Last September, I noted that the Justice Department had filed suit against search giant Google for anti-competitive practices and expressed my reservations with the government’s theory of the case. Yesterday, Google lost in court.
David McCabe, NYT (“‘Google Is a Monopolist,’ Judge Rules in Landmark Antitrust Case“):
Google acted illegally to maintain a monopoly in online search, a federal judge ruled on Monday, a landmark decision that strikes at the power of tech giants in the modern internet era and that may fundamentally alter the way they do business.
Judge Amit P. Mehta of U.S. District Court for the District of Columbia said in a 277-page ruling that Google had abused a monopoly over the search business. The Justice Department and states had sued Google, accusing it of illegally cementing its dominance, in part, by paying other companies, like Apple and Samsung, billions of dollars a year to have Google automatically handle search queries on their smartphones and web browsers.
“Google is a monopolist, and it has acted as one to maintain its monopoly,” Judge Mehta said in his ruling.
The ruling is a harsh verdict on the rise of giant technology companies that have used their roots in the internet to influence the way we shop, consume information and search online — and indicates a potential limit of Big Tech’s power. It is likely to influence other government antitrust lawsuits against Google, Apple, Amazon and Meta, the owner of Facebook, Instagram and WhatsApp. The last significant antitrust ruling against a tech company targeted Microsoft more than two decades ago.
“This is the most important antitrust case of the century, and it’s the first of a big slate of cases to come down against Big Tech,” said Rebecca Haw Allensworth, a professor at Vanderbilt University’s law school who studies antitrust. “It’s a huge turning point.”
While most anti-trust action focuses on harm to consumers, the thrust of this case was harm to competitors and those paying to advertise on the site:
The government argued that by paying billions of dollars to be the automatic search engine on consumer devices, Google had denied its competitors the opportunity to build the scale required to compete with its search engine. Instead, Google collected more data about consumers that it used to make its search engine better and more dominant.
Judge Mehta sided with the government, saying Google had a monopoly over general online search services. The company’s agreements to be the automatic search engine on devices and web browsers hurt competition, making it harder for rivals to challenge Google’s dominance.
For more than a decade, those agreements “have given Google access to scale that its rivals cannot match,” Judge Mehta wrote.
The government also accused Google of protecting a monopoly over the ads that run inside search results. Government lawyers said Google had raised the price of ads beyond the rates that should exist in a free market, which they argued was a sign of the company’s power. Search ads provide billions of dollars in annual revenue for Google.
Judge Mehta ruled that Google’s monopoly allowed it to inflate the prices for some search ads. That, in turn, gave the company more money to pay for its search engine to get prime placement, he said.
“Unconstrained price increases have fueled Google’s dramatic revenue growth and allowed it to maintain high and remarkably stable operating profits,” he said in the ruling.
While there are plenty of other search engines out there, Google is clearly the dominant actors, with estimates ranging from 60.4 percent to 90.3 percent of the US market. Google argues, correctly, that it is the dominant search engine because it produces better results for consumers. The government argues, also correctly, that Google’s dominance allows it to collect more data from said consumers and thus charge more to advertisers. The judge* agreed.
We’re waiting now for the next shoe to drop. What penalties will Mehta impose? Will he force Alphabet to divest some of its properties? Levy massive fines? Something else?
One imagines that Google’s competitors are happy. For now. But they’re all massive enterprises. Assuming continued Democratic control of the DOJ after November’s election, will it be going after them next?
And to what end for consumers? It may well be that search, certain software, and social media networks are natural monopolies. Yes, we’ve seen the enshittification of Google search as it gets bogged down with more ads. But will we get better results if Bing or DuckDuckGo get more market share? Interestingly, that doesn’t seem to be of interest to this cohort of trust-busters.
*While Judge Mehta’s name is a familiar one, I do find it mildly amusing that his name reads like one of Google’s chief competitors.
