On inclination alone, it is most probable that you, as a reader, are using Google to access this article. Such is the prevalence of Google which as an entity plays a subtle yet pervasive role in millions of lives pushing users into vacuously using their search services. The question arises whether this role is by the choice of its users, due to the superiority of its product, or perhaps the consequence of a dominant position. As of 5 August 2024, Columbia's U.S. District Court ruled that search engine giant Google violated US antitrust law by maintaining a monopoly in the search and advertising markets. In the ensuing mayhem, the shares of the parent company Alphabet, plummeted by an alarming 4.6%, marking a shocking defeat for the tech giant, now labelled a monopoly. Google, meanwhile, maintains that its persecution as a monopoly is merely a consequence of being the "best search engine".
"Google is a monopolist, and has acted as one to maintain its monopoly." – Judge Amit P Mehta
Judge Amit Mehta, who has previously ruled on the Capitol riots case against former President Donald Trump, through his findings, delivered that Google was indeed in violation of Section 2 of the Sherman Act, 1980, through its distribution agreements that are exclusionary in nature and anti-competitive in conduct.
To prove monopolization, there need to exist two elements, (as defined in the case of US v. Grinnell Corp.) namely possession of power of monopoly in a particular market and maintaining a monopoly that is not acquired through the consequential development of a superior product or business acumen. In the present case, Google's market share was about 80% in 2009 which swung to a whopping 90% by 2020. The only other capable competitor in the market, Bing, holds about 6% of the market share, revealing the vast space occupied by Google in the market.
Judge Mehta sided with the U.S. Department of Justice (DOJ), who alluded these numbers to Google's exclusionary distribution agreements with key third parties, mainly in two relevant markets: "general search services" and "general search text advertising". These distribution agreements ensure that half of all GSE (General Search Engine) users in the US would be directed to receive Google as their preloaded default search engine on all Apple and Android devices, thereby causing anticompetitive harm.
The Court listed three main anticompetitive effects: (1) causing market foreclosure, (2) preventing rivals from achieving scale, and (3) diminishing the incentives of rivals to invest and innovate in general search. However, Judge noted that the evidence for diminishing incentives was weaker than the others.
Google's agreements with Mozilla, Apple, and Samsung among others outline a revenue share clause that would provide these entities with Billions of dollars in exchange for a position of default GSE in their respective browsers. According to Bloomberg, Professor Kevin Murphy, who was an expert witness for Google, let it slip during the trial that Google provides Apple with 36% of all search advertisement revenue that comes from Safari implying a figure of about $20 Billion for default position. Apple's Senior Vice President, Eddy Cue stated at the trial that the only way Apple could consider switching to Microsoft was if it were to guarantee minimum annual revenues of $4 billion for the first year followed by $1 billion increments over the next 4 years. Interestingly, even this consideration would fall short of the revenues Apple would receive under Google's default engine agreement. Judge Mehta wrote on the matter stating that "The prospect of losing tens of billions in guaranteed revenue from Google — which presently come at little to no cost to Apple — disincentivizes Apple from launching its own search engine when it otherwise has built the capacity to do so,". In other words, there is no foreseeable scenario where any rival or competitor could attempt to displace Google from its dominant position.
In the matter of search text advertising, Google attempted to faux pas that its quality-adjusted process has decreased, an argument which was characterized by Judge Mehta to be built on "weak" evidence. The Court took into consideration certain evidence which revealed that the pricing for these ads was largely through a model similar to a trial-and-error system attempting to quantify the worth of the ad's purchase price and its value to the buyer. Judge Mehta stated that "evidence does not reflect a principled practice of quality-adjusted pricing, but rather shows Google creating higher-priced auctions with the primary purpose of driving long-term revenues."
Despite the ruling, Judge Mehta has not imposed any sanctions on Google. The judgment itself is unclear on the reprimands it imposes on Google. Penalties and other sanctions may be announced post the next trial which is scheduled for the 9th of September 2024. Regardless, the DOJ has taken cognizance of the foundation that this landmark decision has laid and now seeks to dive board off this win for the oncoming legal battles against the monopolistic practices of other major industry players in the market including Amazon, Apple, and Meta. The ruling against Google will play a major role as a precedent to prove the monopolistic tendencies of big tech companies that have long dominated the market share. What could follow is perhaps an exciting age for new entrants into the search engine market or, if one is optimistic enough, a whole new era of tech companies.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.