U.S. District Judge Rules Google is a Monopolist
Plus, Primary results, TN Rep. under investigation, update on the Marion County Record police raid investigation, and the Heritage Foundation president's book delay
U.S. District Judge Rules Google is a Monopolist
On Monday, a federal judge ruled that Google violated US antitrust law by maintaining a monopoly in the search and advertising markets.
After a 10-week bench trial that concluded in November, U.S. District Judge Amit Mehta issued a 277-page order, that determined the tech giant amassed 90% of the internet search market via its partnerships with electronics device makers and mobile carriers, including Apple, Samsung, and Verizon, to designate Google as their default search provider. The judge also found that Google illegally monopolized the search ads market, which is a form of pay-per-click (PPC) advertising that displays ads alongside search results.
Mehta wrote in his ruling, “After having carefully considered and weighed the witness testimony and evidence, the court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly. It has violated Section 2 of the Sherman Act.”
The ruling is the first major antitrust decision against a large tech company since a judge declared Microsoft a monopoly in 1998 and ordered the company to be split into two entities. Judge Mehta cited the US v. Microsoft case, noting that it was relevant to the case against Google.
Google argued that the case is not like Microsoft’s because the company maintained consistent business practices before and after it became a market leader. But Mehta rejected this argument, writing that it’s irrelevant because the same conduct can be exclusionary by both large and small companies.
Google also argued that its contracts with partners like Apple and Verizon were not exclusionary and therefore are not subject to liability under the Sherman Act. Mehta was not persuaded, writing, “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.”
And the case isn’t over yet. This ruling only determined Google’s liability. The next phase of the case will focus on remedies, which could result in a court mandate prohibiting certain business practices or a breakup of Google’s search division.
The silver lining for Google is that Judge Mehta didn’t completely rule against the company. The judge did not agree with the Government’s allegation that Google illegally controls all search advertising.
He rejected the claim that Google has monopoly power in one specific part of the ads market, but agreed with the DOJ that Google has a monopoly in “general search services” and “general search text advertising.” He reasoned that companies like Amazon compete by selling ads on search results for their websites. He also ruled against the arguments that Google improperly withheld certain ad technology from Microsoft.
Still, Mehta described Google’s monopoly in the search market as “remarkably durable,” noting that the company increased its dominant market share from 80% in 2009 to 90% by 2020. Meanwhile, Microsoft’s Bing has less than 6 percent market share. He wrote, “If there is genuine competition in the market for general search, it has not manifested in familiar ways, such as fluid market shares, lost business, or new entrants.” He added, “The market reality is that Google is the only real choice as the default GSE [general search engine].”
He also emphasized that Google’s monopoly over the search market is so great that even megacorporations have no real alternative to Google. He acknowledged, “Time and again, Google’s partners have concluded that it is financially infeasible to switch default GSEs or seek greater flexibility in search offerings because it would mean sacrificing the hundreds of millions, if not billions, of dollars that Google pays them as revenue share. These are Fortune 500 companies, and they have nowhere else to turn other than Google.”
One of the most explosive revelations made during the trial was that Google paid Apple $20B in 2022 for the default search engine partnership. An expert witness for Google acknowledged that the company gives Apple a 36 percent cut of search ad revenue from Safari.
In closing arguments, Judge Mehta acknowledged how impossible it was for other market players to compete. He voiced his skepticism over how much money it requires to incentivize market leaders to switch providers, asking, “If that’s what it takes for somebody to dislodge Google as the default search engine, wouldn’t the folks that wrote the Sherman Act be concerned about it?”
Mehta also found that Google’s exclusive agreements enabled it to raise prices on search text ads “without any meaningful competitive constraint.” Mehta also called Google’s argument about quality-adjusted pricing “weak.” He explained that Google admitted how difficult it is to determine “the value of an ad to its buyer,” adding, “This 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.”
There was a lot of drama throughout the trial, including allegations that Google destroyed evidence relevant to the case. Despite the blatant obstruction of justice, Judge Mehta declined to impose sanctions on Google for failing to preserve chat messages, claiming that it “do[es] not move the needle on the court’s assessment of Google’s liability.” He did warn Google that the company “avoided sanctions in this case. It may not be so lucky in the next one.”
Google has pledged to appeal the ruling but will need permission by the court to do so. The next phase of the case will begin in the fall. Judge Mehta ordered both parties to meet and provide a joint proposal for scheduling proceedings by September 4.
The tech giant also faces a separate antitrust trial over its alleged monopoly over the digital advertising market. That case is scheduled to begin on September 9th in the Eastern District of Virginia.
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