The U.S. district federal court recently sentenced Google, saying that it monopolized the search and advertising markets and violated the U.S. antitrust law.
Judge Amit P. Mehta said in his ruling that "Google is a monopolist" and said that these actions of Google violated Article 2 of the Sherman Act: it is forbidden for anyone to "monopolize, attempt to monopolize or collude with others to monopolize any part of any trade or business".
Judge Mehta pointed out in a 277-page ruling that Google almost controls 90% of the online search market and 95% of the smartphone market. There are also details of the agreement between Google and those browser developers and mobile device manufacturers, such as how to divide and pre-install Google search as the default engine. Google used these agreements to squeeze the market share of competitors, and the incentives for innovation and investment decreased, and the advertising fees also went up.
At present, it is only a preliminary judgment, which only involves the issue of corporate responsibility and does not involve specific punishment measures. The next decision may require it to stop some business activities, and may even split its search business. In addition, Google is also facing another federal antitrust case about advertising technology, which is expected to be heard in September.
Kent Walker, president of Google’s global affairs, said that he would appeal the ruling. He stressed that Google can dominate because it has built a best and most practical search engine, which is good for consumers and advertisers.
Some people have commented that this is one of the most important antitrust cases in this century, and it is also the beginning of a series of cases to be filed against large technology companies, which may profoundly change the business operation mode of Internet technology giants. This case may have an impact on other countries’ antitrust lawsuits against Google, Apple, Amazon and Meta (the parent companies of Facebook, Instagram and WhatsApp).
The last anti-monopoly ruling with such great influence dates back to more than 20 years ago, when the protagonist was Microsoft.
First, the great victory of the Ministry of Justice, Apple Meta Amazon is also taking a lawsuit.
This ruling is a great victory for the US Department of Justice, because they have been accusing Google of illegal monopoly in the Internet search market.
In 2020, the US Department of Justice and some states took Google to court, accusing it of illegally consolidating its market position and crowding out potential competitors such as Bing and DuckDuckGo by paying huge sums of money to companies such as Apple and Samsung to make Google search the default option on mobile phones and browsers.
"These agreements have given Google an unmatched scale for more than a decade," Judge Mehta wrote.
In September 2023, the case was officially launched in court. Judge Mehta agreed with a part of the view in the lawsuit of the Ministry of Justice: Google did monopolize the "general search service" and "general search text ads". That is to say, through exclusive distribution agreement in the American market, the market monopoly position of general search service and general text advertisement has been established.
Google does invest huge sums of money in browsers such as Apple’s Safari and Mozilla’s Firefox every year to ensure that it can become the default search engine. In 2021, in order to maintain the default status of their search engines, Google paid Apple about $18 billion, and signed similar agreements with Mozilla and Samsung. It also makes the default status of some apps a condition for Android phones to access the Play Store. In addition, an expert witness of Google inadvertently revealed that Google and Apple shared 36% of Safari search advertising revenue.
Kent Walker, president of Google’s global affairs, said that he would appeal this ruling. He said: "Although the court’s ruling recognizes that our search engine is the best, the conclusion seems to mean that we should not let everyone use it so easily. In the process of continuing our appeal, we will still focus on making things that everyone finds useful and convenient to use. "
The CEO of DuckDuckGo stood up against Google in the trial. He supported the ruling, but he also knew that the struggle was far from over. In a statement, SVP Kamyl Bazbaz, who is in charge of public affairs at DuckDuckGo, said, "As we have seen in the EU and other regions, Google will try its best not to change. However, we know that there is a strong demand for alternative search engines in the market, and this ruling will help us provide more choices. "
During the trial, Microsoft CEO Satya Nadella expressed his concern about Google’s dominant position in the market. He believed that the relationship between Google and Apple had formed a "Google network", a situation close to "oligopoly". If Google continues to develop without hindrance, it is likely to dominate AI.
This is the first ruling in a series of science and technology monopoly cases filed by the US government in recent years. Legal scholars predict that this ruling will affect the government’s anti-monopoly litigation against other technology giants.
