U.S. v. Google: A Landmark Case and Warning Shot to Big Tech
On August 5, 2024, Judge Amit Mehta of the United States District Court for the District of Columbia ruled (in U.S. v. Google) that Google held monopoly power in the markets for general search engine services and text advertising. In addition, it was deemed to have unlawfully used that power to keep competitors out of those markets and drive up digital ad prices.
Anyone who has Googled anything online won’t be surprised to know that Google is by far the most commonly used service in the general internet search service market. But the degree of Google’s dominance in this market might surprise some. According to Judge Mehta’s opinion, at the time of the suit, Google held almost 90% of the market share for searches conducted on computers and nearly 95% of the share for smartphone searches.
The Google antitrust lawsuit was brought by the Department of Justice (DOJ) and more than 30 states, and it is one of the most significant antitrust cases in decades. It's also the first successful antitrust case against “Big Tech” (i.e., the biggest and most dominant tech companies in their relevant sectors) since the Microsoft Corp settlement that resulted from the Justice Department’s 1998 case against that Big Tech player.
There has been wide speculation in the legal and Big Tech arenas as to who will win on appeal, what penalties might be ordered if Google loses, and what all of this means for antitrust law in general — and Big Tech in particular.
Antitrust Law Primer
To provide context for the Google ruling, let’s review some basic antitrust concepts and terms.
Purpose of Antitrust Laws
The purpose of this area of law is to:
Protect fair competition in the marketplace
Eliminate unfair competition so consumers have more choices in the products and services they buy
Where there is no competition (such as when one company has a monopoly), consumers end up with no other options but to buy the monopolist’s goods or services and pay whatever price it sets.
Antitrust Law Terms Relevant to the Google Case
Fair competition is when companies use fair and lawful means of gaining market share, such as by offering customers better products, prices, or customer service.
Unfair competition occurs when companies use unfair (or anticompetitive) tactics to gain market share, such as by using their dominant market position to keep smaller businesses out of the market.
Examples of unfair competition include:
Price fixing: This occurs when competitors agree to charge all consumers the same price for products or services.
Monopolistic conduct: This is at issue in the Google case, where companies use their large market share to push other companies out of (or keep other companies from entering) the market, leaving fewer choices for consumers.
Corporate mergers: This can lead to excessive market dominance, potentially violating antitrust laws if they create a monopolistic threat.
Market: The term refers to the precise area of competition at issue. In the case of the Google lawsuit, the specific market defined was the market for general search engine services. Whether a given market exists and how it’s defined are vital issues in an antitrust case. For a company to be found liable for anticompetitive conduct in the market, the court must first find that a market exists and must next define what constitutes the market in question.
In the Google lawsuit, plaintiffs claimed that three different markets existed, but the court agreed about only two (the markets for general search engine services and text advertising). The court considered only whether Google had acted unlawfully concerning the two markets it found, and it did not look at Google’s conduct in the third area (the advertiser ad network market).
Key federal antitrust agencies and laws
The Federal Trade Commission (FTC) and the DOJ Antitrust Division work together to regulate competition in the U.S. marketplace by enforcing federal antitrust laws, including:
Section 1 prohibits contracts, combinations, and conspiracies between competitors that restrain trade.
Section 2 (at issue in the Google case) prohibits monopolies and attempts or conspiracies to monopolize.
Clayton Act prohibits, among other things, anticompetitive corporate mergers and unlawful tying (bundling two products together so consumers are forced to buy them both from the same seller).
U.S. v. Google: Key Aspects of the Case
Below are the key dates, facts, claims, arguments, and holdings in the case.
Key Dates and Procedural History:
October 2020 – Suit 1: The DOJ filed suit and was joined by over 30 state attorneys general. The suit alleged Google was unlawfully suppressing competing general search engines.
December 2020 – Suit 2: 38 states filed their own suit, adopting the allegations in Suit 1 and adding others.
January 7, 2021: On the request of Suit 2 plaintiffs, the court consolidated the two cases.
September 12, 2023: Trial began, ending nine weeks later on November 16, 2023. Closing arguments were delayed until the following year.
May 2–3, 2024: The parties gave closing arguments.
August 5, 2024: District Court Judge Amit Mehta issued his decision.
Key Facts:
In his 280+ page opinion, Judge Mehta found a number of facts, including the following:
General search engines and search engine results pages (SERPs): Google is a general search engine. Once a user inputs a query, a general search engine crawls the web looking for responsive links and websites, and it then presents a list of those responsive links by rank on a search engine results page (SERP).
There are two general types of queries on general search engines:
Noncommercial queries: Where the user is looking for general information about a topic and does not show purchase intent (i.e., the desire to buy a product or service)
Commercial queries: Where the user shows purchase intent
SERPs responding to commercial queries typically include paid advertisements in their ranked list of query responses to commercial queries, and Google charges companies for this ad space.
Google’s default general search engine placement: To increase its revenue from ads on SERPs, Google wanted its search engine to be the default general search engine on as many devices as possible. That’s why it entered into exclusive contracts with original equipment manufacturers (OEMs), such as Samsung and Apple, under which Google paid the OEMs over $20 billion to preload Google’s general search engine onto OEM devices, making Google the default search engine. Although users can change the default general search engine to another service, most people tend to stick with the original setting.
Revenue sharing agreements (RSAs): Google also entered into RSAs with major carriers, such as Verizon, AT&T, and T-Mobile, under which Google agreed to share ad revenue with the carriers depending on the degree to which they made Google’s general search engine their default search engine.
Plaintiffs’ Key Claim
Although plaintiffs asserted a number of claims against Google, the headlining claim in the case was the allegation that Google violated Section 2 of the Sherman Act by using its monopoly power in the general search engine and text ad markets to drive out competition and raise prices.
Google’s Argument
After first arguing about the definition of the relevant market and claiming it didn’t monopolize that market, Google argued its monopoly position resulted from its offering the best product — not from its acting anticompetitively. As Judge Mehta’s opinion explains, simply having a monopoly does not, on its own, constitute a violation of Section 2; it’s the defendant’s unlawful use of its monopoly power to harm competition that amounts to an antitrust violation.
Court’s Ruling
The court ruled against Google, holding: “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.”
What’s Next for Big Tech?
Google competitors: In the wake of the Google decision, many people have been wondering what’s in store for some of the Big Tech companies that compete with Google, such as Bing, DuckDuckGo, and Microsoft.
Google partners: Certain penalties against Google could have harmful downstream effects on the companies that entered into default agreements with Google. For example, if Google is no longer able to pay OEMs for making Google’s general search engine the default on their devices, that could cut off a large revenue stream for Apple and Samsung.
Other Big Tech companies: The government has already brought a number of other antitrust cases against Big Tech, including Facebook, Amazon, and Apple, along with another case against Google. All of those cases are still pending. Despite the waves the Google decision has made, it’s unlikely the decision will change the course of any of these lawsuits. Although Judge Mehta ruled that a company’s scale, brand awareness, high-quality product, and market incumbency can keep new companies out of a market — a finding that could affect Big Tech as well as other industries — these findings were highly fact-specific. The cases currently pending against Big Tech involve different facts.
Antitrust Law: A Potential Niche for Future Lawyers
Antitrust law, whether in the context of fast-moving industries like Big Tech or any other area of commerce, is a high-stakes, often complex, and interesting area of practice that could provide an intriguing area of expertise for future lawyers.
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