KUALA LUMPUR – The United States has ruled that Google has been illegally exploiting its dominance to suppress competition and stifle innovation, a groundbreaking decision that could disrupt the internet and hinder one of the world’s most prominent companies.
This highly anticipated ruling by US district judge Amit Mehta comes nearly a year after the start of a trial between the US Justice Department and Google, marking the country’s most significant antitrust case in 25 years, according to AFP.
After reviewing reams of evidence that included testimony from top executives at Google, Microsoft, and Apple during last year’s 10-week trial, Mehta issued his potentially market-shifting decision three months after the two sides presented their closing arguments in early May.
Following an extensive review of evidence, including testimonies from high-ranking officials at Google, Microsoft, and Apple during a 10-week trial last year, Mehta delivered a pivotal ruling three months after the closing arguments were made in early May.
Based on the detailed witness testimony, the court concluded that Google operates as a monopolist and has engaged in practices to sustain its monopoly, Mehta said in his 277-page decision.
He noted that Google’s supremacy in the search market serves as proof of its monopolistic position.
Google “enjoys an 89.2% share of the market for general search services, which increases to 94.9% on mobile devices,” the ruling said.
The report said this represents a significant setback for Google and its parent company Alphabet Inc which had consistently claimed that their popularity was due to consumers’ strong preference for a search engine so effective that it has become synonymous with online searches.
Google’s search engine now processes an estimated 8.5 billion queries daily worldwide, nearly doubling its daily volume from 12 years ago, according to a recent study by the investment firm BOND.
Google’s president of global affairs Kent Walker said that the company plans to appeal Mehta’s findings
“This decision recognises that Google offers the best search engine but concludes that we shouldn’t be allowed to make it easily available,” Walker said.
For now, the decision vindicates antitrust regulators at the Justice Department, which filed its lawsuit nearly four years ago while Donald Trump was still president.
Since then, the efforts to rein in Big Tech’s power have escalated during President Joe Biden’s administration.
“This victory against Google is a historic win for the American people.
“No company – no matter how large or influential – is above the law. The Justice Department will continue to vigorously enforce our antitrust laws,” said Attorney-General Merrick Garland.
The case depicted Google as a technological bully that has systematically thwarted competition to protect a search engine that has become the centerpiece of a digital advertising machine generating nearly US$240 billion in revenue last year.
Justice Department lawyers contended that Google’s monopoly allowed it to charge advertisers inflated prices without needing to invest additional resources into enhancing its search engine.
This complacency, they argued, ultimately harmed consumers.
Judge Mehta’s ruling highlighted the significant annual expenditures by Google to set its search engine as the default on new cellphones and tech devices.
In 2021, Google spent over US$26 billion on these default agreements, according to Mehta.
Google dismissed these claims, arguing that consumers historically switch search engines when dissatisfied with their current one. For example, Yahoo was the leading search engine in the 1990s before Google emerged.
Mehta pointed out evidence from the trial underscoring the importance of default settings. He cited Microsoft’s Bing, which holds an 80% market share on the Microsoft Edge browser, as proof that other search engines can thrive when not preempted by Google’s default status.
Nonetheless, Mehta acknowledged that Google’s product quality is a significant factor in its market dominance, stating unequivocally that: “Google is widely recognised as the best (general search engine) available in the United States.”
The appeals process could extend up to five years, according to George Hay, a Cornell University law professor and former chief economist for the Justice Department’s antitrust division in the 1970s.
If Mehta decides to limit or ban Google’s default search deals, it could squeeze Apple’s profits, too.
Although parts of his decision were redacted to protect confidential business information, Mehta noted that Google paid Apple an estimated US$20 billion in 2022, doubling from 2020.
The judge also noted Apple has periodically considered building its own search technology but backed off that after a 2018 analysis estimated the company would lose more than US$12 billion in revenue during the first five years after a break-up with Google.
Google’s payments have bolstered Apple’s growing services division, which earned US$85 billion in revenue in the last fiscal year. Apple did not immediately respond to a request for comment.
The Justice Department’s antitrust division has recently targeted some of the world’s largest companies.
In March, it sued Apple, and in May, it announced a comprehensive lawsuit against Ticketmaster and its owner, Live Nation Entertainment.
Antitrust enforcers are also investigating the roles of Microsoft, Nvidia, and OpenAI in the artificial intelligence boom.
The Biden administration has achieved significant victories, such as blocking mergers between major publishers and between JetBlue Airways and Spirit Airlines. However, it has faced notable setbacks in the sugar and healthcare industries.
Google is confronting several other legal challenges both in the U.S. and internationally.
In September, a federal trial in Virginia will address the Justice Department’s allegations that Google’s advertising technology constitutes an illegal monopoly. – August 6, 2024