Google is in deep trouble after a federal judge ruled that the company illegally abused its monopoly over the search industry. The ruling follows a 10-week trial in 2023 that arose from a lawsuit filed in 2020 by the Justice Department and several states.
“Google is a monopolist and has acted as such to maintain its monopoly,” said Judge Amit Mehta of the U.S. District Court for the District of Columbia. wrote in the ruling. “You have violated Section 2 of the Sherman Act.”
Mehta has not imposed any corrective measures on Google so far. The judge could order Google to change the way it operates or even sell parts of its business.
The lawsuit alleged that Google acted unlawfully to maintain its dominant position in search through a range of actions, including paying companies like Apple, Samsung and Mozilla billions of dollars a year to be the default search engine on their phones and web browsers. The Justice Department argued that Google facilitates nearly 90 percent of web searches and that by paying to be the default option, it prevented its rivals from reaching the kind of scale needed to compete. As such, Google is seen to have benefited both in terms of revenue and data collection.
“These search access points are preconfigured with a 'default' search engine,” the ruling says. “The default is extremely valuable real estate. Because many users simply search with the default engine, Google receives billions of queries every day through those access points. Google obtains extraordinary volumes of user data from those searches. It then uses that information to improve the quality of searches.”
According to Mehta, Google has acknowledged that losing its position as the default search engine on several platforms would hurt its bottom line. “For example, Google has estimated that losing Safari as the default search engine would result in a significant drop in queries and billions of dollars in lost revenue,” the ruling states.
Google x.com/Google_Comms/status/1820558371285508123″ rel=”nofollow noopener” target=”_blank” data-ylk=”slk:released the following statement;elm:context_link;elmt:doNotAffiliate;cpos:7;pos:1;itc:0;sec:content-canvas”>published the following statement From Kent Walker, President of Global Affairs, on x regarding the judge's decision:
“This decision acknowledges that Google offers the best search engine, but concludes that we should not be allowed to make it readily available. We appreciate the Court's conclusion that Google is '“Google is the highest quality search engine in the industry, earning Google the trust of hundreds of millions of daily users,” that Google “has long been the best search engine, particularly on mobile devices,” that Google “has continued to innovate in search,” and that “Apple and Mozilla occasionally evaluate Google’s search quality relative to its rivals and find Google’s search quality to be superior.” Given this, and given that people are increasingly seeking out more information in more and more ways, we plan to appeal. As this process continues, we will remain focused on building products that people find useful and easy to use.”
During the trial, Google argued that its significant market share was due to having a better product that consumers appreciated. It is likely to appeal Mehta's decision.
The Justice Department also alleged that Google had a monopoly on ads appearing in search results and that Google artificially inflated ad prices above what they would cost in a free market.
In his ruling, Mehta acknowledged that “Google has exercised its monopolistic power by charging supracompetitive prices for general search text ads. That conduct has enabled it to obtain monopolistic profits.” However, the judge added that Google does not have monopolistic power in the broader search advertising market.
Meanwhile, Mehta declined to impose sanctions on Google for failing to preserve employee chat messages that might have been relevant to the case. The ruling notes that since 2008, Google has deleted chat messages between its employees by default after 24 hours.
“The court's decision not to sanction Google should not be interpreted as a condoning of Google's failure to preserve chat evidence,” Mehta wrote. “Any company that delegates to its employees the responsibility of identifying and preserving relevant evidence does so at its own peril. Google avoided sanctions in this case. It may not be so lucky in the next.”
Google and the Justice Department will return to federal court in September over an ad tech case.
Update, August 5, 2024, 4:40 p.m. ET: This story has been updated to include Google's statement on the ruling.
