A federal district court ruled on Monday that Google engaged in monopolistic behavior by paying to become the default internet search engine on mobile devices from other tech companies, marking a significant victory for the Justice Department.
According to Bloomberg, Google paid $26.3 billion in 2021 to companies including Apple and Samsung. The Justice Department argued that these payments effectively restricted the success of competitors in the search engine and advertising markets.
The decision had immediate financial repercussions. Apple’s stock dropped by 6.7% following the announcement, as the revenue from Google’s default search engine deal constitutes a major portion of Apple’s Services division, which has been vital in offsetting declines in smartphone sales. Google’s stock also fell by 4.6%, as the ruling poses a potential threat to the company’s substantial revenue from search ads, estimated between $160 billion and $175 billion annually.
Judge Amit Mehta’s ruling concluded, “[T]he court finds 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.” The Sherman Act outlaws any contracts, combinations, or conspiracies that restrain trade, as well as monopolization or attempts to monopolize.
The ruling reflects a shift in how antitrust cases are evaluated. Traditionally, courts assessed whether consumers benefited from lower prices resulting from the defendants’ actions. However, the current approach focuses more on the impact on competition within the marketplace. In this case, the court found that Google’s financial power was used to block smaller search engines from gaining visibility and competing effectively.
This decision is the latest in a series of regulatory challenges for Google. The DOJ, alongside several state attorneys general, is also pursuing a case against the company for alleged anti-competitive behavior in the ad tech industry. The plaintiffs accuse Google of engaging in anti-competitive mergers and pressuring publishers and advertisers to use its proprietary ad technology. Google is expected to engage in a prolonged appeals process.
In Europe, Google has faced three major antitrust fines totaling €8.25 billion over the past decade for issues related to its Shopping comparison service, Android mobile operating system, and AdSense advertising service.
Senator Amy Klobuchar, a leading advocate for updated antitrust laws, praised the ruling. “I have long been calling for action,” Klobuchar said. “The Justice Department took this on and won. This case underscores the importance of enforcing our antitrust laws and highlights the need for updated competition rules for big tech companies. If they continue to resist sensible regulations, they will face more lawsuits—and more losses.”