Yesterday’s ruling by a federal U.S. judge that Google illegally held a monopoly in search and text promoting is a staggering defeat for certainly one of the world’s biggest tech firms.
“After having fastidiously considered and weighed the witness testimony and evidence, the court reaches the next conclusion: Google is a monopolist, and it has acted as one to keep up its monopoly,” US District Judge Amit Mehta wrote in his ruling. “It has violated Section 2 of the Sherman Act.”
While it is going to be several months before Judge Mehta hands down the penalties, this decision goes to the guts of Google’s business. Whatever the judge decides could upend all the pieces about search and search promoting. Google said it is going to appeal the ruling, so it is going to likely be years before we all know the end result.
If you’re wondering why the judge ruled as he did, here is the Department of Justice’s case against the tech giant in 11 slides it used for the closing argument.
Market share
The Federal Trade Commission defines a monopoly as “conduct by a single firm that unreasonably restrains competition by creating or maintaining monopoly power.”
Market share is the very first thing courts consider when determining if a monopoly exists. While having a 50% market share can mean there’s a monopoly, judges generally require a minimum of a 60% to 65% market share.
That 89.2% is the common of desktop and mobile search. While that could be very lopsided, it’s much more so while you have a look at the 2 individually.
How was that market share gained?
The next criterion for determining monopoly is how the corporate achieved/maintained its dominant position. There can be no problem if this got here by legitimate business practices — “a greater product, superior management or historic accident,” to cite the FTC. As someone around when Google launched in 1998, I can attest that it was a big improvement over other search engines like google. This is why, by 2002, the corporate had an 80% search market share.
But, is that the way it maintained that position?
The Justice Department said it was because Google paid other firms to make its search engine the default setting.
Or, as Google itself put it:
In 2022 the corporate paid Apple $20 billion to be the default on iPhones — the chief competitor of Android, Google’s cell phone operating system.
The DoJ said this not only preserved market share, it also prevented others from getting the info needed to create competitive search engines like google.
This data is so necessary to Google that it designed its Chrome browser to gather it even in the supposedly private Incognito setting.
The advantages
The DOJ said Google exploited its dominance to strong-arm other firms and set prices without having to fret about what competitors might do.
Search engine dominance made Google a major location for digital promoting. Our colleague Danny Goodwin takes a deep have a look at that in his article “How Google harms search advertisers in 20 slides.” Google’s own documents showed the corporate was fully aware of what it had done.
Only Judge Mehta knows what the penalties shall be. The most extreme possibility can be to force Google to sell its Chrome browser and/or Android mobile software businesses, stopping the corporate from directly integrating search into each. Also, necessary to notice, there’s one other federal antitrust suit pending against Google. This one focuses on the corporate’s adtech business and is scheduled to start out in September.
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