A Washington D.C. judge last week found Google guilty of violating U.S. antitrust law and possessing an illegal monopoly over the search market.
Over the course of the almost year-long trial, covered extensively by Stewart Dunlop for PPC Hero, the Justice Department revealed the myriad underhand methods Google has employed to enable it to become and remain the world’s automatic search engine.
These included paying companies to make it the default search engine within their products. These included an agreement within Apple to install Google search as the status quo option within its Safari browser. In 2021 the value of all these agreements amounted to more than $26bn.
Google’s market share varies from country to country but is said to be 81.95% worldwide. In America this rises to about 90% of the overall online search market and 95% on smartphones.
U.S. District Judge Amit Mehta was damning in his ruling, (the entirety of which is worth a skim if you have time.)
“Google is a monopolist, and it has acted as one to maintain its monopoly,” he wrote.
“Sure, users can access Google’s rivals by switching the default search access point or by downloading a rival search app or browser. But the market reality is that users rarely do so.”
“The default is extremely valuable real estate. Because many users simply stick to searching with the default, Google receives billions of queries every day through those access points.”
“Google, of course, recognizes that losing defaults would dramatically impact its bottom line. For instance, Google has projected that losing the Safari default would result in a significant drop in queries and billions of dollars in lost revenues.”
“The distribution agreements have caused a third key anticompetitive effect: They have reduced the incentive to invest and innovate in search.”
“There is no genuine ‘competition for the contract.’ Google has no true competitor.”
In criticism of the company he added “the court is taken aback by the lengths to which Google goes to avoid creating a papertrail for regulators and litigants… It trained its employees, rather effectively, not to create “bad” evidence. Ultimately, it does not matter. Section 2 liability does not rise or fall on whether
there is “smoking gun” proof of anticompetitive intent.”
In summary, the verdict said:
Specifically, the court holds that (1) there are relevant product markets for general search services and general search text ads; (2) Google has monopoly power in those markets; (3) Google’s distribution agreements are exclusive and have anticompetitive effects; and (4) Google has not offered valid procompetitive justifications for those agreements. Importantly, the court also finds that Google has exercised its monopoly power by charging supracompetitive prices for general search text ads. That conduct has allowed Google to earn monopoly profits.
The court declined to advise on sanctions. However, the Justice Department is said to be considering requesting a breakup of the parent company.
This will likely to second trial to determine potential fixes.
Neil Chilson, former chief technologist for the FTC, described suggestions the government would order Google to split as “total wishcasting”.
“Nothing in Judge Mehta’s rather standard antitrust approach suggests a breakup is a plausible remedy,” he told the Guardian. “A breakup wouldn’t address the core conduct that the court found problematic: exclusive contracts for default placements.”
