Google may be a monopoly, but it’s not clear what to do about it

In the corporate world, the United States has seen some of the planet’s biggest antitrust cases. Think for instance of the 1911 case by the U.S. government against Standard Oil of New Jersey, or the 1982 case against AT&T. In both of these cases anti-competitive actions by the companies led to their eventual breakup.

Fast forward from there to August 5, 2024, when a U.S. judge ruled that search giant Google engaged in anti-competitive actions in violation of antitrust laws, spending billions of dollars to, in effect, become the default search engine for most people, a monopoly if you will.

Should the ruling stick, and more importantly, should a subsequent trial end with major changes ordered for the Google search product and for its parent company Alphabet, it may mark a first big victory for the U.S. vs. Big Tech.

Here’s the key wording from Washington, D.C., U.S. District Judge Amit Mehta: “The court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly.”

Also key in the judicial finding is that Google paid many billions of dollars to third parties to ensure its search engine was the default product on their devices. This made the entry of potential competitors a prohibitively expensive venture.

Through its Google search engine, Alphabet nets about 70 per cent of its revenues. Any action to sever Google Search from Alphabet would be potentially ruinous for the company. Of course, any penalty or divestiture ruling could be years away. After all, this case was first brought under the Trump administration.

For Big Tech this won’t be the only antitrust case. The U.S. Justice Department has other cases pending against Meta Platforms (parent company of Facebook, Instagram, WhatsApp, and more), Amazon, and Apple. All of these cases allege that the companies run illegal monopolies. In a peripheral August ruling a U.S. court ordered that Amazon be responsible for product safety recalls for items ordered through its platform.

There is an argument to be made that when it comes to “Big Tech,” at least in America, the companies win even if they lose in a legal sense. Consider Microsoft, among the biggest of the big in technology. Some may remember Microsoft coming to the rescue with a $150 million investment when Apple was on the financial ropes. Today both are trillion-dollar companies and yet the U.S. government sought to break up Microsoft over the use of its internet search engine, Internet Explorer.

At first U.S. regulators wanted to take action against Microsoft for essentially controlling the personal computer market through the dominance of its Windows operating system. When that avenue was dropped, the American Department of Justice pursued an antitrust case around the difficulty of installing competing software products, in particular internet browsers, on Windows-based machines.

As part of the verdict Microsoft was ordered broken up into two entities, a company responsible for operating systems, primarily the Windows OS, and another company to handle all other software from Microsoft.

Microsoft won on appeal and of course the company was not broken up into separate and distinct businesses. It did change the way the Internet Explorer browser was bound into the Windows operating system and competing products forever changed that space. Today Internet Explorer is but a footnote, although aspects of it live on in Edge and Bing.

It is far from clear what will become of the Google case. Search is fundamental to Alphabet-Google. On the face of it the U.S. DOJ has a stronger case than it did against Microsoft more than three decades ago.

At the same time, Judge Mehta noted Google was able to achieve market dominance in search not by sheer chance but by being continually innovative and making “shrewd business decisions.” Even more telling, Mehta said Google through its innovation had created the “highest quality search engine” in the field.

Apple, which takes billions in annual payments from Google to have its search products on its devices, says there’s really no competitor, suggesting its end users, its customers, want the Google product rather than say Bing from Microsoft. 

What about here in Canada? Our own Competition Bureau has been investigating Google’s anticompetitive practices in the advertising space. Where that will lead only time can tell. For most Canadians, their only recent example of antitrust or anti-competitive corporate behaviour was the Weston Bakeries bread price-fixing scheme.

For now, the net effect of Mehta’s finding is minimal, and certainly of no consequence at the user level. At the legal level Alphabet is sure to appeal the finding, just as Microsoft did so long ago.

Follow me on Facebook (facebook.com/PeterVogelCA), or on Twitter (@PeterVogel)

[email protected]

Your voice matters! Join the conversation by submitting a Letter to the Editor here.