It has been twenty years since the anti-monopoly lawsuit of the Ministry of Justice against Microsoft in 2001 and the next anti-monopoly case against Google.. Since 2020, more similar cases have appeared soon.
At present, Amazon, Apple and Meta are all facing monopoly lawsuits filed by the US government. The Justice Department has sued Apple, accusing it of making it difficult for consumers to give up the iPhone. The FTC sued Meta, arguing that Meta suppressed emerging competitors, and also sued Amazon, accusing them of squeezing sellers in the online market.
Second, if you lose the case, Google may face five penalties.
In the United States, the default search engine for every new mobile phone is almost Google. For users, Monday’s ruling on Google may mean that Google will no longer be the ubiquitous boss in the future.
At present, Judge Mehta needs to make a further ruling on how to deal with Google. He has arranged a hearing in September and will discuss specific punishment measures then.
Next, he may order a major adjustment to the default settings of the new device, requiring users to choose their own default search engine before the first search, and may also ask Google to sell some of its services.
However, because Google has appealed this judgment, the whole legal process may be delayed for many years, and may even never be implemented.
Here are five possible punishments proposed by professionals.
1. It is forbidden for Google to continue to sign exclusive distribution agreements with large companies.
There are three main ways for American courts to solve the monopoly problem: ordering the end of illegal acts, making rules to prevent them from happening again, and taking any necessary additional measures.
In order to meet the first requirement, the most common prediction is that Mehta will prohibit Google from continuing to sign agreements on default engines with companies such as Apple, Samsung and Mozilla.
"At the very least, the Ministry of Justice will ask for an injunction prohibiting Google from engaging in acts that the court considers inappropriate." William Kovacic said that he was a member of the antitrust regulator of the US Federal Trade Commission.
Location is very important. Mehta’s ruling found that even if users can easily change the default settings, most people will not change them.
But some people do prefer Google. Bing is the default search engine for some Microsoft devices, which is why "Google.com" is the most popular search term on Bing.
In the future, users who like to use Google may have to search for "Google.com" in other search engines.
2. Remind users to change Google more frequently.
Mehta can follow the example of the EU. The European Union has been asking Google to provide search engine options on Android devices for years, and recently extended this rule to Chrome browsers.
This regulation in Europe has not made Google’s substitutes popular, because users still recognize Google more than users. The horse has gone out of the stable, but one problem with free choice is that it may not reduce Google’s market share. Herbert Hovenkamp, an antitrust scholar at the University of Pennsylvania, said.
However, if Mehta takes this approach, he should further improve the EU rules, said SVP Kamyl Bazbaz of DuckDuckGo’s public affairs department. Users should see the prompt to choose a search engine regularly, not just once. At the same time, users should not be disturbed by Google pop-ups, and Google can’t pop up from time to time to remind users to switch the default search engine back to Google. When you use another search engine for the first time, you should also be able to set it as the default with one click.
In this way, some people may give up Google more firmly, but various frequent default settings reminders may upset some people.
3. Stripping the search business from Google
In recent years, the judicial department is more inclined to take structural punishment measures, such as requiring companies to divest some businesses. The most famous example is the split of the telephone giant Bell Company in 1980s, after which a number of independent companies including AT&T were created.
However, not all cases will be supported by the court. For example, in the case of Microsoft, they lost the antitrust lawsuit in the 1990s, and it was not split in the end, but Microsoft finally agreed to a series of behavioral adjustments.
Regulators prefer to divest the company’s business once and for all, so that the problem can be solved once and for all, and there is no need to continuously monitor whether the company complies with the regulations.
The difficulty is to determine which business parts should be divested. John Kwoka, an economics professor at Northeastern University, pointed out that the key is to identify the businesses that Google has and "distort its own incentive mechanism". For example, if the search business is divested, Google’s Android system may be allowed to cooperate with more search engines.
