On Monday, August 5th, a federal judge in the United States ruled that Google, a subsidiary of Alphabet, monopolized the online search engine market through illegal practices. This marks the first victory for US antitrust authorities in a lawsuit.
The Department of Justice accused Google of reaching agreements with companies like Apple and Samsung to make its search engine the default option on web browsers and smartphones, illegally aiding in maintaining its monopolistic position in the market. Google controls about 90% of the global online search market and 95% of the smartphone market.
US District Judge Amit Mehta wrote in a 276-page ruling: “The court concludes that Google is a monopolist, which has maintained its monopoly position as a monopolist.”
According to the ruling, in just 2021, Google paid $26.3 billion to companies to ensure its search engine became the default search engine on web browsers and smartphones, maintaining its dominant market share.
Mehta agreed with the prosecutors’ core argument that Google’s substantial payments to become the default search engine suppressed competition, also allowing Google to maintain a dominant position in sponsored text ads that appear with search results.
During the court proceedings, it was reported that the search engine brought Google over $160 billion in advertising revenue, accounting for a significant portion of Alphabet’s annual revenue.
The judge’s ruling on Alphabet’s primary source of income sets the stage for a second trial – to determine potential remedies, such as requiring Google to stop paying billions of dollars annually to smartphone manufacturers to set Google as the default search engine on new phones.
The judge stated, “Even if new entrants could bid competitively at the end of (Google’s) agreements from a quality perspective, such companies would have to be prepared to contribute high billions to their partners and compensate partners for any shortfall in revenue resulting from the change in order to be able to compete.”
He pointed out, “Google certainly recognizes that losing the default search engine status would greatly impact its profits. For example, Google expects to lose significant query volume and billions of dollars in revenue if it loses the default search engine status on Safari.”
Since 2002, Google has been the default search engine on Apple devices with the Safari browser. When Apple users purchase new devices, all searches conducted through Safari use the Google search engine without any changes made.
According to previous media reports, there was a secret agreement between Google and Apple. It was reported that Apple first agreed in 2002 to use Google for free in the Safari browser. However, the two companies later decided to share search advertising revenue.
Monday’s ruling is the first major ruling in a series of cases against large tech companies accused of monopolistic behavior.
Over the past four years, federal antitrust regulators have also sued Meta Platforms, Amazon, and Apple, alleging that these companies illegally maintained monopolies. Another case regarding Google’s advertising technology is scheduled for trial in September.
In the United States, having a large and dominant corporation is not illegal, as long as it is achieved through optimizing products and enhancing management to gain a dominant position. However, if a company adopts predatory tactics to gain an advantage by excluding, weakening, and damaging the interests of competitors, it may violate antitrust laws. If found guilty, companies face fines, and may even be forced to restructure or be dissolved.