Google Search is an illegal monopoly, a federal judge rules

A federal judge ruled yesterday that Google Search – similar to a player with Boardwalk, Park Place, and hotels on all the yellow and green properties – is an illegal monopoly and acted like one to maintain its dominance. It marks the first antitrust decision against a tech company in decades.

The ruling pertains to two market areas: search and text based advertising (the ads that appear alongside search results). It honed in on two main areas:

• Google’s exclusive search agreements. The tech giant has contracts with companies like Samsung, Apple, and Mozilla that involve Google paying its partners a fee + revenue share to remain the default search engine on devices and web browsers. In 2022, Google paid Apple $20 billion + 36% of its search ad revenue from Safari for default position on the browser – a figure representing ~3x more than the company’s other search-related costs combined, including R&D.
• The ensuing feedback loop. While these exclusive agreements make it difficult for startups to compete and gain market share in search, the traffic generated by these agreements feeds data into Google – which then can use this info to improve its products even further.

Google argued in a trial last year that its dominant position in the industry – currently controlling ~90% of online search and ~95% of mobile search – was a result of its product and services simply being better.

But the judge disagreed, saying the evidence at trial showed the importance of default settings when it comes to usage. One cited example: Microsoft's Bing search engine has 80% share of the search market on the Microsoft Edge browser.

• Essentially – regardless of whether Google’s services or products are better, its exclusive agreements have an impact on consumer choice and are examples of the company acting illegally to maintain its monopoly. Testimony from former Google exec Sridhar Ramaswamy just about sums this up: “[the exclusive agreements] basically freeze the ecosystem in place.”

Looking ahead… The case is far from over. The judge hasn’t yet posited any remedies for Google’s actions, and an appeal is almost certain to happen.

⚖️ Zoom out: Other Big Tech companies currently facing antitrust lawsuits include: Meta, Apple, Amazon, and Google (this time related to ad tech).