The US Department of Justice has accused Google of paying Apple and other companies over $10 billion annually to maintain its default search engine status. After a federal judge in the US declared Google a monopoly in the search field, it will determine what punishment Google will face, such as requiring it to be broken up or adding restrictions to its business expansion. Alphabet, Google's parent company, saw its stock price drop more than 5% at one point during trading.
$Alphabet-C (GOOG.US)$Lost in an antitrust case that determines the fate of its most important business search.
On Monday, August 5th, Eastern Time, a federal judge at the District Court for the District of Columbia in the United States announced a ruling that found Google's search business in violation of US antitrust laws. This means that the plaintiff, the US Department of Justice, won the case, and the way millions of Americans get information online may change dramatically. Google's dominant position in the search market for decades may be overturned.
During Monday's midday trading on the US stock market, after the ruling of the defeated case was announced, Alphabet, Google's parent company, widened its decline, falling by more than 5%, and then narrowing to within 5%, eventually closing down 4.6%, and has fallen for three consecutive trading days to the lowest closing level since April 25.
The case began during the Trump administration. In 2020, the US Department of Justice joined attorneys general from 52 states and jurisdictions to sue Google, accusing Google of paying billions of dollars to technology peers, smart phone manufacturers and wireless service providers such as Apple and Samsung, in exchange for setting Google Search as the default choice for phones and web browsers. If these partners choose to get a share of the revenue from Google Search, they cannot pre-install and promote competitive search engines.
US government prosecutors believed that this default search choice allowed Google to create the world's most popular search engine, driving Google's annual revenue of more than $300 billion, primarily from search advertising.
This case is the first anti-monopoly lawsuit against a domestic technology company launched by the US federal government in more than 20 years. Last September, the largest anti-monopoly case in the tech industry in more than 20 years went to trial. At that time, Kenneth Dintzer, a lawyer with the US Department of Justice, accused Google of spending more than $10 billion in one year to maintain its status as the default search engine for the Internet and mobile devices, thereby killing market competition.
Dintzer said that Google has formed a monopoly position since at least 2010, and has abused its dominant position in the general search field in the past twelve years. Google used the default search agreement as a weapon to prevent competitors, and through organizing Apple to seek better computer, mobile phone and other device search options than Google, it exerted its power in the search market.
On Monday, Amit Mehta, the US federal judge presiding over this case, wrote in the Google monopoly case opinion that Google has anti-competitive behaviors that must be stopped.
"After carefully considering and weighing the testimony and evidence of witnesses, the court concludes the following: Google is a monopolist, and it has acted as a monopolist to maintain its monopoly position. It violates Section 2 of the Sherman Act."
In addition, Mehta stated that if Google is found to have violated antitrust laws, Judge Mehta will arrange another trial to decide what kind of punishment to impose on Google. Google is likely to appeal. Therefore, the media believes that it may take several years before this litigation is finally settled.
On Monday, some media outlets reported that Mehta's ruling may lead to another lawsuit to determine what punishment Google will face, and that Google may appeal. In any case, Monday's ruling may ultimately overturn the way Google offers its search engine to users, affecting Google's ability to engage in high-priced transactions with device manufacturers and online service providers, which is the core of this case.
When the case was first filed, US antitrust officials did not rule out the possibility of splitting Google. They warned that Google's actions could threaten future innovation or the rise of Google's successors.
Earlier comments suggested that if Google loses the case, Mehta theoretically can order the split of Google, but legal experts believe that this possibility is slim, and it is more likely that new restrictions will be imposed on Google's business operations, such as limiting Google's ability to become the default search engine for phones and PCs by making payments to companies such as Apple and Samsung. A judge cannot require Google to be split because it illegally paid device manufacturers.
Editor/Somer