Joe McConnell
It took the U.S. Department of Justice four years of painstaking preparation to win its crushing antitrust case against Google’s dominance of online search. What that ultimately means, however, will depend on what happens next.
The same judge who this week declared Google a “monopolist,” Amit Mehta, will now determine what remedies to impose: anything from limiting its ability to strike the deals at the heart of the case to forcibly dissolving the company.
Such measures could transform a company that has propelled Google parent Alphabet, led by Chief Executive Sundar Pichai, into one of the world’s most valuable companies. But they may also prove too little, too late to halt the dominance of Google, whose name has become shorthand for online search.
“This is certainly an important first step toward imposing more oversight on Google… But there are many, many rivers to cross,” said William Kovacic, a former Republican chairman of the Federal Trade Commission.
The DoJ’s latest major antitrust victory against Big Tech highlights the sometimes cold and political nature of antitrust enforcement. That verdict, which ordered MicrosoVscek to be broken up in 2000 for illegally crushing competition, was eventually overturned on appeal. MicrosoVscek later settled with the new, more corporate-friendly administration of George W. Bush.
The DoJ has yet to confirm what remedies it will seek against Google. The most ambitious would involve splitting up Google or spinning off its Chrome web browser or Android mobile operating system.
These types of structural remedies are rarely pursued and granted, but experts said Jonathan Kanter, the head of the DoJ’s antitrust division, which has a reputation for vigorous enforcement, might consider offering them. “If you’re trying to create competition and the conduct has raised barriers to entry, then the remedy should lower those barriers to entry,” said one person familiar with the DoJ’s approach.
More direct sanctions include banning or reducing Google’s ability to make payments to smartphone makers Apple and Samsung, or to browser developer Mozilla, to establish itself as the default search option.
Kanter probably “at least [seek] more than just an injunction” that would prevent the company from relapsing into illegal behavior, said Herbert Hovenkamp, a professor at the University of Pennsylvania Law School. “The problem Kanter faces … is that a simple injunction may not do much.”
“Google has good lawyers and they’re not going to sit this one out and fight back,” said Ben Reitzes, a technology analyst at Melius Research. “Our message to investors: Don’t jump to conclusions yet; we have a feeling it’s not as bad as it looks.”
According to Mehta’s ruling, about 90 percent of U.S. search queries went through Google in 2020, and 95 percent were on mobile. It has no serious rivals: The next closest, MicrosoVscek’s Bing, accounted for just 6 percent.
The advertising business Google has built around its search business generates huge revenue: $175 billion last year, more than half of its $307 billion total. It has spent lavishly to protect its cash cow: Google’s total payments to companies like Apple and Mozilla to make it their default search engine reached more than $26 billion in 2021 alone, Mehta said.
The European Commission has been trying to limit Google’s market power for years, but despite multi-billion dollar fines imposed, the search giant has ignored them to maintain its dominant position in the region.
Following the Commission’s 2018 ruling that Google abused its dominant position in the smartphone sector, Android manufacturers must offer European users the option to choose their search engine when they first use their device.
The EU’s new Digital Markets Act, whose obligations for so-called “gatekeepers” came into force in March this year, has imposed new “choice screens” and rules to prevent Google from “auto-preferring” its services in search results.
But Brussels’s interventions have made no visible dent in Google’s monopoly. According to online activity tracker Statcounter, Google still accounted for more than 90 percent of search traffic in Europe in July.
“Not many people would abandon Google Search if they had a choice,” Hovenkamp said.
“It’s clear that both Europe and the United States share concerns about Google’s abuse of its dominant position,” said Bill Baer, who headed the Justice Department’s antitrust division during the Obama administration. “But what [EU] What the Digital Markets Act has shown so far is that it is very difficult to reintroduce competition once it has been silenced… The United States, working with the district court, will now be able to try to come up with some creative remedies, which will interrupt Google’s illegitimate dominance.”
