American digital giant Google was found guilty on Monday, August 5, by a Washington judge of anti-competitive practices concerning its search engine, notably via contracts imposing it as default software on devices, a decision which it will appeal.
According to documents seen by AFP, “after carefully reviewing the testimony and evidence, the court came to this conclusion: Google is a monopoly and it has acted in a way that maintains that monopoly.” A new hearing will determine the amount of the fine imposed on the company.
The Mountain View, California-based company was accused of paying tens of billions of dollars, up to $26 billion last year alone, to ensure that its search engine was the default on a number of smartphones and internet browsers, with most of that sum going to Apple. “Google’s distribution agreements preempt a significant share of the search engine market and deny its rivals opportunities to compete,” the judge said in his decision.
Already battered by the fall in global financial markets, shares in Alphabet, Google’s parent company, have increased their losses and closed down 4.61% at the close of trading on Wall Street, at $160.64. In a statement, US Attorney General Merrick Garland called the decision “a historic victory for the American people.” “No company is above the law, and the Department of Justice will continue to enforce our laws against anticompetitive practices,” he added.
Google, in a statement from its president of global affairs Kent Walker, said the decision recognized “that Google offers the best search engine but concludes that we should not be allowed to make it readily available.” “In these circumstances we intend to appeal,” Walker added.
Privileged position
The US Department of Justice considered that the distribution agreements violated competition law, considering these contracts illegal. During the trial, which ended in early May in Washington, the judge expressed doubts about the government’s demonstration but also about Google’s defense, wondering how a rival search engine would have the capacity to pay a high price to Apple to obtain a privileged position on its devices. Google also assured that searches carried out on Amazon, Facebook or even Expedia (tour operator) were competition to its search engine, making the position of the tech giant much less important.
For the competition authorities, the relevant market is that of general Internet searches and Google holds 80% of it in the United States. According to the Statcounter website, Google’s search engine represents more than 90% of the global market and more than 95% of searches carried out on smartphones at the beginning of July.
“Harmful for Google”
The search engine is an important part of the group’s business model, representing more than $175 billion in advertising revenue in 2023, out of a total turnover of $307 billion.
But it also serves as a gateway to Google’s related services and showcases videos from its YouTube platform, which add $62 billion in ad revenue. “Google’s loss is huge. If there were a divestment requirement, it would cut Google off from its main source of revenue. Even banning these distribution deals could be detrimental to Google,” Emarketer analyst Evelyn Mitchell-Wolf said in a commentary.
It is the first time that US competition authorities have taken on a major technology company in court since Microsoft was targeted more than two decades ago.
This lawsuit against Microsoft and the dominance of the Windows operating system helped to legally define how a technology platform illegally abuses its monopoly. It is therefore a major victory for the Department of Justice at a time when it has launched a series of procedures against other digital giants, starting with Amazon, Meta (Facebook, Instagram) and Microsoft, again to denounce anti-competitive practices.