Judge Amit Mehta ruled that Google's "default distribution" of its search engine significantly contributed to its advertising revenue and illegally suppressed competition.
"Google has used its monopoly power to block meaningful competition in the search market by putting a stranglehold on major distribution points for more than a decade,"
said Kamyl Bazbaz, a senior vice president at DuckDuckGo.
Court Ruling on Google's Monopoly:
A federal judge concluded on August 5 that Google holds a monopoly on general search services and text ads. This ruling indicates Google's liability as a monopolist, though the next steps remain undetermined.
"The court concludes that Google is a monopolist and has acted to maintain its monopoly,"
Judge Mehta wrote, stating that Google violated Section 2 of the Sherman Act.
This case continues an antitrust investigation by the U.S. Department of Justice and state attorneys general that began in 2020, alleging that Google used distribution agreements to stifle competition. The case was argued until May 2024.
Monopoly Conditions in Search Services:
Google has created monopoly conditions in general search services and text ads. However, it does not monopolize search advertising or general search advertising due to either a lack of market power or the absence of a defined market for these businesses.
Each sector—general search services, text ads, search advertising, and general search advertising—was assessed individually based on market factors. The broader implications for Google's online advertising business will be addressed in a case before U.S. District Judge Leonie Brinkema on September 9.
Amazon, too, was hit with a lawsuit by the US Federal Trade Commission and 17 state attorneys general last year that alleged the online retail giant engages in exclusionary and anticompetitive behavior. And, per the EU's Digital Markets Act, Apple had to allow third-party app stores to work with iPhone. Google itself has been embroiled in a number of lawsuits, including one involving data handling in its Chrome browser.
Google-Apple Relationship Scrutiny:
The relationship between Google and Apple was closely examined. "Most users access a search engine through a browser like Apple's Safari or a search widget preloaded on mobile devices," Mehta noted. "These access points are preset with a default search engine, which is highly valuable."
Advertising on search engines generated $26 billion for Google in 2020.
"This landmark decision holds Google accountable," Assistant Attorney General Jonathan Kanter stated. "It paves the way for innovation and protects access to information for all Americans."
Google argues its dominance stems from the quality of its search results. "This decision acknowledges Google offers the best search engine but concludes we shouldn't make it easily accessible," a Google spokesperson told Reuters.
Future Implications:
Future court cases could lead to significant changes for Google, including the potential separation of Google Search from its parent company, Alphabet. However, Google plans to appeal the ruling
What is Sherman Act?
The Sherman Act, enacted in 1890, is a fundamental piece of antitrust legislation in the United States aimed at preserving fair competition in the marketplace.
It consists of three main sections:
1. Section 1: Prohibits contracts, combinations, or conspiracies that unreasonably restrain trade or commerce among the states or with foreign nations. This includes practices like price-fixing, bid-rigging, and market division.
2. Section 2: Outlaws monopolization, attempted monopolization, or conspiracy or combination to monopolize. This means it is illegal to acquire or maintain monopoly power through improper conduct rather than through legitimate business practices.
3. Section 3: Extends the provisions of Section 1 to U.S. territories and the District of Columbia.
Violations of the Sherman Act can lead to severe consequences, including fines, dissolution of offending companies, and imprisonment for individuals involved in illegal activities. The Act is enforced by the U.S. Department of Justice and the Federal Trade Commission, which can bring civil and criminal cases against violators. The Sherman Act serves as a critical tool to maintain competitive markets and prevent anticompetitive practices that harm consumers and other businesses.
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