Alphabet's Google broke the law with monopolistic behavior over online search and related advertising, a federal judge ruled on Monday, marking the first victory for U.S. antitrust authorities challenging Big Tech's market dominance. This significant win for the Justice Department comes after it sued the search engine giant over its control of about 90% of the online search market, and 95% on smartphones.
"The court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly," U.S. District Judge Amit Mehta wrote. His ruling paves the way for a second trial to determine potential remedies, such as breaking up the company or requiring it to stop paying smartphone makers billions of dollars annually to set Google as the default search engine on new phones. This phase could be lengthy, followed by potential appeals to the D.C. Circuit and U.S. Supreme Court, possibly stretching into 2026.
Market Overview:
- Alphabet's Google found guilty of monopolistic behavior.
- Judge rules Google maintained its monopoly illegally.
- Shares of Alphabet fell 4.3% following the ruling.
Key Points:
- Justice Department wins significant antitrust case.
- Google paid $26.3 billion in 2021 to remain the default search engine.
- Remedy phase could result in breaking up Google or other major changes.
Looking Ahead:
- Potential lengthy legal process with appeals possible until 2026.
- Other Big Tech antitrust cases could be influenced by this ruling.
- Federal antitrust regulators continue to target other major tech companies.
Shares of Google parent Alphabet fell 4.3% on Monday amid a broad tech share decline. Alphabet announced plans to appeal Judge Mehta's ruling. Mehta noted that Google paid $26.3 billion in 2021 to ensure its search engine remains the default on smartphones and browsers, maintaining its dominant market share.
The ruling is the first major decision in a series of cases taking on alleged monopolies in Big Tech. Filed by the Trump administration, the case was heard from September to November. "A forced divestiture of the search business would sever Alphabet (GOOG) from its largest source of revenue. But even losing its capacity to strike exclusive default agreements could be detrimental for Google," said Emarketer senior analyst Evelyn Mitchell-Wolf. In the past four years, federal antitrust regulators have also sued Meta Platforms (META), Amazon (AMZN), and Apple (AAPL), claiming illegal monopolies. Another case against Google (GOOGL) over its advertising technology is scheduled for trial in September.
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