KATIE BARKER—On August 5, 2024, Judge Amit P. Mehta of the U.S. District Court for the District of Columbia ruled in United States v. Google LLC that Google illegally maintained a monopoly in violation of Section 2 of the Sherman Act. In his 277-page opinion, Judge Mehta found that Google monopolized the general search services and text advertising markets through its exclusive dealing agreements that made Google the default search engine on many devices and browsers. This landmark decision marks the first major antitrust ruling against a Big Tech company since the ruling in United States v. Microsoft Corp. over 20 years ago. However, the battle is far from over–Google announced plans to appeal, and the remedies have yet to be decided.
The case began when the Department of Justice, joined by 11 states, filed a complaint against Google in October 2020. Shortly after, 38 states filed a similar complaint. The two cases were consolidated for trial. On September 12, 2023, the ten-week trial began, described by many as the biggest antitrust trial since Microsoft. To establish a monopolization claim at trial, the DOJ had to prove that (1) Google had monopoly power in the relevant market, and (2) Google acquired or maintained their position through improper conduct.
Based on the evidence presented, Judge Mehta concluded that general search services and general search text advertising constituted markets. He applied the factors from Brown Shoe Co. v. United States, finding that general search engines (“GSEs”) and general search text ads (“text ads”) each had unique uses and characteristics, and market participants recognized them as distinct products with no adequate substitutes. Regarding GSEs, Judge Mehta explained that although people could choose whether to search on a GSE, specialized vertical provider, social media platform, or website, no source was interchangeable with the comprehensiveness of a GSE. Regarding text ads, over 92% of Google’s advertisers purchased only text ads. Product listing ads–the other primary type of search ads–served under 10% of advertisers, so they could not adequately substitute for text ads.
Having established the relevant markets, Judge Mehta found that Google held market power in both. In the general search services market, Google held approximately a 90% share, protected by several barriers to entry, including high capital costs, Google’s control of key distribution channels, brand recognition, and scale. In the text ads market, Google held an 88% market share with the same barriers to entry. Additionally, Google set the prices of its text ads without considering competitors’ prices, which would not have been possible without market power.
Possessing market power, however, is not illegal on its own–the DOJ had to prove that Google’s power was maintained willfully. The DOJ focused on Google’s exclusive agreements with browser developers, device manufacturers, and wireless carriers. Specifically, the DOJ argued that the agreements–which made Google the default search engine on billions of devices worldwide–prevented the preinstallation of competing search engines. Judge Mehta agreed that the agreements were exclusive and had anticompetitive effects, such as market foreclosure, thus rendering them illegal.
The case is now moving on to the remedies phase. Judge Mehta ordered both parties to submit a joint statement proposing a schedule for remedies proceedings by September 4, 2024, but the parties were unable to agree on a timeline. On September 6, 2024, a status conference was held at which the DOJ was given until December 2024 to submit its proposed remedies for Google. Hearings are expected to occur next spring with a final decision on remedies by August 2025.
The DOJ could propose various remedies, ranging from behavioral to structural. Behavioral remedies–those governing a company’s conduct–may include preventing Google from entering into exclusive default search engine agreements, requiring choice screens for users to select their preferred browsers, or ordering Google to share click and query data with its rivals. Structural remedies–those changing the structure of the business–may include separating Google Search from both the Chrome browser and Android operating system. The remedies phase, however, can present significant difficulties. The Microsoft case is illustrative–the U.S. Court of Appeals vacated the District Court’s remedial order to break up Microsoft. Because break-ups are rare and complex, commentators are predicting this is an unlikely outcome for Google. Prohibiting Google from entering into agreements or otherwise paying to be a default search engine may prove itself a more effective remedy.
Regardless of how the case plays out, it is certain to have far-reaching impacts. First, there may be significant financial implications, not only for Google, but also for the companies it contracts with. For example, Google’s revenue share payment to Apple was $20 billion in 2022. A termination of the agreement between Google and Apple could cost Apple approximately 4-6% of its profit. Second, consumers will have more search options if Google is no longer the default browser, which could produce a positive result allowing for a more personalized search experience. Third, with Google forced to step back and make changes, other competitors, such as OpenAI, might come forward with advanced search algorithms in attempt to dominate the search engine market.
This case will also have broad implications for antitrust law and Big Tech. Attorney General Merrick B. Garland called the DOJ’s victory a “historic win for the American people,” signifying that no company is above the law. This decision may pave the way for stricter enforcement of antitrust laws in the Big Tech sector and cause companies to proceed with greater caution. It may also serve as precedent for future Big Tech antitrust cases, including those pending against Apple, Amazon, and Meta. Google is not out of the woods yet either–the DOJ has sued Google again, this time for monopolization of digital advertising technologies. Trial is underway as of September 9, 2024, and some are predicting that the recent decision in the search monopoly case may influence this ad tech case–which once again poses high stakes for Google and the future of antitrust enforcement against Big Tech companies.