Hovenkamp is skeptical about whether stripping off the search business can really increase market competition. After all, this service is very popular. He said, "Even if Google search is sold, it will only give another company the dominant position. I’m not sure what kind of split can really be effective."
Some financial analysts who specialize in Google’s parent company Alphabet are also not optimistic about this practice. Moody’s rating VP Emile El Nems believes that "Alphabet’s large scale, strong execution and stable financial situation have reduced legal risks and the possible financial and business model impact."
Some legal experts have imagined a possible future scenario: search results are provided by Google, but advertising services are handled by a company separated from Google. One possible problem with this arrangement is that the accuracy of advertising may decline and may even become more annoying.
4. Force Google to share data and algorithms with competitors.
Judge Mehta emphasized in his ruling that Google received far more searches than any other search engine, and these data promoted the optimization of their algorithms, so it had a good user experience.
One of the most radical punishments is to ask Google to share data or algorithms with its competitors to make them stronger.
Rebecca Haw Allensworth, a professor at Vanderbilt University, said: "Courts usually don’t like to force competitors to share such data, but judges seem to be very concerned about how Google’s behavior weakens competitors’ competitiveness in the scale of search data." "Compulsory data sharing can directly solve this problem."
Bazbaz Baz of DuckDuckGo mentioned that all the queries users make on Google and all the results they click on are data that may be shared.
However, he needs to provide necessary technical support and customer service to ensure that other applications can also obtain Google’s search results, and can integrate these results into his own service to provide users with a competitive search experience.
Other competitors believe that Google is not doing well enough in this regard at present.
"Only by taking various punishment measures can competitors enter the market and rely on the advantages of their own products for fair competition." Lee Hepner, senior lawyer of the American Economic Freedom Project, said.
Any method involving Google’s sharing of data may cause users’ privacy concerns. If the strength of competitors increases, they will also have a greater chance to get the default settings. This means that those users who prefer to use Google may need to do some extra operations to return to their accustomed Google search.
5. Strengthen supervision to prevent Google from getting worse.
The US Department of Justice will propose possible punishment measures to Judge Mehta, and Google will have the opportunity to refute it. At present, neither side has disclosed their specific requirements.
In some other antitrust cases, Google continues to restrict competition by designing products and changing policies, one of which is to make it difficult for competitors to bear the cost of competition.
Bazbaz Baz of DuckDuckGo judged, "Google will do everything it can to hinder progress." Therefore, he hopes that Judge Mehta can establish a regulatory body to implement these measures and ensure that Google can abide by these regulations.
He also hopes that Google is required to invest in public education programs to let users know the benefits of changing to a search engine. Through these regulatory and public relations measures, users may frequently hear information about Google’s search antitrust case for a long time to come.
Third, if you lose, the worst thing may be Firefox.
Although Google lost the case in Monday’s ruling, the court did not rule that Google should implement the appeal of the Ministry of Justice. It is unlikely that the court will force Apple to abandon Google as a search partner, but it may demand that the terms of the agreement be changed to create a level playing field, such as providing multiple searches instead of becoming the default search.
If Google is asked to withdraw its agreement with Apple, theoretically, after consumers open new devices for the first time, Safari interface will display different options-such as Microsoft Bing, DuckDuckGo, etc., and Google will become a parallel choice.
At the same time, Apple will not be able to get this huge sum of money from Google. This is really a major blow to it. On Monday, Apple’s share price fell by nearly 5%. However, Apple does have diversified businesses and a wide range of income sources, so it will not fall into financial difficulties.
At present, Apple has gradually got rid of its dependence on traditional Internet search engines through artificial intelligence technology.
Apple’s eyes are on AI, improving and enriching Siri’s functions, and introducing OpenAI’s ChatGPT and Google’s Gemini chat bot into Apple’s mobile phone. Future consumers will be guided to Apple’s built-in AI and Siri instead of web browsers.
In the next few months, Apple’s system interface will change. The upcoming Apple Intelligence may change the way people use the iPhone and other devices. Once the new "type into Siri" function is implemented, users can query the AI assistant from anywhere on the iPhone, iPad or Mac interface without talking to Siri.
