Federal Judge Rules Google Is a Search Market ‘Monopolist’

Google has a monopoly over general search services and acted as a monopolist, defending its dominance in violation of U.S. antitrust law, a federal judge ruled Monday (docket 1:20-cv-03010-APM).

DOJ and 11 state attorneys general sued Google in October 2020, claiming the platform monopolized the digital advertising market. Another 38 states filed a separate lawsuit in December 2020, and the cases were consolidated in January 2021. The U.S. District Court for the District of Columbia kicked off the government’s 10-week antitrust bench trial in September (see 2309120075).

Judge Amit Mehta in a 286-page ruling wrote Monday: “After having carefully considered and weighed the witness testimony and evidence, the court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly. It has violated Section 2 of the Sherman Act.”

Google will appeal, said President-Global Affairs Kent Walker in a statement Monday. Mehta’s decision recognizes Google “offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available,” he said. The company welcomes Mehta’s findings that Google is “the industry’s highest quality search engine, which has earned Google the trust of hundreds of millions of daily users,” and that “Apple and Mozilla occasionally assess Google’s search quality relative to its rivals and find Google’s to be superior," said Walker. Given those findings, and that “people are increasingly looking for information in more and more ways, we plan to appeal,” he said. “As this process continues, we will remain focused on making products that people find helpful and easy to use.”

Mehta will rule later on potential remedies, which could include fines and structural changes at the company.

Mehta found Google’s distribution agreements in product markets for general search services were “exclusive” with “anticompetitive effects.” He cited its relationship with Apple, and agreements between the two that, he said, have insulated the search platform from competition. Google hasn’t “offered valid procompetitive justifications for those agreements.”

Google exercised monopoly power as it charged “supracompetitive prices for general search text ads,” and it allowed the company to earn “monopoly profits,” the judge wrote. The cost-per-click for a text ad on the platform has consistently increased, and Google has used “pricing knobs” to drive those increases between 5% and 15% at a time, Mehta added.

Google’s ad revenue has grown consistently at 20% or more per year: “There is no evidence that any rival constrains Google’s pricing decisions.” Google has a “major, largely unseen advantage over its rivals": default distribution.

Mehta noted Google spends tens of billions of dollars maintaining its default search deals with companies like Apple. Such deals disincentivize Apple “from launching its own search engine when it otherwise has built the capacity to do so.” The court is “taken aback by the lengths to which Google goes to avoid creating a paper trail for regulators and litigants.” Google clearly learned from the federal government’s antitrust lawsuit against Microsoft in the 1990s about how to train its employees to not “create bad evidence.”

Attorney General Merrick Garland said in a statement that the decision shows no company, “no matter how large or influential,” is above the law. Antitrust Division Chief Jonathan Kanter said it “paves the path for innovation for generations to come and protects access to information for all Americans.”

Ohio Attorney General Dave Yost (R) said the states maintain Google has illegally monopolized the search services market through a series of anticompetitive exclusionary contracts and conduct: "As a result, Google has deprived consumers of competition that could lead to greater choice, innovation, and better privacy protections."

Public Knowledge Policy Counsel Elise Phillips credited Mehta for outlining how Google’s "exclusive agreements with Apple to be the default search engine, and with Android to lock users into using Google search, deprive competitors the opportunity to scale their own businesses while disincentivizing Google from truly innovating." Google’s dominance in "text advertising allowed Google to freely ramp up text ad prices to boost its own profits, resulting in poorer quality ads and limiting the competition’s ability to attract revenue and ad dollars," said Phillips.