To secure its position as the search engine giant, Google broke the law, a district court judge decided Monday. In the conclusion of a massive, multiyear legal battle, Amit P. Mehta, a judge of the U.S. District Court for the District of Columbia, ruled that the company violated section two of the Sherman Antitrust Act of 1890. “Google is a monopolist, and it has acted as one to maintain its monopoly,” Mehta wrote in his 277-page judgment for a pair of consolidated 2020 lawsuits brought by the Department of Justice and several U.S. states.
In his ruling, Mehta pointed to the dominance of Google’s search engine. Nearly 90 percent of all Internet searches—rising to nearly 95 percent of all searches on smartphones—went through Google Search by 2020. Its main competitor, Microsoft Bing, accounts for only about 6 percent of all searches. Google’s business practice of dominating the market by entering into contracts to make its general search engine the default option for companies that manufacture Android devices was illegal, the judge said. Google has also spent billions of dollars to ensure its search engine is the default on Apple gadgets.
The company’s own research revealed its overbroad influence, too, Mehta noted. “In 2020, Google conducted a quality degradation study, which showed that it would not lose search revenue if [it] were to significantly reduce the quality of its search product,” he wrote. A company that knows it can make its product worse “without concern of losing consumers,” he added, is “proof of monopoly power.”
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Google plans to appeal this decision, said Kent Walker, the company’s global affairs president, in a statement to Scientific American. “This decision recognizes that Google offers the best search engine but concludes that we shouldn’t be allowed to make it easily available,” Walker said. “As this process continues, we will remain focused on making products that people find helpful and easy to use.”
This is the biggest U.S. antitrust decision since the DOJ won a lawsuit against Microsoft two decades ago. (Microsoft avoided breaking up by winning an appeal.) Legal observers have described the Google case as a landmark—a description it merits as the “first of the modern digital platform cases to come to a conclusion,” says Fiona M. Scott Morton, an economics professor at the Yale School of Management, who served as the DOJ’s top antitrust economist in the Obama administration. She has also consulted for companies, including Amazon and Apple.
Big tech has recently faced a flurry of lawsuits. Last year, for instance, the Federal Trade Commission sued Amazon, alleging the e-commerce company had monopoly power to inflate prices. Monday’s outcome “generally helps set the tone that these are companies that are not too big to lose,” says Scott Morton, who had co-authored a 2020 working paper that argued that Google Search is a monopoly. The court got two “basic points” exactly right, in her view: that Google’s overwhelming share of searches gave it the ability to raise prices beyond a competitive level and that its exclusive contracts prevented other companies from attempting to enter the general search market.
Scientific American spoke with Scott Morton to understand what might happen next and what this decision might mean for people who just want to find the best answers to their questions.
[An edited transcript of the interview follows.]
You said this ruling helps establish that big tech is “not too big to lose.” Was that a concern?
I think that [big tech] would say, “Google is marvelous. It’s an example of American innovation. It’s a great success.” In a monopolization case, you’re always balancing whether that great success was achieved ... “on the merits” or through some kind of conduct that was actually harming competition. So if the company can convince the court that the reason they’re giant and profitable is because they’re just marvelous and that’s all, then you have this difficulty of enforcing the antitrust law.
What happened in this case?
It’s a very simple situation, really. There are two ways to get on to a handset: through the Google Android handset or through the Apple handset. And Google mandated to its OEMs [original equipment manufacturer, such as phone maker Samsung] that its search engine had to be the exclusive default preinstalled on all Android phones. And then it paid Apple a [nearly] 40 percent share of search revenue to be the exclusive default [for queries made via Apple’s Safari browser].
And then if you’re an entrepreneur, and you have a good idea for how to make a better search engine, where are you going to get customers?
Google spokespeople have said the company will appeal this decision. Do you think the case will end up in front of the Supreme Court?
Yeah! Probably.
In your 2020 paper, you describe hypothetical ways the government could force Google to make changes or fix the harms it’s caused. (Such potential remedies will be decided separately in a later trial. Any legal appeals will need to be resolved before Google has to take any action.) What might happen here? I’m a regular user of Google Search, as I’d imagine most people reading this are. How might our search experiences change?
The first thing would be to stop Google from [making payments] in exchange for an exclusive default position. That will deprive Apple of $20 billion in revenue, and so Apple will have to decide, “Do we just give that up? Or do we make our own search engine in which we can capture that revenue ourselves?” That might cause an Apple search engine to arise, which would be interesting and provide choice to your readers.
A second remedy that I think would be impactful is [if Google were to divest its] Android operating system [OS], by which I mean the Android Open Source Project, plus Google Play Services, which together form the mobile operating system that Google uses. [In this scenario, the company would] just divest that [OS] into an independent corporation that would be subject to a regulated price for a few years.
If Samsung only has one choice of an operating system to license—namely Google’s Android—and Google supplies it with the OS and all kinds of other features and services, what happens when something goes wrong? Is Samsung really going to want to install Bing on its phones and make Google upset and potentially jeopardize valuable support it needs for the operating system? That would be a hard thing to ask an OEM to do.
Whereas if the operating system is an independent corporation that’s just freestanding and selling to anybody at $10 a head, Samsung knows for sure it can license an operating system. Then it can [tell] Google..., “We’ll put you as a default search in one place, but on some of our handsets, we want to put Bing because Bing is offering us a higher revenue share.” And then users can always change their default, of course. But ... it would cause both Google and Bing to compete to give a higher revenue share to the OEM.
The nice thing about that is that because the OEMs are quite competitive with one another, a higher revenue share from search is like a subsidy to the phone. And so you and I would go out, and we’d find that phones would get cheaper because Samsung and Motorola and HTC would all be effectively earning money from us. And so they’d say, “Wow, if I can get $300 a year in search revenue from this customer, I’m willing to give them a free phone because that’s a lot of money.” The freeing up of this marketplace would move some of Google’s monopoly profits into the hands of consumers through lower phone prices.
If Google hadn’t monopolized search, what might the online landscape look like?
You could easily imagine a search engine saying, “Well, our algorithms are a little worse, but we give you a really clean page with organic links and a couple of clearly marked ads down the side, which you can look at or not as you please.”
Realistically, could that be a consequence of this ruling?
We’ll have to see what the government asks for in terms of remedy. That’ll be the question.
I think it’s important that OEMs and browsers have the ability to choose their own defaults. We need, ideally, to spin off Android so that the OEMs who use Google are free to do whatever they want with search and don’t feel that Google has the ultimate power of taking away their operating system, which is the case right now.