Judge Amit P. Mehta has issued his ruling in a closely watched antitrust case against Google, ruling the search giant is a monopoly.

The Department of Justice filed a lawsuit against Google last year, claiming the company is a monopoly that unfairly and illegally uses its monopoly power to stifle competition in the search market.

According to The New York Times, after a ten-month trial, Judge Mehta has ruled against Google, concluding the company is not only a monopoly, but one that is abusing its market position.

“After having carefully considered and weighed the witness testimony and evidence, the court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly,” Judge Mehta wrote in his ruling.

Google’s Exclusivity Deals

Throughout the case, Google’s attorneys tried to argue that the company holds the dominant position in the market purely because it is better.

“Google is winning because it’s better,” argued John Schmidtlein, Google’s lead attorney on the case.

In contrast, the DOJ maintained that Google’s deals have helped artificially keep it at the top, to the exclusion of other options. In particular, the DOJ scrutinized deals with Apple, Mozilla, and other vendors that have kept Google the default search engine across platforms.

As the Times points out, those deals gave Google access to a treasure trove of consumer data and search habits that gave it an even greater advantage in honing its search engine and shutting out rivals. Judge Mehta agreed with the DOJ’s case, calling out Google’s deals

Google has not achieved market dominance by happenstance. It has hired thousands of highly skilled engineers, innovated consistently, and made shrewd business decisions. The result is the industry’s highest quality search engine, which has earned Google the trust of hundreds of millions of daily users.

But Google also has a major, largely unseen advantage over its rivals: default distribution. Most users access a general search engine through a browser (like Apple’s Safari) or a search widget that comes preloaded on a mobile device. Those search access points are preset with a “default” search engine. The default is extremely valuable real estate. Because many users simply stick to searching with the default, Google receives billions of queries every day through those access points. Google drives extraordinary volumes of user data from such searches. It then uses that information to improve search quality. Google so values such data that, absent a user-initiated change, it stores 18 months-worth of a user’s search history and activity.

The distribution agreements benefit Google in another important way. More users mean more advertisers, and more advertisers mean more revenues. As queries on Google have grown, so too has the amount it earns in advertising dollars. In 2014, Google booked nearly $47 billion in advertising revenue. By 2021, that number had increased more than three-fold to over $146 billion. Bing, by comparison, generated only a fraction of that amount—less than $12 billion in 2022.

Judge Mehta then broke down his ruling.

Specifically, the court holds that (1) there are relevant product markets for general search services and general search text ads; (2) Google has monopoly power in those markets; (3) Google’s distribution agreements are exclusive and have anticompetitive effects; and (4) Google has not offered valid procompetitive justifications for those agreements. Importantly, the court also finds that Google has exercised its monopoly power by charging supracompetitive prices for general search text ads. That conduct has allowed Google to earn monopoly profits.

On the Alleged Destruction of Communications and Evidence

The DOJ accused Google of intentionally deleting internal communication that could implicate it, even after it was warned to retain such communications. Judge Mehta declined to impose sanctions—while acknowledging Google’s actions could very well warrant them—only because it would not change Google’s liability.

Judge Mehta did, however, take note of Google’s tremendous effort to ensure there were no smoking guns that could be used against it in the form of internal communications, drawing a direct comparison to how many such smoking guns existed in Microsoft’s antitrust case decades ago.

Still, the court is taken aback by the lengths to which Google goes to avoid creating a paper trail for regulators and litigants….Google clearly to to heart the lessons from these cases. It trained its employees, rather effectively, not to create “bad” evidence. Ultimately, it does not matter. Section 2 liability does not rise or fall on whether there is “smoking gun” proof of anticompetitive intent.

Possible Penalties

Judge Mehta did not address penalties in this ruling, although the possibilities run the full gamut. At the very least, Google will likely face stiff monetary fines. The company may be prohibited from striking the kind of deals that have helped it maintain its dominance. Google may be forced to adopt a measure similar to what Apple was forced to do in the EU, namely give users a first-run option to choose their search engine, rather than defaulting to Google. At the most extreme end of the spectrum, the DOJ could seek to break up Google during the penalty proceedings.

Whatever the outcome, Google is sure to appeal, meaning this case is far from over.