A federal judge has ruled that Google has maintained an unlawful monopoly in the search engine market by contravening US antitrust laws and investing heavily in contracts to become the default search provider for many devices in the United States.
A federal judge’s ruling that Google’s conduct in maintaining a “killer” feature was an antitrust violation marks the first significant win for U.S. authorities attempting to curb the influence of Big Tech, with potential far-reaching implications for Alphabet and its tech industry peers.
A federal judge’s ruling, handed down nearly four years after the US Justice Department initiated legal action, may now pave the way for potential changes or penalties to be imposed on Google from as early as September.
The prospect of fragmenting Alphabet to inject a sense of urgency into the market has gained traction, given Google’s dominant position in controlling over 90% of the search market.
The court concludes that Google is a monopolist, perpetuating its dominance through anti-competitive practices.
Google’s President of Global Affairs, Kent Walker, announced the company’s intention to challenge the ruling.
“This resolution recognizes Google as the preeminent search engine, yet simultaneously argues that making it universally accessible would not be permitted.”
U.S. legal professional and Attorney General Merrick Garland described the decision as a “historic victory for the American people.”
“No corporation, no matter how large or powerful, is exempt from adhering to the law,” he declared.
Shares in Alphabet fell around 4.5 percent on Monday, as concerns about regulatory scrutiny and intensifying competition weighed heavily on investor sentiment amid ongoing uncertainty over the company’s growth prospects.
Google paid billions to become the default search engine.
Judge Mehta’s judgment highlighted the significance of Google’s default distribution agreements with corporate partners, akin to those made with browser developers, mobile device manufacturers, and telecommunications companies, which he saw as a crucial factor contributing to Google’s search market supremacy.
“Google reportedly pays substantial sums to ensure preloaded default settings,” he said.
Frequently, the metric is determined by calculating a proportion of the revenue generated by Google from searches conducted through its default search algorithms relative to total advertising income. This is called ‘income share’.
As of 2021, these funds surpassed a staggering $26 billion in value. This staggering figure represents a massive fourfold increase over the cumulative costs of Google’s various search-related services.
Google secures default placement in key search ranking factors in exchange for a revenue share, but it also ensures that its partners refrain from preloading any other standard search engine on the device.
Since most Android devices sold in America are equipped with Google right out of the box.
According to Mehta, Google’s status as the default search engine proved “extraordinarily helpful”, mainly due to users’ tendency to leave it set by default on their devices.
“Day in and day out, Google processes billions of queries through these key entry points,” he noted.
While Google amasses vast amounts of consumer data through search queries. Utilizing this data enables a significant enhancement in search quality.
“Google holds your search history in high esteem, storing 18 months’ worth of your searches unless you explicitly modify your settings.”
According to Google’s claims, its dominance in the search market was largely attributed to the superiority of its product, with the company asserting that users would easily switch to alternative search engines such as Google and Yahoo if they chose not to remain with the default option.
Additionally, the company faced competition from industry giants like Microsoft’s Bing search engine as well as several prominent social media platforms.
Despite Microsoft’s efforts to promote its own Web Explorer and Edge as default browsers, Mehta noted that Google still maintained a stronghold on Windows computers in the US, with Bing serving as the default search engine for Microsoft devices.
While acknowledging Chrome’s impact, he emphasized that Google’s dominance wasn’t solely driven by the browser’s reputation, noting that the company already possessed an 80% search share on Windows when Chrome debuted, which has persisted to this day.
The judge’s gavel came down with a resounding crack, signaling the start of the highly anticipated trial. The courtroom fell silent as the jury took their seats and the plaintiffs’ lawyer began his opening statement?
“The undeniable success of default settings is evident in the widespread adoption of Bing by Edge users.” “Bing’s search share on Edge accounts for approximately 80%, while Google holds a mere 20% share,” he stated.
According to Mehta, Google was aware that abandoning its default settings would have a significant impact on its bottom line.
“As an example, Google has predicted that switching from Safari as the default browser would result in a significant decline in search queries and billions of dollars in lost revenue,” he said.
“What would likely occur if Google were to lose its default Android status?”
According to Mehta, even if a brand-new competitor with a high-quality search engine attempted to outbid to become the default, such an agency would only be able to compete if it was willing to pay partners upwards of billions of dollars in revenue share.
US regulators have recently filed lawsuits against several companies, including , , and .
