Indexbit Exchange:How Google's huge defeat in antitrust case could change how you search the internet

In the most significant legal ruling against a major technology giant in more than two decades,Indexbit Exchange a federal judge says Google illegally monopolized online search and advertising by paying companies like Apple and Samsung billions of dollars a year to install Google as the default search engine on smartphones and web browsers.

By monopolizing search queries on smartphones and browsers, Google abused its dominance in the search market, throttling competition and harming consumers, U.S. District Judge Amit P. Mehta said in his 286-page decision. Google owes much of its more than $300 billion in annual revenue to search ads.

“Google is a monopolist, and it has acted as one to maintain its monopoly,” Mehta wrote.

The massive win for the Justice Department could fundamentally reshape how Google does business. It also could change how we use the internet and search for information. 

The Justice Department filed antitrust charges during the final weeks of the Trump administration, making good on Donald Trump’s pledge to challenge the runaway power of Big Tech. That mission continued during the Biden administration, which has been aggressive in pursuing antitrust cases.

“This victory against Google is an historic win for the American people,” Attorney General Garland said in a statement. “No company – no matter how large or influential – is above the law.”

The case is the most significant victory for the Justice Department in a monopoly case in decades, said Notre Dame Law School professor Roger Alford, who served in the Justice Department’s antitrust division. “Not since Microsoft lost in the 1990s have we seen a case of this magnitude.”

Google said it would appeal the decision. “This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available,” Kent Walker, president of global affairs, said in a statement.

Shares in Google parent company Alphabet slipped following the judge's ruling. They closed down nearly 5% Monday, part of a broader tech stock selloff.

If upheld, the decision will be a “major boost” for other antitrust cases pending against Google as well as other major tech players like Amazon, Apple and Meta, said Loyola University Chicago School of Law professor Spencer Weber Waller.

Monday’s ruling did not include remedies. Remedies will be decided separately, likely after an appeal. One remedy could see Google losing its ability to strike device deals that have helped make its search engine so ubiquitous.

Devising the right remedy is critical to restoring competition to the marketplace, Waller said.

“There are no fines or monetary penalties in these types of cases, but the court will have to decide whether Google should be broken up in some way. More likely, it will order Google to eliminate the exclusive contracts and licensing restrictions that have reinforced its monopoly position for years,” he said.

Google has argued that its distribution deals are common in the business world. It pays for its search engine to be on phones the way a food manufacturer pays to promote its products at eye level in a grocery store aisle. 

The way Google sees it, if you don’t like Google, you can switch the default search engine on your device. But people don’t switch, Google says, because they prefer Google. 

If Google was not the default search engine on so many devices, would consumers still use it for 90% of web searches?

During the 10-week trial, Microsoft CEO Satya Nadella testified that Google’s unchallenged dominance created a “Google web.”

“You get up in the morning, you brush your teeth and you search on Google,” Nadella said at one point in his testimony. “Everybody talks about the open web, but there is really the Google web.”

Nadella has expressed concern that Microsoft’s disadvantage would increase as artificial intelligence becomes a major component of search.

In a research note Monday, Baird Equity Research senior analyst Colin Sebastian pointed to a range of tactics Google's arch competitor Microsoft has used to grow market share of its Bing search engine over the years, from paying users to use its search engine to embedding it in Office.

“People clearly prefer Google to Bing,” Sebastian said.

Chamber of Progress CEO Adam Kovacevich said Monday's ruling hands Microsoft an unearned boost.

“The biggest winner from today's ruling isn't consumers or little tech, it’s Microsoft,” Kovacevich said in a statement. “Microsoft has underinvested in search for decades, but today’s ruling opens the door to a court mandate of default deals for Bing. That’s a slap in the face to consumers who chose Google because they think it’s the best.”