By now, you know that Google lost its landmark antitrust case, pending what is sure to be a dogfight of an appeal. In the balance, there are more antitrust cases in the tech sector involving Meta and Amazon, among others.
With that in mind it’s important to focus on the details in the judge’s decision, which concludes that Google’s business practices violated antitrust laws, specifically the Sherman Act, by maintaining and abusing its monopoly power in the search and search advertising markets.
According to several legal opinions in the immediate aftermath of the decision, consumers will not be affected any time soon. However, before the decision, several legal firms played “what if” with the anticipated decision, including this speculation from the Lanier Law Firm — which had filed one of the many suits against Google — in January.
“Casual web and smartphone users, for example, will see a wider variety of search engines available for use if Google loses in these antitrust lawsuits. Instead of being directed to Google by default, many more users will search the internet using privacy-focused search engines such as DuckDuckGo,” the firm posted.
“When booking travel, looking for hotels, or searching for activities on your next vacation, Google’s loss in these antitrust cases would place vertical search websites higher in the search results. Instead of seeing services such as Google Flights or Google Hotels above the fold, you’ll begin to see more companies like Tripadvisor, Yelp or Kayak.”
The case, formally known as United States of America et al. v. Google LLC, centered on Google’s extensive and complex business practices that, according to the plaintiffs, stifled competition and innovation. The ruling, detailed in a comprehensive 286-page opinion by U.S. District Judge Amit Mehta, outlines how Google’s practices created barriers to entry for competitors, thereby maintaining what he called its monopolistic status.
The decision marks a turning point in a nearly four-year legal battle between Google and U.S. antitrust enforcers. The Department of Justice, joined by 11 states, filed the original lawsuit in October 2020, alleging that Google used anticompetitive tactics to preserve its dominance in search and search advertising. A separate lawsuit filed by a coalition of state attorneys general was later consolidated with the federal case.
After a nine-week bench trial that concluded in November 2023, Mehta ruled that Google’s distribution agreements with mobile device manufacturers, wireless carriers and web browser developers foreclosed rivals from key distribution channels and allowed Google to unlawfully maintain its monopoly power.
The court defined two relevant antitrust markets in which Google was found to have monopoly power:
1. General search services: Mehta rejected Google’s argument for a broader “query responses” market that would have included specialized vertical providers like Amazon. Instead, he concluded that general search engines like Google and Bing constitute a distinct product market.
2. General search text advertising: The court found that text ads on general search engines are a separate market from other forms of online advertising, including product listing ads and display ads.
In both markets, the court determined that Google possesses monopoly power based on its dominant market share and the existence of significant barriers to entry. The ruling notes that Google has held over 80% share of general search queries since 2009, reaching nearly 90% by 2020. In general search text advertising, Google’s market share was found to be 88%.
At the core of the case were Google’s revenue-sharing agreements that make Google the preset default search engine on Apple’s Safari browser, Mozilla’s Firefox browser and on Android mobile devices. Mehta concluded these agreements are exclusive deals that hinder rivals from critical distribution channels.
The court found the agreements produce three main anticompetitive effects:
1. Market foreclosure: The agreements were found to foreclose about 50% of general search queries and 45% of the general search text ad market from competitors.
2. Depriving rivals of scale: By locking up default search placements, the agreements deny Google’s competitors access to search queries and user data needed to improve their products and ad platforms.
3. Reduced incentives to invest and innovate: The ruling states that Google’s exclusive grip on key distribution channels has diminished incentives for both Google and its rivals to invest in search and search advertising capabilities.
Mehta rejected Google’s arguments that the agreements produce offsetting procompetitive benefits. He found that Google failed to show that deals enhance user experience, incentivize competition, or produce other benefits that justify their exclusionary effects.
Notably, the court dismissed Google’s contention that it faces robust competition for queries from specialized vertical providers and social media platforms. Mehta determined these are largely complementary services rather than substitutes for general search.
A key finding in the ruling is that Google’s monopoly power has enabled it to charge supracompetitive prices for search text ads without facing meaningful competitive constraints. The court cited evidence that Google has used various “pricing knobs” to steadily increase text ad prices over time, often seeing about 50% of price hikes stick long-term.
Mehta found Google makes these pricing decisions without regard for competitors’ pricing. He stated this ability to profitably raise prices substantially above competitive levels is clear evidence of monopoly power.
While finding Google liable for monopolization, the ruling does not specify remedies at this stage. Mehta indicated the court will address relief in subsequent proceedings.
The Department of Justice had previously suggested potential remedies could include barring Google from entering into exclusionary agreements, unwinding existing deals, and potentially requiring divestitures. However, the exact scope of relief remains to be determined.
A few other notable elements of Mehta’s decision:
• The court rejected a proposed market for “general search advertising” that would have included both text ads and product listing ads. It found insufficient evidence to support this as a relevant antitrust market.
• Mehta dismissed claims related to Google’s search advertising tool SA360, finding Google had no duty to provide feature parity between its own ad platform and Microsoft’s.
• The ruling declined to impose sanctions on Google for failing to preserve certain employee chat messages, though it criticized the company’s practices around document retention.
• While focused on competitive effects rather than intent, the judge expressed concern over “the lengths to which Google goes to avoid creating a paper trail for regulators and litigants.”
Google is expected to appeal the decision, potentially setting up years of additional litigation. The company has maintained that its success stems from building a superior product rather than anticompetitive conduct.
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