The foundation of the Google (GOOG, GOOGL) empire took a major blow on Monday after a judge found its search and advertising businesses violated antitrust laws.
The ruling, made by District of Columbia Judge Amit Mehta, sided with the US Department of Justice and a group of states in a set of cases alleging the tech giant abused its dominance in online search.
“After having carefully considered and considered the testimony of witnesses and evidence, the court reached the following conclusion: Google is a monopoly, and has acted as one to maintain its monopoly. It has violated Section 2 of the Sherman Act,” Mehta wrote in . his rule.
Although Google is expected to appeal the decision, the findings, if upheld, could prohibit the contract for the whole year but guarantee the dominance of Google search ads.
By 2023, Google’s search advertising business will generate more than $175 billion.
Combined with Google’s YouTube ads and Google’s network revenue, which is promoted on search engines in general, these ads generated $237 billion of the company’s total revenue of $307 billion.
By June 2023, Google will control 91% of the global search engine market across all computing platforms, according to Statcounter. In mobile, Google’s market share is even higher at 95%.
Nearly four years ago, in October 2020, when the DOJ and the states filed suit, Google’s annual revenue was $162 billion, about half of the most recent revenue reported for that year.
The decision is a big win for the Justice Department and could have big implications for some other big names in the tech world.
That’s because Apple ( AAPL ), Amazon ( AMZN ), and Meta ( META ) are defending themselves against a series of federal and state-led antitrust suits, some of which have made similar claims.
The investigation is part of a broader effort by the Biden administration to crack down on what it sees as anticompetitive behavior across a range of industries, from health care to groceries to technology.
Google’s decision comes after a two-month trial late last year that included testimony from Google CEO Sundar Pichai, as well as executives from search marketplace rivals Microsoft ( MSFT ) and DuckDuckGo.
DOJ and 35 states, along with Guam, Puerto Rico. and the District of Columbia, accusing Google in a separate lawsuit of unfairly holding market dominance in search, including search engines, search engine ads, and search engine text ads.
The cases were handled simultaneously because of similar allegations that Google held a monopoly by paying companies like Apple, Amazon, Mozilla, and Firefox to make Google the default search provider on mobile phones, tablets, and browsers.
At the time of the lawsuit, Google held a 90% share of online searches. At the trial, the lawyer argued that Google acquired and held the outstanding shares not by anticompetitive behavior, but by providing a superior product.
Google’s disputed behavior concerns contracts it enters into with computer and mobile device manufacturers, as well as with browser services, browser developers, and wireless carriers.
The contract, the government argued, violated antitrust laws because it made Google the default search provider.
Companies that have signed exclusive contracts include Apple, LG, Samsung, AT&T, T-Mobile, Verizon, and Mozilla. These deals are why smartphones from manufacturers including Samsung, one of the world’s largest smartphone makers, are preloaded with various Google apps.
At trial, Google argued that despite holding a monopoly on the search market, the contract did not violate antitrust laws or harm competition.
Microsoft’s Bing accounts for only 3.74% of the global market across all platforms, while Yahoo Finance’s affiliate company Yahoo accounts for 1.16%. In the US, Google controls 87% of the search market across all platforms. Bing has 7.2%, Yahoo has 2.4%, and DuckDuckGo has 1.9%. On mobile, Google holds 95% of the US search market.
The global search industry is also in the midst of major changes as companies increasingly rely on generative AI responses for their services.
Google has added the AI ​​Summary feature to its standard search service, providing users with generative AI-powered answers to queries that summarize content found on various websites in a special window on the search engine’s standard website links.
Microsoft offers a Copilot feature on its Bing search engine, which provides similar functionality to Google’s AI Overview.
The move to generative AI-powered search results raises additional questions about the fate of the search industry, including whether websites used to summarize AI results receive appropriate credit for their contributions.
In addition, these features raise concerns that providing users with answers to questions in boxes that take content from third-party websites will prevent users from visiting the site, which will dramatically affect page views and revenue.
At the end of the trial, legal experts predicted that the DOJ’s landmark cases against Microsoft in 1998 and AT&T in 1974 could be instructive for the outcome of the Google case.
The three cases are “vertical foreclosure cases,” antitrust challenges aimed at companies that use vertical integration of different businesses or services to foreclose on competition.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him at X on @DanielHowley.
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