A federal district court ruled Monday that Google engaged in monopolistic behavior when it paid to supply the default internet search engine on other tech companies’ mobile devices, handing a win to the Justice Department.
Google paid $26.3 billion to other companies, mainly Apple and Samsung, during 2021, Bloomberg reports. Those payments essentially restricted competitors’ abilities to succeed, the DOJ argued.
Apple, which has earned billions from its search engine deal with Google, saw its stock drop 6.7% on the news. The default search engine revenue constitutes a large chunk of Apple’s Services business, which Apple has relied upon to make up for declining growth in the smartphone market.
The court has not yet decided on sanctions against Google, but the decision could be a massive blow to the ubiquity of Google Search. The bulk of Google’s revenue comes from its search ads, which brings in an estimated $160 billion to $175 billion per year. As such, Google stock dropped 4.6% when the court’s decision was announced.
“[T]he court concludes that Google has violated Section 2 of the Sherman Act by maintaining its monopoly in two product markets in the United States—general search services and general text advertising—through its exclusive distribution agreements,” federal district court judge Amit Mheta wrote in the verdict.
The Sherman Act outlaws “every contract, combination, or conspiracy in restraint of trade,” and any “monopolization, attempted monopolization, or conspiracy or combination to monopolize.”
For years the courts weighed antitrust cases on whether or not consumers were served (usually via lower prices) by the actions of the defendants. But the courts are more willing to view alleged antitrust actions through their effects on competition in the marketplace. In the Google case, the ruling suggests the company used its vast wealth to block smaller search engines from getting exposure to mobile search and search advertising markets.
The defeat is the latest in a string of regulatory setbacks for Google. The DOJ (along with a group of state AGs) has also sued Google for anticompetitive behavior in the ad tech space. The plaintiffs claim Google engaged in anticompetitive mergers with other ad tech companies, and bullied publishers and advertisers into using the company’s proprietary ad technology products. Google, meanwhile, is already planning out a protracted appeals process.
In Europe, the search giant has incurred three anti-competitiveness fines totaling $8.25 billion euros over the past decade. The company was sanctioned for its Shopping comparison service, its Android mobile OS, and its AdSense advertising service.
Minnesota Senator Amy Klobuchar spearheaded an effort in the Senate to retrofit antitrust laws to better deal with the unique kinds of antitrust seen in the digital age. “I have long been calling for action . . . the Justice Department took this on and won,” Klobuchar said in a statement. “This . . . shows the importance of enforcing our antitrust laws and why I am advocating for competition rules of the road for big tech companies. If they keep fighting any sensible rules of the road they will keep getting sued—and will keep losing.”
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