Google Drops Biggest Tech Antitrust Ruling in Two Decades — Will an AT&T-style breakup be next?

Closing arguments in the largest antitrust trial to date Alfabet sp (NASDAQ:GOOG) (NASDAQ:GOOGL), also known as Google, closed last week.

Now it all depends on the judge Amit Mehta make a decision that could change the fortunes of the company and others in the big tech space.

Mehta of the U.S. District Court for the District of Columbia is expected to issue a ruling before the end of the year.

The case was brought in 2020 by the Department of Justice, along with attorneys general from 11 states, who claim that Google engaged in anticompetitive practices in order to maintain its dominance in the online search space.

Specifically, it concerns the billions of dollars that Google pays other technology companies every month to secure its place as the default search engine in Apple Inc (NASDAQ:AAPL), SAMSUNG, LG, Motorola owned by Lenovo Group Ltd (OTC:LNVGY) and other devices, as well as in browsers such as Mozilla Firefox and Opera. The plaintiffs argue that this practice prevents other companies from succeeding with their own search products by giving Google a disproportionate market share in the search engine space.

Last week, court documents revealed that Google would pay Apple $20 billion in 2022 to be the default search engine on Safari, the web browser used on iPhone, iPad and Mac devices. In 2021, that number was $26.3 billion when other browsers like Firefox are included.

Google is estimated to account for approximately 90% of all Internet searches, far outpacing competitors such as Microsoft‘s (NASDAQ:MSFT) Bing, Peasant Search or DuckDuckGoa privately owned search engine focused on user privacy.

Closing arguments from Google’s lawyers and a Justice Department lawyer David Dahlquist after a 10-week study lasting from September to November 2023.

Read also: Google fights changes to Fortnite Maker Play Store amid antitrust battle: what’s at stake?

However, the case was prepared by the Department of Justice for three years. The main argument of the lawsuit is that Google’s control over today’s Internet is extensive enough to be considered a monopoly, and that it violated antitrust laws by paying competing companies, cell phone manufacturers and wireless Internet providers to maintain its position as the default search engine .

The company then benefited from additional traffic through advertising activities.

For its part, Google argued that its dominant position in the market was solely due to the superior quality of its products under fair competition. While the company admitted to paying partners and competitors to keep its search engine at the top, it argued (both in the September 2023 open letter and in the lawsuit) that web browser makers choose to feature Google of their own volition.

The company also argued that competitors such as Yahoo and Bing also pay browser makers to get preferential positioning on their software and that users can very easily change the default search engine on any device.

The importance of the process cannot be overestimated. The case marks the first time in more than two decades that the federal government has prosecuted a major technology company on antitrust charges, since a U.S. judge ruled that Microsoft violated domestic antitrust laws in 2000 in a lawsuit brought by the Justice Department and 19 states in 1998 r.

The consequences of this decision could also spill over into several other antitrust lawsuits currently rocking Big Tech companies, including the Federal Trade Commission’s ongoing antitrust investigation into Inc (NASDAQ:AMZN), as well as an investigation by the same agency Meta Platforms Inc (NASDAQ:META), the parent company of Facebook, Whatsapp and Instagram.

Google is also under fire in Europe, where the EU’s Court of Justice is slapping it with a $2.6 billion antitrust fine.

What’s at stake for Google?

In a press release, the Justice Department compared the lawsuit to other landmark antitrust actions, including 1998. AT&T Inc (NYSE:T) in 1974, which resulted in the Bell System being split into several companies across the country in 1982.

At the end of last week’s arguments, Mehta said he had not yet made a decision. According to CNN, the judge proposed that to compete with Google’s dominant position, a hypothetical competitor would have to invest billions not only in developing the complex search tool itself, but also in competing with Google in its billion-dollar market of exclusive contracts with web browser makers and device manufacturers.

“I can’t imagine a world where any other competitor, especially a new competitor, could do this. Microsoft wouldn’t be able to do that,” Mehta said.

If Mehta rules in favor of the Justice Department, the trial will move to the second stage, in which the court will determine what penalties Google will face. In this separate proceeding, the plaintiffs and the company would outline various ways Google should respond to relinquish some of its alleged monopoly power.

According to Bloomberg, a possible solution would be to split the company into several units, including a separate unit for the Android operating system, which is currently owned by Google. Another possible penalty would be to force Google to reveal its search data to competitors to level the playing field, or to force the company to give up exclusivity agreements with other companies.

Bill Baer, a former head of the Justice Department’s antitrust division, told the New York Times that it is unlikely that the Justice Department will. will try to divide the company in some way.

“It is more likely that there will be some restrictions on Google’s operations in the future,” he said.

Now read: Has Chrome been tracking you in Incognito mode? The answer is yes, and now Google says it will delete the data

Shutterstock photo.

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