Google paying to be default search on phones is totally against the law, judge rules

Google's payments to make its search engine the default for smartphone browsers and elsewhere violate US antitrust law, a federal judge ruled Monday.

The opinion memorandum [PDF] represents a major milestone for the US Justice Department in its campaign to tame Big Tech.

"This victory against Google is an historic win for the American people," said Attorney General Merrick Garland, in a statement. "No company - no matter how large or influential - is above the law. The Justice Department will continue to vigorously enforce our antitrust laws."

Judge Amit Mehta, of the District of Columbia, said after considering the evidence and testimony from the nine-week bench trial last year that he reached the following conclusion: "Google is a monopolist, and it has acted as one to maintain its monopoly. It has violated Section 2 of the Sherman Act."

The decision, which follows closing arguments in May, applies specifically to the impact Google's search distribution agreements have on the market for internet search services and search text ads.

The judge said Google's Search Ads 360 ad management platform, also challenged by the Justice Department, does not violate antitrust law. In addition, he declined to sanction Google for failing to preserve employee chat messages. The Justice Department in February urged the judge to sanction Google for destroying evidence.

Donald Polden, former dean and professor of law at Santa Clara University, told The Register the outcome was not a surprise, despite other plausible scenarios.

"It seems clear that the judge did his homework and was able to parse through some of Google's conduct that was arguably pro-competitive," said Polden. "But the basic framework of US monopoly law (like Microsoft, AT&T, etc) left the court with little opportunity to craft a decision around market dynamics, market share, and the company's heavy investment in exclusive dealing arrangements (generally more leniently viewed in antitrust analysis, than say price fixing) with a staggering market share."

The challenge for the court, Polden said, will be how the remedy is crafted.

"The federal courts (like in US v. Microsoft) struggled with what to do with an efficient monopolist with high consumer favorability or acceptance (break up is too inefficient and costly and most courts have a hard time re-juggling an entire industry), so we'll see what happens after the court sets up a briefing and argument schedule on remedies," he said.

Despite the uncertainty about how market competition will be restored, the Open Markets Institute, a progressive advocacy group, welcomed the ruling.

"The Google Search ruling was a long time coming and is a historic win for our antitrust enforcers and internet users everywhere," said Barry Lynn, executive director of the Open Markets Institute, in a statement. "The Justice Department brings Google back to court in September for its monopoly over search advertising markets and we expect to see similar results."

The News/Media Alliance, a media trade organization, also endorsed the ruling.

"We are incredibly pleased with the outcome today and applaud the Department of Justice for holding this dominant monopoly accountable for anticompetitive behavior in the digital advertising market, which has harmed countless businesses, including publishers of quality journalism," said Danielle Coffey, News/Media Alliance president and CEO, in a statement.

The Chamber of Progress, a tech trade group headed by former Google executive Adam Kovacevich, characterized the decision as a win for Microsoft.

"Microsoft has underinvested in search for decades, but today's ruling opens the door to a court mandate of default deals for Bing," said Kovacevich, CEO of the Chamber of Progress, in a statement. "That's a slap in the face to consumers who chose Google because they think it's the best."

Google for years has been paying browser developers, smartphone makers, and wireless carriers to set Google Search as the default search engine. These payments show up on Google's financial statements under the line item titled "Traffic Acquisition Costs."

In 2021, the Chrome titan paid more than $26 billion to ensure Google Search is set as the default, according to information revealed during the trial. Apple, for example, received between $18-$20 billion in 2020 for setting Google Search as the default search engine in Safari on Apple devices.

The effect of these payments has been to unlawfully limit competition, according to Judge Mehta.

The judge's 286-page ruling explains his reasoning in detail. One of the factors he cites is Google's admission that "does not 'consider whether users will go to other specific search providers (general or otherwise) if it introduces a change to its Search product.'"

Pointing to Google's own 2020 quality degradation study that found Google Search would not lose revenue if search quality got worse, Judge Mehta said, "The fact that Google makes product changes without concern that its users might go elsewhere is something only a firm with monopoly power could do."

Google isn't ready to accept the ruling and plans to take its case to a higher court.

"This decision recognizes that Google offers the best search engine, but concludes that we shouldn't be allowed to make it easily available," said Kent Walker, president of global affairs at Google, in a statement provided to The Register.

"We appreciate the court's finding that Google is 'the industry's highest quality search engine, which has earned Google the trust of hundreds of millions of daily users', that Google 'has long been the best search engine, particularly on mobile devices', 'has continued to innovate in search' and that 'Apple and Mozilla occasionally assess Google's search quality relative to its rivals and find Google's to be superior.' Given this, and that people are increasingly looking for information in more and more ways, we plan to appeal." ®