Apple’s coping strategy actually presents a feature of the struggle between the government and the technology industry. Technology is developing so fast that when the government liquidates it, the industry has entered the next innovation era. Apple will have the opportunity to reach new non-exclusive agreements with artificial intelligence companies such as Google, which will not violate the legal rules of the US government.
In contrast, the situation of another partner of Google is not optimistic.
Mozilla, a non-profit technology organization, is the developer of Firefox browser. After users enter text in Firefox browser and click query, the interface will automatically use Google’s search engine. According to the Mozilla Foundation’s recently published financial statement for 2021-2022, 510 million of the 593 million dollars in revenue came from Google’s search payment. If Google’s $510 million disappears completely, Mozilla will face a major financial crisis.
Mozilla first emerged in the late 1990s. At that time, the Internet Explorer browser developed by Microsoft almost had a monopoly position in the web browser market. As a community-driven project, Mozilla has been trying to break this situation. Monday’s ruling is a new challenge, or a setback, it encountered in the market dominated by giants. Earlier this year, Mozilla laid off about 60 employees and the CEO announced his resignation.
At present, Mozilla is still very brave and has not directly solved the survival problem that the ruling may pose. A spokesperson for Mozilla said, "Mozilla has always supported consumers’ competition and choice, especially in search. We are closely reviewing the court’s ruling, considering its potential impact on Mozilla, and how we can take active actions in the next step … Firefox will continue to provide a series of search options to satisfy users’ preferences and cultivate a competitive market."
Fourth, a lesson from the past: the Microsoft monopoly case finally ended in reconciliation.
The last important U.S. court ruling on science and technology antitrust was the Microsoft case in the 1990s.
In this trial against Google’s monopoly, Google repeatedly tried to explain the difference between this case and the case against Microsoft in that year. Google believes that today’s competition threshold in the search field is far lower than Microsoft’s control over personal computer software.
The current antitrust case against Microsoft has set the tone for the contest between the government and Google. The Ministry of Justice and some states believe that this search giant is following the old path of Microsoft, but the battlefield has shifted to different technology markets.
The general process is as follows:
Litigation: In May 1998, the U.S. Department of Justice, together with 19 states and the District of Columbia, filed an antitrust lawsuit against Microsoft. The main reasons for the prosecution include: Microsoft abused its monopoly position in the operating system market, squeezed out its competitors through improper means, especially bundling Internet Explorer with Windows, and attacked Netscape Navigator of Netscape.
Preliminary judgment: In June, 2000, federal judge Thomas Penfield Jackson ruled that Microsoft violated antitrust and ordered Microsoft to split into two independent entities: one responsible for operating system business and the other responsible for software application business.
Appeal and settlement: Microsoft appealed this judgment. During the appeal, Microsoft continued to argue that their behavior was a legitimate business strategy, not anti-competitive behavior, while trying to reconcile with the government to avoid the company being split up. In June 2001, the court of appeal overturned the order to split the company, but upheld the ruling that Microsoft violated the anti-monopoly law. The case was remanded to a new judge.
Final settlement: After a series of negotiations, in November 2001, the US Department of Justice and Microsoft reached a settlement agreement. The agreement came into effect on November 1, 2002.
The main contents of reconciliation:
The final settlement agreement did not require the separation of Microsoft, which is a major difference from the original judgment.
After the settlement, science and technology critic Cringely wrote in his personal column that it is impossible to split Microsoft. Microsoft has firmly controlled the market, and only major internal mistakes can make it die. "Now the only way for Microsoft to die is to commit suicide."
In the end, the verdict on Microsoft weakened Microsoft’s dominant position in the technology industry and made room for other technology companies (such as Google and Apple) to develop. This case also affected the European Union, which made a similar ruling against Microsoft in 2004.
The US antitrust case against Microsoft also laid the foundation for the competition rules of digital giants at that time.
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