Alphabet Inc. (GOOG) has lost a major antitrust ruling in Washington after a judge ruled that the tech giant had used exclusive deals to illegally monopolise the online search industry through Google.
Google Loses Major Antitrust Court Case
Judge Amit Mehta produced a 286-page ruling that gave the US government its first significant antitrust win against the tech industry in close to two decades. Key to the decision was the ruling that Google has paid $26bn to ensure that its search engine was placed on smartphones and web browsers as the default option. This essentially meant that its competitors were prevented from making inroads into this market. The judge said:
The trial evidence firmly established that Google’s monopoly power, maintained by the exclusive distribution agreements, has enabled Google to increase text ads prices without any meaningful competitive constraint.
He pointed out that the company’s distribution agreement contained clauses that impaired the opportunities for rivals to compete with it.
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In this way, Google was able to carry on raising the cost of online advertising without suffering any negative consequences. The government’s case was partly based on evidence that Google has paid companies including Samsung and Apple huge sums of cash to obtain prime position on their smartphones and web browsers. By doing this, Google has retained its position as the most-used search engine and generated $300bn in annual search ad revenue.
GOOG shares fell by over 4% once the news was released. The company could be forced to pay billions of dollars if it fails to overturn the decision on appeal.