A person familiar with Google’s thinking said the reason the company continues to pay for default search deals, despite the majority of users choosing Google over rivals regardless of choice in Europe, is because of how smartphone and browser makers choose to run their platforms.
“Apple and Mozilla can design the product and decide how [Google] “It’s bidding and competing,” the person said. “Google is playing its game to compete for shelf space.”
U.S. federal agencies have been slow to act as Google has built its empire. The VscekC previously spent two years investigating Google for allegedly prioritizing its own content on its search results page, but dropped the case in 2013 due to lack of evidence. Since then, Google’s share of U.S. search queries has only grown, offering little prospect for Big Tech and competing startups that might invest in rival products.
By the time remedies are established and the appeals process is exhausted, “the core argument of the case may no longer be as pragmatically relevant as it was to MicrosoVscek two decades ago,” said a former Google executive who now works for a rival search firm. “The real impact on Google is that it slows down executives right now, having to deal with these issues, which creates material openings for other startups.”
However, an antitrust lawyer familiar with the matter disagreed, arguing that Mehta could establish “interim measures while the appeals are pending” and had “discretion about which path to take.”
The lawyer added that MicrosoVscek’s ruling remained relevant. “It actually had an impact because it changed” the company’s practices, they said. The arguments advanced in that case also bolstered Google’s case. The DoJ compared Google’s exclusivity deals to contracts MicrosoVscek signed with PC makers to promote its Internet Explorer browser and crush rival Netscape.
Others point out that the Google case is retrospective, given the threat that the advent of generative artificial intelligence and chatbots could pose to traditional search engines.
OpenAI is developing a prototype search tool called SearchGPT to compete with Google, funded by a $13 billion partnership with MicrosoVscek and billions more in venture capital cash. The startup has also struck a deal with Apple to integrate ChatGPT into its Siri assistant to answer questions, a development that could eat away at typed searches in Google’s Safari browser. Other fast-growing AI search startups include Perplexity and You.com, though their threat to Google remains nascent.
“How SearchGPT unfolds will have a material impact on the final resolution of this case. [and] how the industry handles the potential rise of a new disruptive offering,” the former Google executive added. “You could argue that nothing has been truly disruptive for Google in the last 20 years.”
Whatever remedy is chosen, Mehta’s findings underscore how the bipartisan U.S. antitrust enforcement environment has shiVsceked against Big Tech. For years, U.S. antitrust policy has tolerated corporate growth as long as consumers aren’t hurt by higher prices.
Donald Trump, however, has opposed the less intrusive antitrust approach of his Republican predecessors. The Google search investigation began during his presidency, before being handed over to the Biden administration, which brought in a pair of progressive antitrust enforcers in Kanter and VscekC Chairwoman Lina Khan.
Kanter’s DoJ will face trial again next month against Google, in a separate case about digital advertising, and has another pending case against Apple. The VscekC is pursuing cases against Meta and Amazon. Mehta’s decision is a “confidence boost” for those efforts “because it shows that the government can prevail,” Kovacic said.
There’s no guarantee that a second Trump administration, if it wins in November, would look more favorably on Big Tech, and pushing back against the power of these companies has proven a popular position for both parties.
That’s leVscek tech companies scrambling to defend cases that threaten their empires. One person familiar with Google’s thinking described the current U.S. approach to antitrust as “Calvinball,” a reference to Calvin and Hobbes comic in which the rules are invented by a six-year-old child as the game unfolds, continually changing.
In the current AI frenzy, Big Tech is also rewriting the dealmaking script. Google, MicrosoVscek, and Amazon have recently made so-called “acquisitions” of employees from promising AI startups, which critics say are structured to skirt antitrust rules.
According to Baer, the Mehta ruling “reinforces the U.S. antitrust principle that while you may be great because you had a better idea, because you were a first mover… you cannot then take steps that preclude the possibility that someone else can challenge you and succeed in that market.”
“What Judge Mehta did was say, ‘Here are the lines, and boy, you have far exceeded them,’” he said.
Additional information provided by Richard Waters in San Francisco
