Google CEO Sundar Pichai testifies before the House Judiciary Committee in the Rayburn House Office Building on December 11, 2018 in Washington, DC.
Alex Huang | Getty Images
In Monday’s ruling Google U.S. Judge Amit Mehta cited the company’s monopoly in online search in one of the most famous technology antitrust cases in U.S. history: Microsoft.
a federal judge Decide In 1999, Microsoft illegally used the market power of the Windows operating system to exclude a rival browser, Netscape Navigator. The 2001 settlement forced the software giant to stop disadvantaged rivals in PC deals.
Google’s Landmark caseA government lawsuit filed in 2020 alleges that the company maintained its share of the search market by erecting strong barriers to entry and feedback loops that maintained its dominance. The court found that Google violated Section 2 of the Sherman Act, which prohibits monopolies.
“The ultimate outcome here is no different than the Microsoft court’s conclusion regarding the browser market,” Mehta wrote in the 300-page ruling. “Just as the agreement in that case helped keep Navigator usage within Navigator or any other competitor below the critical level required to pose a real threat to Microsoft’s monopoly, Google’s distribution agreement also limits the volume of inquiries from its competitors, thereby preventing Google from responding to any real competitive threat.
A key similarity, Mehta said, is the “power of presupposition.” For Google, this means that it apple iPhones and Samsung devices — deals that cost companies billions of dollars One year’s expenses.
“Users are free to navigate to Google’s competitors through non-default search access points, but they rarely do so,” Mehta wrote.
Mehta said a separate trial will be held on September 4 to determine remedies or penalties against Google. At that point, Google can appeal, a process that experts say could take about two years. Microsoft appealed its initial ruling and eventually settled with the Justice Department.
“All along the government has said implicitly or explicitly that they’re basing this case on the Microsoft case,” said Sam Weinstein, a law professor at Cardozo School of Law and a former Justice Department antitrust lawyer.
In the Microsoft case, Judge Thomas Penfield Jackson found that the company forced PC makers to install its Internet Explorer browser in Windows and threatened to punish them for installing or promoting Navigator. The judge recommended that Microsoft spin off either its operating system business or its applications business, both of which enjoy market leadership.
After Microsoft successfully appealed, the U.S. District Court prohibit The software company is exempted from retaliation against device manufacturers for shipping PCs with multiple operating systems. Microsoft is required to provide software and hardware companies with the same programming interface as Microsoft middleware for Windows.
Nicholas Economides, an economics professor at New York University’s Stern School of Business, said the similarities in the Google case are clear.
“My first reaction to this is that Google seems to have failed across the board,” Economides said. “This huge blow reminds me of the Justice Department’s victory against Microsoft.”
Risks of Core Search
Some legal experts believe the most likely outcome is that courts will require Google to void certain exclusivity agreements. The court could recommend that Google make it easier for users to try other search engines.
While fines are also on the table, the greater risk is that Google will have to change its business practices in a way that hurts profitability. For example, if Google were no longer considered the default search engine on smartphones, it could lose a significant portion of its core market.
inside second seasonAmong them, “Google search and other” revenue was US$48.5 billion, accounting for 57% of Alphabet’s total revenue.
In its appeal, Google is likely to present new evidence that artificial intelligence is taking on more of a competitive role, a dynamic that didn’t exist when the Justice Department filed its original lawsuit. However, since being upstaged by OpenAI, Google has tried to downplay this perception. Chat GPT.
Neil Chilson, the former chief technologist at the U.S. Federal Trade Commission and now head of artificial intelligence policy at the Abundance Institute, believes that Google’s increased competition is partly due to artificial intelligence, which may help the company’s develop.
Chilson said: “The strict market definition means that the court found that Google illegally maintained a monopoly in general search.” But “search vertical providers” are like Amazon Chilson said that artificial intelligence services such as ChatGPT “have the potential to disrupt Google’s entire general search advertising business model.”
Google shares were little changed after Monday’s ruling, as the stock was already trading lower amid a broad market sell-off. The stock fell another 0.6% on Tuesday to close at $158.29. Google did not comment on this report.
Since Mehta did not discuss potential remedies in the ruling, investors and analysts were forced to wait. Experts say it’s unlikely that Google will be forced to break up.
“I think in the Microsoft case there were clear businesses that could be divested, but it’s not that clear here,” Weinstein said, adding that divestitures are rarely ordered in Article 2 cases.
The trial, which begins on September 4, will provide some important answers. Bill Bell, who ran antitrust divisions at the Federal Trade Commission and the Justice Department, said Microsoft’s precedent makes the case against Google stronger.
“It’s hard to say at this point what the Justice Department will seek and what the judge will accept,” Bell said.
—CNBC’s Jordan Novet contributed to this report.
