Google has been found guilty of anti-competitive practices and abuse of its monopolistic position in the United States, following its antitrust trial. The company is exposed to a potential break-up. And Mozilla risks being a collateral victim…
It’s a real bolt from the blue that hits Google! In 2020, the Department of Justice – the body that handles antitrust cases alongside the Federal Trade Commission (FTC) – filed a complaint against the company, accusing it of having spent billions of dollars to maintain the monopoly of Google Search and prevent competition from emerging. The trial was held from September to November 2023, with the Mountain View firm striving to prove that its strategy was legitimate, while the US Department of Justice claimed that it had caused harm to competing search engines and consumers.
Finally, as reported CNBCthe American court ruled on August 5, 2024 that the Internet giant had indeed illegally maintained its positions, spending billions of dollars to be the default search engine on several web browsers, on computers as well as on smartphones. This is what is called a monopoly situation. Google has therefore indeed violated section 2 of the Sherman Act, the text legislating on anti-competition in the United States. And, for that, the company simply risks being dismantled. Finally, Donald Trump may not have been entirely wrong in saying that Google was “close to closing”…
Google antitrust trial: billions of dollars to secure its monopoly
Proving that Google had abused its dominant position was no easy task. But the Justice Department ultimately succeeded in demonstrating that the company had restricted competitors’ ability to compete fairly. The various agreements signed, referred to as “anti-competitive practices”limit the opportunities for other search engines to penetrate the market, thus consolidating the monopoly of the Mountain View firm. “Google is a monopoly, and the company acted as such to maintain its monopoly”the judge wrote in his decision.
Following this conviction, the Internet giant will be fined, the amount of which will be determined at a future hearing. The courts could also require Google to restructure, or even sell off its entire activities – a dismantling – as it did for Microsoft more than twenty years ago.
As a reminder, the antitrust trial against the Redmond firm took place at the end of the 1990s and concerned the dominance of the Windows operating system. In 2000, the company was finally found guilty of anti-competitive practices and was ordered to be dismantled. The courts then asked Microsoft to split into two separate companies, one that would produce the operating systems (Windows) and another that would produce the software (Word, Excel, etc.). The company appealed and escaped this sentence in 2001, after the dismantling sanction was rejected by the appeal court, which nevertheless upheld the accusation of monopoly.
For its part, Google has already announced that it will appeal its conviction. The group claims that searches carried out on Amazon, Facebook and Expedia are competition for its search engine and that its distribution agreements are beneficial for consumers and comply with antitrust laws. For them, Internet users do not use Google because they have to, but because they want to. The company also points out the ease of the process for changing the default search engine. In any case, the consequences for the company may not be visible for several years.
Google antitrust trial: Mozilla and Firefox in turmoil
The trial’s ruling could well have repercussions on other digital players, and in particular on Google’s partners, who benefit from significant revenues through this channel. According to the New York Timesthe contract between Apple and Google reaches 20 billion dollars. If Google is indeed going to have to stop its payments, Apple will then have to do without this financial windfall. We are not too worried about the Cupertino company, which should absorb this loss without too many problems. But that is not the case for everyone.
Indeed, the Mozilla Foundation, which oversees the development of the Firefox web browser, could well be feeling the pinch. It has had an agreement with Google since 2017 to make its search engine the default gateway to the web on the browser. And for this, the digital giant pays hundreds of millions of dollars to Mozilla, to the point of representing its main source of income. According to figures provided by the foundation in its annual reportof the $593 million released in 2022, $510 million comes from “the integration of its clients’ search engines by default or as an option in the Firefox web browser”and more specifically Google.
Also, if Firefox were to permanently separate from Google, this financial hole could well cause its definitive downfall, while the web browser is already struggling to survive against Chrome and Edge, which together have nearly 90% of the market share. According to StatcounterFirefox is satisfied with only 2.74%. Asked by FortuneMozilla simply stated that the foundation “has consistently championed competition and choice online, particularly in search. We are carefully reviewing the court’s decision, considering its potential impact on Mozilla and how we can positively influence next steps.”.
Google trial: how effective are US antitrust laws?
The question is, however: why are we only taking up this case now? Google’s practices and its monopoly have been going on for decades. Are US antitrust laws really effective? The problem seems to come from the role of the FTC. Indeed, since the 1980s, judges have limited themselves to asking whether the behavior of the company accused of anti-competitive practices led to an increase in prices for consumers or not. They only sanction if prices actually increase. However, in the case of Google – but also of many other digital giants – the products and services are free. As a result, there is no notion of price, strictly speaking. This is why no digital giant has ever been convicted for anti-competitive practices, with the exception of Microsoft.
And even in this case, as we have seen, the option of dismantling has very little chance of succeeding. The same is true this time. Indeed, Google is an American digital player that is far too important on a global scale. It is unlikely that in the midst of a showdown with China, the United States will choose to dismantle the spearhead of its companies. Geopolitical considerations are likely to take precedence over competition issues… It is more likely that the judge will claim damages and prohibit new agreements, as was the case for Microsoft.
For its part, the European Union has adopted a different strategy. It has preferred to implement a series of regulations, such as the GDPR, the DMA and the DSA, with the aim of regulating digital giants upstream. The aim is to ensure that these companies adopt good conduct in a preventive manner, before the damage is done. The consequences are already visible, including on Google’s side, since smartphones and computers must now ask users to choose their default web browser and search engine. But the impact of these measures remains limited, because using Google Search has become a reflex after years of monopoly. Justice is coming too late on the issue…