US judge finds Google guilty in landmark search and advertising monopoly case

• Google acted illegally to hold back its competition and to build and maintain a monopoly on internet search and the advertising business built around it
• "No company - no matter how large or influential - is above the law"

It’s an assumption that’s so commonly held and everyday, that you could be forgiven for thinking that somehow it’s legal. But it isn’t.

We’re talking about Google’s stranglehold on search and position as the centrepiece, ruling class of all internet hierarchy and activity. Hats off to them for building a service that’s so ubiquitous that using any other search other than ‘Googling it’ feels like stepping back into the last century. Literally.

However, it seems all our nascent suspicions were true and now a US judge has stepped up to agree with the planet’s consensus and drop a bombshell that appears long overdue: That is that Google acted illegally to hold back its competition and to build and maintain a monopoly on internet search and the advertising business built around it.

Enough is enough

And if that sounds like a major potential kick to the internet giant (and parent company Alphabet) you’d be right. The decision could prompt major changes, not just within Google as they seek to align themselves with what’s legal but also in the many gateways and ‘loopholes’ rivals may now find in the forcefield Google had effectively thrown around the internet.

The case stems back to 2020 when Google was sued by the US Department of Justice for gaining control (through suspected nefarious means) of owning around 90% of all online search. Today’s outcome asks for "structural relief" which - in layman’s language - would require the break-up of the company, loosening their grip on the many strands that Google owns and works together to form the internet as we largely know it.

Apple's $20 billion 'default browser' fee

A main component of the case - and the decision made today by US District Judge Amit Mehta was that Google had - by their own admission - paid billions to date in order to be the default search engine on browsers and phones. Indeed, the company - while a fierce rival of Apple and iOS with its own Android operating system and Google-branded phones - still pays Apple an annual fee running into the billions to remain as the defacto default whenever anyone makes a search on an iOS device. 

In 2022 - the last year with figures on file - Google paid Apple $20 billion to remain as iOS’s default search. An amount that Apple - despite their rivalry - simply can’t say no to and an incredible 17% of Apple’s operating profit for the year.

“Google is a monopolist, and it has acted as one to maintain its monopoly,” Judge Mehta summed up in his opinion, while the US Attorney General Merrick Garland described the ruling as being an "historic win for the American people".

“No company - no matter how large or influential - is above the law. The Justice Department will continue to vigorously enforce our antitrust laws.”

Google of course did fight back in the case. “Google is winning because it’s better,” said Google's lawyer John Schmidtlein during closing arguments. But ultimately Google’s track record of paying for placement proved to be its undoing.

"Even if a new entrant were positioned from a quality standpoint to bid for the default when an agreement expires, such a firm could compete only if it were prepared to pay partners upwards of billions of dollars in revenue share," decided Judge Mehta.

What happens now?

Well, perhaps surprisingly stock of Google’s parent Alphabet fell by only a couple of percentage points after the ruling. And shares of Apple, which arguably stands to lose as much as Google, fell even less. However a potential break up of Google departments could, in the long term, cut far deeper.

One potential outcome would be that Google will offer customers a choice of search engines - something it has already done in Europe but had next to no impact on its search market share.

But if Google can’t pay to be number one any more, will it still want to part with that cash? And how will Apple and it's stockholders react when their profits are 17% lighter? We’ll keep you posted.