A Washington judge ruled on Aug. 5 that Google (owned by Alphabet Inc.) illegally monopolized the search market through exclusive deals. District Judge Amit Mehta said Alphabet’s $26.3 billion payment in 2021 to make Google’s search engine the default option on smartphones and web browsers effectively prevented competitors from succeeding in the market. The U.S. government won its first major antitrust case against the tech giant in more than two decades.
“Google’s distribution agreements capture a significant portion of the overall search market and limit the ability of competitors to compete,” Mehta wrote in his 286-page ruling. Bloomberg).
The judge said that by monopolizing search on phones and browsers, Google has been able to continually raise its online advertising prices without any consequences.
“The evidence at trial strongly suggests that Google’s monopoly power, backed by exclusive distribution agreements, allows Google to raise text ad prices without any significant restrictions on competition,” Mehta said.
What is Google accused of?
Antitrust regulators say Google illegally holds a monopoly on online search and related advertising. The government says Google has paid Apple, Samsung and other companies billions of dollars for decades to gain priority on smartphones and web browsers. That default position has allowed Google to build the world’s most-used search engine and generate more than $300 billion in annual revenue, largely from search advertising.
“From a quality perspective, even if a new entrant were willing to bid to have a search engine pre-installed, that firm could compete only if it was willing to pay its partners billions of dollars in revenue shares and compensate them for any lost revenue. The bottom line is “search engine changes,” Mehta wrote in the decision.
The judge ruled that Google did not have a monopoly in the overall search advertising market, noting that rivals such as Amazon, Walmart and other retailers had begun offering search-related ads on their own sites.
But the judge said Google has a monopoly on search text ads that appear at the top of search results pages to attract users to sites.
Google controls approximately 90% of the online search market and 95% on smartphones.
Alphabet shares fell nearly 4.5% to $159.25 in New York after the decision was announced. Google ads account for 77% of Alphabet’s total sales in 2023. Apple, which could lose billions of dollars by paying Google to make its search engine the default browser on iPhones, fell 4.8% to $209.27.
Historical decision
“This victory against Google is a historic victory for the American people,” said Attorney General Merrick Garland. “No company, no matter how big or powerful, is above the law.”
Google said it plans to appeal the decision.
“This decision recognizes that Google offers the best search engine, but concludes that we should not be allowed to make it easily accessible,” Google said in a statement.
“We will continue to focus on creating products that people find useful and easy to use.”
The Justice Department has not yet said what changes it will seek, but it has acknowledged that European regulators’ demands that Google offer users a choice of search engine have led few to make the switch. The Justice Department could also require Alphabet’s search business to be separated from other products, such as Android or Chrome. That would be the largest forced breakup of a U.S. company since AT&T’s 1984 breakup.
What are you thinking?
Source: Gazeta
Jackson Ruhl is a tech and sci-fi expert, who writes for “Social Bites”. He brings his readers the latest news and developments from the world of technology and science fiction.