Google IS a Monopoly: What’s Next?

The verdict is in, and in one of the most significant legal battles in recent years, Google has officially been deemed to be a search monopoly.

This landmark ruling, brought by the U.S. Department of Justice (DoJ), alongside several states, judged that Google has engaged in anticompetitive practices to preserve its dominance, thereby stifling competition and innovation.

So how did we get here? And what’s next?

The case

The DoJ, along with 11 states, filed a lawsuit against Google in October 2020. The primary accusation is that Google has used its dominance in the search engine market to unfairly protect its position and suppress competitors. 

With Google controlling about 90% of the online search market and 95% on smartphones, the launch of the most significant antitrust case since the Microsoft trial in the late 1990s, was bound to come eventually, and the trial began in late 2023. 

On August 5th 2024, US District Judge Amit Mehta ruled that Google acted illegally to maintain a monopoly on search and related advertising. In his ruling, Mehta wrote: “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.”

"No company - no matter how large or influential - is above the law."

The in-depth ruling covers a lot of ground, the crux of it being that Google has massively stifled competition in search through default agreements with the likes of Apple, and subsequent artificial price raises and contractual strong-arming. ”Once monopoly has been achieved and assuming significant entry barriers, the monopolist can set a profit-maximizing price without excessive concern about the behavior of other firms in the market.” (discussing pricing power following price predation to drive out competitors). That is precisely how Google has approached its ad pricing… With less ad revenue, Google’s rivals are limited in their ability to reinvest in quality improvements (both as to search and general search text ads) to attract more users and more ad dollars.”

The ruling was heralded by US Attorney General Merrick Garland, the country's top prosecutor, as a "historic win for the American people". He continued: "No company - no matter how large or influential - is above the law," Mr Garland said in a statement on Monday. "The Justice Department will continue to vigorously enforce our antitrust laws.”

Industry impact

No punishments have been meted out by the DoJ. Yet. 'Remedies' to the situation will be discussed in further court sessions, however the ruling is expected to have significant repercussions:

• Break-up of Google? One of those remedies could be the order to break-up Google’s parent company Alphabet. It’s a long debated topic, but the ruling could hasten the sell-off.
• Market dynamics: By forcing Google to loosen its grip on search distribution channels, the decision could pave the way for increased competition and innovation in the search market.
• Regulatory landscape: Finally, more than just sabre-rattling. The case marks a pivotal moment in antitrust enforcement in the tech industry, potentially setting precedents for how other tech giants are regulated in the future. Google itself faces another huge case, more on that below.

Google’s view

Alphabet will, of course, appeal the result. In a company statement, Alphabet looked at the positives while biting back at the ruling: “This decision recognises that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available." 

However, the robust ruling from Mehta raises questions as to the legal arguments Google could make to overturn the judgment. As he put simply, “The fact that Google makes product changes without concern that its users might go elsewhere is something only a firm with monopoly power could do.”

What’s next?

In short, more legal wranglings. After this ruling, Google are back in court against the DoJ on September 9th, facing charges relating to the company’s ad stack. As per ExchangeWire’s Mat Broughton: “The DOJ’s next case alleges that Google, via a host of acquisitions and subsequent manipulative self-preferencing actions, forced as many transactions as possible through its own ad tech stack, to the detriment of players across the entire digital advertising supply chain.”

Much like the antirust search trial, the case will be tried by a single judge (US District Judge Leonie Brinkema) in a bench trial rather than by jury. Google managed to avoid a jury trial by paying USD$2.3m (£1.8m), the maximum damages payable to the government.

However, as Judge Mehta’s ruling has shown, the lack of jury is no guarantee of success for Google; the DoJ are showing their teeth these days, and this week’s ruling will ramp up the tension at the company heading towards the next case. For all details, check out our preview of 'the biggest event of the year'.

Could these rulings hasten the break-up of Google? Our expert panel at ATS London 2024 on Wednesday 11th September will discuss the issue in depth. Final tickets available now.