United States federal judge on Monday ruled that Google, a subsidiary of Alphabet, has engaged in monopolistic behavior in online search and advertising.
The landmark ruling is a significant win for U.S. antitrust authorities and marks the first victory in their efforts to challenge the market dominance of Big Tech companies.
The Justice Department, which filed the lawsuit, has successfully challenged Google’s control of about 90% of the online search market and 95% of smartphones.
“The court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly,” U.S. District Judge Amit Mehta wrote.
His ruling against Google paves the way for a second trial to determine potential fixes, such as breaking up the company or requiring the company to stop paying smartphone makers billions of dollars annually to set Google as the default search engine on new phones.
Ultimately, Google will have a chance to appeal the court’s rulings to the U.S. District Court of Appeal for the D.C. Circuit.
Following the ruling, shares of Google parent Alphabet (GOOGL.O), opens new tab fell 4.3% on Monday as part of a broad tech share decline.
Judge Mehta noted that Google had paid $26.3 billion in 2021 alone to ensure that its search engine is the default on smartphones and browsers and to keep its dominant market share.
“The default is extremely valuable real estate… Even if a new entrant were positioned from a quality standpoint to bid for the default when an agreement expires, such a firm could compete only if it were prepared to pay partners upwards of billions of dollars in revenue share and make them whole for any revenue shortfalls resulting from the change,” Mehta wrote.
He noted “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 ruling is the first major decision in a series of cases taking on alleged monopolies in Big Tech.
In the past four years, federal antitrust regulators have also sued Meta Platforms (META.O), opens new tab, Amazon.com (AMZN.O), opens new tab, and Apple Inc (AAPL.O), opens new tab, claiming the companies have illegally maintained monopolies. Another case against Google over its advertising technology is scheduled to go to trial in September.
When it was filed in 2020, the Google search case was the first time in a generation that the U.S. government accused a major corporation of an illegal monopoly. Microsoft settled with the Justice Department in 2004 over claims that it forced its Internet Explorer web browser on Windows users.
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