A historic ruling against Google could change the internet as we know it

A federal judge found Monday that Google’s search business constitutes an illegal monopoly, a landmark ruling and major victory for the Biden administration as it seeks to clamp down on Big Tech. The decision has the potential to bring major changes to the internet — and sends a signal that no company is too big to regulate. US District Judge Amit Mehta found that “Google is a monopolist, and it has acted as one to maintain its monopoly.” That involved protecting its dominance in the search engine market; Mehta focused particularly on the fact that Google signed contracts with companies, including Apple, to become the default search engine on their devices. Google currently enjoys a nearly 90 percent share overall and an almost 95 percent share on mobile devices. Google has vowed to appeal the ruling, which it has framed as an attempt to make it harder for consumers to access a search engine they prefer. The appeals process could take years to play out, and Judge Mehta has yet to levy specific penalties against Google, which will be decided following a hearing in September. While it may be true that many consumers prefer Google over any currently available alternative, should the ruling stand, it may allow a competitor to devise a better product, and one that actually has a real chance to penetrate the market. And that could mean more search options for consumers. “If the door is locked, you can’t get consumers,” said Fiona Scott Morton, a professor at Yale School of Management and former chief economist at the Justice Department’s antitrust division. “The door isn’t locked anymore. The door is open [to] a whole industry of innovators who have good ideas, and then we would see a change in competition going forward.” What the Google antitrust ruling means for the company, the internet, and consumers The implications of the case, which was initially brought under the Trump administration, aren’t yet entirely clear. Much of it may depend on exactly how Mehta decides to penalize Google, and how difficult that penalty makes doing business. In weighing punishment, Mehta will need to meaningfully penalize Google while minimizing any negative impacts on consumers — and that is a “real quandary,” said Herbert Hovenkamp, an antitrust scholar at the University of Pennsylvania Carey Law School. Perhaps the most likely remedy would be to force Google to exit any contracts it signed with device makers to offer Google as a default search engine for a certain sum of money. But that might have minimal immediate impact on Google: those makers may still decide to make Google their default search engine. “Apple will just end up doing what it’s already doing,” Hovenkamp said. “And that may be true for a lot of device makers.” But if a better search engine eventually comes along — say, one powered by AI, with better safety and privacy standards, or even a different way of displaying ads — then device makers don’t have to stick with Google. Fundamentally, that kind of competition should spur innovation, which is good for consumers. Scott Morton said that Google is currently the best search engine in part because almost everyone uses it and it has exclusive positions on various device operating systems, which creates a “self-perpetuating circle.” Its user base gives it a large volume of data and reliable revenue opportunities that it can then use to cover the development, marketing, and acquisition costs that help it keep its edge. “Once you break that, we don’t know what might happen,” she said. “It could be very exciting.” What the ruling means for other Big Tech companies In addition to its implications for the future of the internet, the ruling could affect the way other Big Tech companies do business. “What it signals is that if you’ve got a dominant product, you’ve got to be very careful to make sure that your licensing and contract agreements are open, because making them exclusive can be dangerous,” Hovenkamp said. That could mean greater caution around partnerships between companies. The Google ruling could also serve as a template for future antitrust cases, Hovenkamp said. But it’s not clear how predictive this case will be of the other pending antitrust lawsuits that the Biden administration has filed against Big Tech companies. It has several in process: * It has accused Apple of maintaining a monopoly on the US market for smartphones, of which the iPhone makes up 65 percent. The complaint alleges that Apple has deliberately thwarted apps, products, and services that would make it easier for users to switch from the iPhone to other smartphones and lower costs for consumers and developers. * It sued Google a second time over the company’s ads business, which it claims has achieved dominance through anti-competitive mergers and by strong-arming publishers and advertisers. * It has accused Meta of acquiring Instagram and WhatsApp to stymie competition and prevent consumers from having access to other social media platforms. A federal judge initially dismissed the lawsuit, ruling that the government had failed to define the market in which Meta has held a monopoly, before allowing the administration to refile. * It has accused Amazon of preventing its sellers from offering lower prices on other online platforms and prioritizing its products over third-party products, artificially keeping prices high and quality down. Scott Morton said that each of those cases is different in terms of their content and precedent from the Google case, which relied on a ruling against Microsoft in the late ’90s over its anticompetitive practices to maintain its monopoly in the PC market. “The behavior of Google was very similar to the behavior of Microsoft, and so that similarity allowed the Justice Department to show the judge that this conduct really fit into that same pattern and therefore should be treated the same way, namely made illegal,” she said. The Google case might not therefore serve as a precedent in the existing cases against other Big Tech companies. But it has contributed to a significant vibe shift in terms of how tech companies can expect to be regulated. “What is different is a change in the temperature,” Scott Morton said of the effect of the ruling in Silicon Valley. “These firms are not too big. We have applied the law to them, and we have found that — even though they’re American, even though they’re innovative and spend money on R&D, even though they have executives who look good in the suit — they can still be found liable.”