A US judge ruled on Monday that Google violated anticompetition law by spending billions of dollars to build a monopoly and become the world’s default search engine, the first major victory for federal authorities in challenging Big Tech’s market dominance.

The ruling paves the way for a second trial to determine possible solutions, possibly including the breakup of Google’s parent company Alphabet, which would change the landscape of the online advertising world, which Google has dominated for years.

It is also a green light for America’s aggressive anti-competition enforcers to prosecute Big Tech, a sector that has come under fire from all sides of the political spectrum.
“The Court concludes this: Google is a monopolist, and it has acted like a monopolist to maintain its monopoly,” wrote US District Judge Amit Mehta of Washington, DC. Google controls about 90% of the online search market and 95% of smartphone usage.

The “cure” phase could be lengthy, followed by potential appeals to the U.S. Court of Appeals, the District of Columbia Circuit and the U.S. Supreme Court. The legal dispute could last into next year or even 2026.

Alphabet shares fell 4.5% on Monday amid a broad decline in tech stocks as the broader stock market tumbled on recession fears. Google advertising was set to account for 77% of Alphabet’s total sales in 2023.

Alphabet said it plans to appeal Mehta’s decision. “This decision recognizes that Google is the best search engine, but concludes that we should not be allowed to make it as freely available as we are,” Google said in a statement.

US Attorney General Merrick Garland called the ruling “a historic victory for the American people” and said that “no company – no matter how large or influential – is above the law.”

White House Press Secretary Karine Jean-Pierre said that “the pro-competition decision is a victory for the American people,” adding that “Americans deserve an Internet that is free, fair, and open to competition.”

Mehta pointed out that Google paid $26.3 billion in 2021 alone to ensure its search engine remains the default on smartphones and browsers and maintains its dominant market share.

“Default is very valuable real estate,” Mehta wrote. “Even if a new entrant were willing to bid for a default at the expiration of a contract from a quality perspective, such a firm could compete only if it was willing to pay partners billions of dollars in revenue sharing and make up for any revenue shortfall that results from the change.”

He added, “Of course, Google knows that losing the default would have a devastating impact on its profits. For example, Google has estimated that losing Safari as the default would lead to a significant drop in queries and billions of dollars in lost revenue.”

The decision is the first major verdict in a series of cases against alleged monopolies in Big Tech. The case, filed by the Trump administration, went before the judge from September to November last year.

“A forced divestiture of the search business would separate Alphabet from its biggest source of revenue. But losing its ability to enter into exclusive default agreements could also be damaging to Google,” said Evelyn Mitchell-Wolf, senior analyst at eMarketer. She added that a lengthy legal process would delay any immediate impact for consumers.

Over the past four years, federal antitrust regulators have also sued Meta Platforms, Amazon.com, and Apple, claiming these companies illegally maintained monopolies.

All of these cases began under the administration of former President Donald Trump.

Senator Amy Klobuchar, who chairs the Senate Judiciary Committee’s antitrust subcommittee, said the fact that the case spans administrations reflects strong bipartisan support for antitrust enforcement.

“This is a huge win for the American people that antitrust enforcement is active and working well when it comes to competition,” he said. “Google is an unchecked monopolist.”
When the case was filed in 2020, the Google Search case was the first time in a generation that the US government had accused a major corporation of an illegal monopoly. Microsoft settled with the Justice Department in 2004 over allegations that it forcibly imposed its Internet Explorer web browser on Windows users.