Google loses antitrust case over search monopoly in the US

In a major setback for Google, a US federal court has ruled that the tech company is ‘monopolist’ and has illegally established a monopoly in online search by paying billions of dollars to smartphone, telecom and browser companies. The lawsuit against Google was filed in 2020 by the Justice Department and 38 US states. 

“Google is a monopolist, and it has acted as one to maintain its monopoly. It has violated Section 2 of the Sherman Act,” the court ruled. The Section 2 of Sherman Act prohibits companies in the US from monopolizing or conspiring to monopolize any part of trade or commerce. 

The federal court found that Google’s distribution agreements with other smartphone and browser firms are exclusive and have anti-competitive effects on rivals. 

The lawsuit claimed that Google has paid tens of billions of dollars to phone companies such as Apple to be shown as the default search option on their products. This has helped it to solidify its position as the leading search engine, while hindering rival search companies’ ability to build and scale competitive products without access to new users or search data.  

According to a 2023 NYT report, Google pays Apple $18 billion a year to remain the default search engine on Safari browser on Mac, iPad and iPhones. 

The amount paid by Google is calculated as a percentage of the advertising revenue that it generates from queries run through the default search access points. According to court documents, in 2021, Google paid more than $26 billion a year as part of the revenue share.

“This landmark decision holds Google accountable. It paves the path for innovation for generations to come and protects access to information for all Americans,” said Jonathan Kanter, assistant attorney general in the US Justice Department. 

Most users access search through a browser that comes preloaded on their smartphone.  Since most users stick to the default search engine, it becomes prime real estate for any search engine provider.

According to the lawsuit, 65% of searches are done through Safari’s default search bar. Access to this prime real estate has allowed Google to derive large volumes of user data from search queries and then use it to improve the search quality, giving it a qualitative edge over its rivals. 

Google owns 91.04% of the search engine market share as of July, according to Statcounter data.  Microsoft Bing held the second largest search share of 3.86%, followed by Russia-based Yandex at 1.36%, Yahoo at 1.24%, Baidu at 0.91% and privacy-focused DuckDuckGo at 0.62%. 

Following the court’s ruling, Google told US media outlets that it will file an appeal against the decision. However, if the ruling is upheld during appeal, Apple stands to lose a fixed revenue stream. Though this income constitutes a very small portion of Apple's total revenue, it can be seen as a notable loss at a time when iPhone sales, the primary source of Apple’s revenue, have been declining. 

In addition to ruling Google as a monopolist, judge Amit Mehta also called out Google for obscuring potential evidence by failing to preserve internal communication including employee messages. “The court is taken aback by the lengths to which Google goes to avoid creating a paper trail for regulators and litigants,” noted Mehta.

The lawsuit may complicate things further for Google as it is the target of similar antitrust lawsuits over monopoly in online advertising.  In January 2023,  the Justice Department filed a lawsuit against Google for allegedly arm twisting advertisers and publishers to use its online ad technology. 

Google’s monopoly in search, advertising and Android market has been under scrutiny in multiple countries including India. In October 2022, India’s antitrust watchdog Competition Commission of India (CCI) slapped Google with a fine of Rs 1,337 crore for abusing its dominant position in Android mobile device markets. 

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