Google loses antitrust suit, as federal judge rules it monopolized search

A federal judge said on Monday that Google “is a monopolist,” ruling that the company illegally maintained a monopoly over search.

In a 277-page ruling, Judge Amit P. Mehta determined that Google has monopoly power over search general services and general search text advertising. Mehta wrote that “Google's distribution agreements are exclusive and have anticompetitive effects” and that Google “has not offered valid pro-competitive justifications for those agreements.”

In 2020, the U.S. Justice Department sued Google, alleging the company partnered with device makers and web browsers to position its search engine as the default, stifling competition. Thirty-eight state attorneys general filed their own suit months later, and both suits were included in a weekslong trial last September. Lawyers for Google, the Justice Department and the attorneys general delivered closing remarks in May this year.

Days before the September trial began, Google President of Global Affairs Kent Walker wrote a blog post denying the claims, arguing, in part, that there are “more ways than ever to find information today,” and that browser and device makers “have a choice, and they choose Google.”

“We compete hard for that placement, so that users can easily access Google Search,” Walker wrote. “We’re proud that browser makers opt to show Google Search based on the quality of our products.”

But after considering the evidence and testimonies, Mehta saw it differently.

“For years, Google has secured default placements through distribution contracts. It has entered into such agreements with browser developers, mobile device manufacturers, and wireless carriers,” Mehta wrote in the ruling. “These partners agree to install Google as the search engine that is delivered to the user right out of the box at key search access points.”

Mehta noted that Google’s default distribution gives it an advantage in advertising; default placement means more users, who attract more advertisers. And as Mehta noted, Google pays its partners a share of the advertising revenue it generates from search queries.

“In exchange for revenue share, Google not only receives default placement at the key search access points, but its partners also agree not to preload any other general search engine on the device,” Mehta wrote. “Thus, most devices in the United States come preloaded exclusively with Google. These distribution deals have forced Google's rivals to find other ways to reach users.”

Walker, the Google global affairs president, said in a statement to CNBC that Google intends to appeal.

“This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available,” Walker wrote. “As this process continues, we will remain focused on making products that people find helpful and easy to use.”

In a note on Tuesday, MoffettNathanson analysts wrote that a potential outcome of the ruling (if Google loses its appeal) is that Google “will be forced to cease” payments to mobile phone manufacturers, noting that an unintended consequence would be that Google would “save billions of dollars that it had previously paid” to Apple and other companies. The analysts expect that the “vast majority” of consumers would still choose Google’s search engine if given the choice, considering it has become the “default search engine” for many households.

But J. Walker Smith, chief knowledge officer at Kantar, thinks the ruling could put pressure on Google to implement more traditional marketing practices regarding search: “Now it will be a matter of persuading consumers to try it and adopt it and keep it,” he tells The Current, not just for traditional search but potentially for artificial-intelligence-based search, as well.

“Without a dominant, default search engine having the ability to push its own AI product in a protected way, the market will be opened up to other offerings,” he adds. “I think this could mean more innovation in AI search.”

Another antitrust trial between the Justice Department and Google begins next month, this time on whether Google holds a monopoly in the online advertising technology space.