A resounding antitrust victory in federal court Monday by the Justice Department and several dozen state attorneys general is likely to have far-reaching impact on Google’s online search and advertising business, creating a ripple among its business partners.
Federal Judge Amit Mehta ruled Google illegally locked up about 90% of the internet search market by doling out billions of dollars through partnerships with Apple Inc., Samsung Electronics Co., Verizon Communications Inc. and others. Apple alone received $20 billion in 2022 to make Google the default search engine on the Safari browser; it was revealed during the 10-week bench trial that concluded in November.
“Google is a monopolist, and it has acted as one to maintain its monopoly,” Mehta wrote in a 286-page decision.
“This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available,” Kent Walker, president of Google global affairs, said in a statement. He said the company plans to appeal.
Mehta’s ruling, which focused on whether Google broke the law, will be followed by another trial to determine a remedy. Jonathan Kanter, who leads antitrust efforts at DoJ, has suggested structural remedies that include a break up of some kind.
Google might be forced by the court to enact a “choice screen” that informs users about other available search engines, Vanderbilt University law professor Rebecca Allensworth told CNN.
The decision effectively puts the kibosh on these favorable revenue-sharing agreements, worth billions of dollars annually, for Google business partners like Samsung, Verizon and Mozilla. Google paid out more than $26 billion in 2021; much of it went to Apple. The arrangements made Google the default search engine on mobile phones and web browsers, establishing the Alphabet Inc. division as the dominant vendor for $132 billion search-ads market.
Those deals, Mehta wrote, had “anticompetitive effects in the general search services market,” because half of all users of search engines in the U.S. had Google as a default service on Apple and Android devices. That, in turn, impeded rivals like Microsoft Corp. and DuckDuckGo from getting big enough to compete with Google, and it discouraged them from investing and innovating in search, Mehta said.
Alden Do Rosario, founder of Chitika, a startup that competed with Google AdSense, recalled how Google made changes in its search product that disproportionately affected competitors — but not its own ad products. In 2012, he said Google had a release in search that would “block the search query so that it would not be visible to competitor products like ours,” he said in an email. “However, conveniently, the change did not affect [then] Google AdWords advertisers.”
Google has said losing its perch as the search engine leader would significantly undercut its queries, resulting in billions of dollars in lost revenue.
“The defaults are more than just ‘incremental promotion,'” Mehta wrote. “They supply Google with unequalled query volume that is effectively unavailable to rivals.”
Search advertising is “unique because its cost-per-click pricing model balances the interests of users, publishers, and advertisers,” Adam Epstein, co-CEO of search advertising company adMarketplace, said in an email message. “The Court’s decision gives hope to advertisers that an effective remedy will restore balance by opening up competition in this ‘must buy’ media market.”
“If the ruling results in a decomposition of search engine upon devices and browsers, that should result in increased usage of Yahoo, Bing, DuckDuckGo, and many more,” Ted Sfikas, field chief technology officer of digital analytics company Amplitude, said in an email. The upcoming release of the highly-anticipated OpenAI search engine could “further recalibrate the market,” he said, resulting in a “more agnostic data architecture in place globally to work with them all.”
Should Google be prevented from offering its search services under current deals, whom would it choose as a viable option? “It’s hard to see a short term answer,” longtime tech analyst Jack Gold said in an email message. “Microsoft? not good enough. Yahoo? No way. The new ChatGPT option? Not proven yet. Apple doing it’s own thing? Been there, done that.”
“If the partners are forced to turn off Google search, then there really are very limited equivalent options and users will not be happy,” Gold said. “What would be more advantageous in my opinion would be some form of monetary penalty or some other form of funding for equalization of markets. But just a shut down would be a disaster in my opinion.”
The decision and its ramifications has already set off a flurry of phone calls, email and texts to antitrust experts like Abiel Garcia.
“I suspect it will be the big tech people” who want to find out how they are affected, Garcia said in a text message. “And any large corporation that controls a significant portion of their market.”
Ultimately, the DoJ’s big win is expected to embolden it and the Federal Trade Commission to take even more legal actions vs. Big Tech on antitrust grounds. Both are already scrutinizing Apple, Amazon.com Inc., Facebook parent Meta Platforms Inc., Microsoft, and Nvidia Corp.
