WASHINGTON (AP) — A judge ruled Monday that Google’s ubiquitous search engine illegally abuses its dominant position to stifle competition and stifle innovation, a sweeping decision that could upend the Internet and embroil one of the world’s best-known companies.
The long-awaited ruling from U.S. District Judge Amit Mehta comes nearly a year after the U.S. Justice Department began a lawsuit against Google in the country’s largest anti-monopoly battle in a quarter century.
After reviewing reams of evidence, including testimony from top executives at Google, Microsoft and Apple during last year’s 10-week trial, Mehta delivered his potentially market-changing ruling three months after the two sides presented their closing arguments in early May.
“After careful consideration and weighing of the testimony and the evidence, the court finds that Google is a monopolist and has conducted itself as such to maintain its monopoly,” Mehta wrote in his 277-page ruling. He said Google’s dominance in the search market is evidence of its monopoly.
Google “has an 89.2% market share for general search, rising to 94.9% on mobile devices,” the ruling said.
It’s a major blow for Google and its parent company, Alphabet Inc., which has long maintained that its popularity stems from an overwhelming desire among consumers to use a search engine that’s so good at what it does that it’s become synonymous with looking things up online. According to a recent study by the investment firm BOND, Google’s search engine now handles an estimated 8.5 billion searches worldwide every day, nearly double the daily volume of 12 years ago.
Kent Walker, Google’s president of global affairs, said the company plans to appeal Mehta’s findings. “This decision recognizes that Google offers the best search engine, but concludes that we should not be able to make it available,” Walker said.
The decision tentatively confirms the case of antitrust regulators at the Justice Department, which filed the lawsuit nearly four years ago when Donald Trump was still president and has ramped up efforts to curb the power of Big Tech during President Joe Biden’s administration.
“This victory against Google is a historic victory for the American people,” said Attorney General Merrick Garland. “No company — no matter how large or influential — is above the law. The Department of Justice will continue to vigorously enforce our antitrust laws.”
The case cast Google as a technological bully that has methodically thwarted competition to protect a search engine that has become the centerpiece of a digital advertising machine that generated nearly $240 billion in revenue last year. Justice Department lawyers argued that Google’s monopoly allowed it to charge advertisers artificially high prices while giving it the luxury of not having to invest more time and money into improving the quality of its search engine — a lax policy that hurt consumers.
As expected, Mehta’s ruling focused on the billions of dollars Google spends each year to install its search engine as the default option on new mobile phones and tech gadgets. In 2021 alone, Google spent more than $26 billion to lock in those default agreements, Mehta said in his ruling.
Google laughed off the accusations, noting that consumers have historically switched search engines when they were disappointed with the results they received. Yahoo, for example, now a minor player on the Internet, was the most popular search engine in the 1990s before Google came along.
Mehta said the evidence at trial showed the importance of the defaults. He noted that Microsoft’s Bing search engine has 80% of the search market in the Microsoft Edge browser. The judge said that shows that other search engines can be successful if Google is not established as the predetermined default option.
Yet Mehta also called the quality of Google’s product a key component of its dominance, saying bluntly that “Google is widely recognized as the best (general search engine) available in the United States.”
The Consumer Choice Center, a lobbying group that has fought other attempts to rein in the companies, criticized Mehta’s decision as a step in the wrong direction. “The United States is drifting toward the anti-tech stance of the European Union, a part of the world that produces almost nothing and punishes successful American companies for their popularity,” said Yael Ossowski, the center’s deputy director.
Mehta’s finding that Google has an illegal monopoly opens a new legal stage to determine what changes or penalties should be imposed to undo the damage and restore a more competitive landscape.
The potential outcome could result in a broadly supported injunction requiring Google to dismantle some pillars of its Internet empire or stop it from spending billions annually to ensure that its search engine automatically answers queries on the iPhone and other Internet-connected devices. After the next phase, the judge could conclude that only modest changes are needed to level the playing field.
“Google’s loss in its antitrust lawsuit over search could be a huge deal, depending on the remedy,” said Evelyn Mitchell-Wolf, a senior analyst at eMarketer. “A forced divestment of the search business would cut Alphabet off from its biggest source of revenue. But even losing its ability to negotiate exclusive standards agreements could be damaging to Google. Its ubiquity is its greatest strength, especially as competition among AI-powered search alternatives heats up.”
In any case, she added, a lengthy appeals process will delay the immediate impact on both consumers and advertisers.
If a major change happens, it could be a coup for Microsoft. The company’s power was undermined in the late 1990s when the Justice Department filed an antitrust lawsuit against the software maker, accusing it of abusing the dominant position of its Windows operating system on PCs to shut out competitors.
That Microsoft case mirrored the case against Google in many ways, and the outcome now could be similar. Just as Microsoft’s fierce antitrust battle created distractions and obstacles that created more opportunities for Google after its founding in 1998, the decision against Google could be a boon for Microsoft, which already has a market value of more than $3 trillion. Alphabet was once worth more than Microsoft, but it now trails its rival with a market value of about $2 trillion.
In addition to boosting Microsoft’s Bing search engine, the outcome could hit Google at a crucial tipping point that is pivoting technology into the age of artificial intelligence. Both Microsoft and Google are among the early leaders in AI in a battle that could now be influenced by Mehta’s market-disrupting decision.
Microsoft CEO Satya Nadella was one of the Justice Department’s star witnesses during testimony in which he expressed frustration with deals Google made with companies like Apple that made it nearly impossible for its Bing search engine to make progress even as Microsoft has poured more than $100 billion into improvements since 2009.
“You wake up in the morning, you brush your teeth, and you Google it,” Nadella said at one point in his testimony. “Everyone talks about the open web, but there really is the Google web.”
Nadella also feared that stronger anti-monopoly measures would be needed to prevent the situation from deteriorating as AI plays an increasingly large role in search.
“Despite my excitement that there is a new angle for AI, I am deeply concerned that the vicious cycle I find myself caught in could become even more vicious,” Nadella said during testimony.
If Mehta decides to limit or ban Google’s basic search deals, it could also hurt Apple’s profits. While parts of his decision were redacted to protect confidential business information, Mehta noted that Google was estimated to pay Apple $20 billion in 2022, double the amount from 2020. The judge also noted that Apple has periodically considered building its own search technology but backed off after a 2018 analysis estimated the company would lose more than $12 billion in revenue in the first five years after a split with Google.
Google’s payments have helped Apple’s steadily growing services division, which generated $85 billion in revenue in the company’s last fiscal year. Apple did not immediately respond to a request for comment.
The Justice Department’s antitrust division has recently taken on some of the world’s largest companies. In March, it sued Apple, and in May it announced a sweeping lawsuit against Ticketmaster and its owner, Live Nation Entertainment. Antitrust enforcers have also launched investigations into the roles played by Microsoft, Nvidia and OpenAI in the boom in artificial intelligence.
The Biden administration has won a number of major legal battles, including blocking mergers of some of the world’s largest publishers, as well as JetBlue Airways and Spirit Airlines. It has also suffered some notable setbacks, including in the sugar and health care industries.
Google is facing several other legal threats, both in the U.S. and abroad. In September, a federal trial is set to begin in Virginia over Justice Department allegations that Google’s advertising technology constitutes an illegal monopoly.
——
Associated Press journalists Alanna Durkin Richer and Barbara Ortutay contributed to this report.