The foundations of the Google (GOOG, GOOGL) empire suffered a major blow on Monday when a judge found that the company’s search and advertising businesses violate antitrust laws.
The ruling, handed down by District of Columbia Judge Amit Mehta, sided with the U.S. Department of Justice and some states in a series of lawsuits alleging that tech giants abused their dominance in online search.
“Google is a monopoly and has acted as a monopoly in order to maintain its monopoly,” Mehta said in his ruling.
If the findings are upheld, they could outlaw a deal that has all but guaranteed Google’s dominance for years.
Google said it plans to appeal the decision, saying: “We recognize that Google provides the best search engine, but we conclude that it should not be allowed to make it so easily accessible.” “I added it,” he said.
Judge Mehta ruled that Google violated antitrust laws by marketing “general search” and “general search text” ads that appear at the top of search results pages.
He said Google does not hold a monopoly in the search advertising market and therefore has no liability in that market.
The decision is a major victory for the Justice Department and could have major implications for other major companies in the technology industry.
“This pro-competition ruling is a victory for the American people,” the White House said in a statement.
Apple (AAPL), Amazon (AMZN) and Meta (META) are defending themselves against a series of other federal and state-led antitrust lawsuits, some of which make similar claims.
The scrutiny is part of a broader effort by the Biden administration to rein in what it considers anticompetitive behavior across many industries, from health care to groceries to technology.
For Google, the judge’s decision affects a huge revenue stream. In 2023, Google’s search advertising business generated more than $175 billion in revenue.
Combined with Google’s YouTube ads and Google Network revenue (both of which the company promotes on popular search engines), advertising accounts for a staggering $237 billion of the company’s total revenue of $307 billion. I did.
According to Statcounter, as of June 2023, Google controls 91% of the global search engine market across all computing platforms. On mobile, Google’s market share was even higher at 95%.
Almost four years ago, in October 2020, when the Justice Department and states filed the lawsuit, Google’s annual revenue was $162 billion, about half of its most recently reported annual revenue.
Google’s decision comes after two months late last year that included testimony from Google CEO Sundar Pichai as well as executives from search market rivals Microsoft (MSFT) and DuckDuckGo. The decision was made after a trial.
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Department of Justice and 35 states, Guam and Puerto Rico. In a separate lawsuit, the District of Columbia accused Google of maintaining unfair market dominance in search, including search engines, search engine advertising, and search engine text advertising.
Sundar Pichai, CEO of Google and Alphabet Inc. Reuters/Carlos Barria · Reuters/Reuters
These lawsuits are brought together because of nearly identical allegations that Google maintained a monopoly by paying companies like Apple, Amazon, Mozilla, and Firefox to be the default search provider on phones, tablets, and browsers. was treated.
At the time of the lawsuit, Google had a 90% market share in online searches. At trial, the company’s lawyers said that Google had gained and maintained its vast market share by offering superior products, not by anticompetitive behavior.
Google’s disputed conduct centered on contracts the company entered into with computer and mobile device manufacturers, browser services, browser developers, and wireless carriers.
The government argued that these agreements violated antitrust laws because they made Google the required default search provider.
Companies with these exclusive agreements include Apple, LG, Samsung, AT&T, T-Mobile, Verizon, and Mozilla. As a result of these deals, smartphones from manufacturers including Samsung, one of the world’s largest smartphone makers, come pre-installed with various Google apps.
In court, Google argued that the agreement did not violate antitrust laws and did not harm competition, despite its monopoly in the search market.
Microsoft’s Bing has just 3.74% of the global market across all platforms, while Yahoo Finance’s affiliate Yahoo has 1.16%.
In the US, Google controls 87% of the search market across all platforms. Bing has 7.2%, Yahoo 2.4% and DuckDuckGo 1.9%. On mobile, Google has 95% of the US search market.
The global search industry is also in the midst of major changes, as companies increasingly add generated AI responses to their services.
Google has added an AI Overview feature to its standard search service, giving users AI-powered generative answers to their queries that summarize content found on different websites in a dedicated window on the search engine’s standard website links. provided to.
Microsoft offers Copilot functionality in its Bing search engine, which provides similar functionality to Google’s AI Overview.
The shift to AI-powered search result generation raises further questions about the fate of the search industry, including whether websites used to summarize AI results will receive appropriate recognition for their contributions. Masu.
Similarly, this feature provides answers to users’ queries in boxes that retrieve content from third-party websites, preventing users from accessing those sites and dramatically impacting page views and revenue. There are growing concerns that they will give it away.
These new search options give Google an opportunity to argue in a separate “remedy” phase of the trial that the anticompetitive problems identified in the complaint no longer exist or have been diminished.
Google’s appeal of the case could require it to enter a relief phase until the case has passed through the appellate system.
Alexis Keenan is a legal reporter at Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on X @Daniel Howley.
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