything will be done regarding Google’s guilty charge. Mehta’s ruling covers Google’s initial liability rather than an issuance of remedies that typically follow illegal actions to safeguard monopolies. As for future punitive assessments, Google could be looking at fines, mandates to change or eliminate specific business contracts or practices that uphold the illegal parts of the monopoly or even a full divestment and break up of businesses and organizations.
Mehta and the DOJ could set their sights on the very lucrative $26B Google pays in revenue share to Apple to ensure its dominance in mobile search which could have an direct impact on the Cupertino-based smartphone makers quarterly earnings report, as well as the other organizations the company pays out to such as Mozilla and Samsung.
Microsoft’s name and parallel business were invoked several times in Mehta’s ruling as an outline for how the judge determined illegal activities as well as a reflection of the lack of realistic search competition Google maintains in the market. Compared to Bing’s stagnate six percent market share, Google has seen continual growth thanks in part to exclusive deals and contracts that lock US and international search competition out of the market.
Mehta points to a particularly damming admission from Apple senior vice president Eddy Cue who explained that there is “no price that Microsoft could ever offer to preload Bing.” Cue’s admission may have solidified the perception of exclusivity Google and Apple sought to strongarm the search experience on mobile.
Apple isn’t the only bigwig tech firm beholden to Google’s financial influence as Mehta also points out that, “time and again, Google’s partners have concluded that it is financially infeasible to switch default GSEs or seek greater flexibility in search offerings because it would mean sacrificing the hundreds of millions, if not billions, of dollars that Google pays them as revenue share. These are Fortune 500 companies, and they have nowhere else to turn other than Google.”
Further cementing Google’s guilty verdict is Mehta’s assessment of the company’s practices when it comes to manipulating the pricing structure of its text-based search advertising platform. Despite Google’s argument of dynamic pricing based on quality, Mehta points to the company’s own struggles with defining user quality, but instead opting to simply increase auction bids for advertisers as play to continue ‘long-term revenues.’
Mehta’s ruling today puts into motion the final phases of case that originated in 2020, with other large tech firms such as Amazon, Apple, and Meta awaiting similar rulings on their efforts to monopolize their respective markets.
