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Google Found Guilty of Monopolizing Search Market
In its first major antitrust lawsuit against a tech behemoth in more than two decades, a judge decided on Monday that Google unlawfully monopolized the search market by means of exclusive deals, so giving the government a notable victory.
The Ruling’s Impact
Judge Amit Mehta said that Google’s $26 billion payments to make its search engine the default on smartphones and web browsers practically stopped rivals from succeeding in the market. In a286-page decision Mehta said, “Google’s distribution agreements foreclose a substantial portion of the general search services market and impair rivals’ opportunities to compete.” Google has regularly raised online advertising rates without facing competition by monopolizing distribution.
Antitrust Allegations
Paid Apple, Samsung Electronics, and others billions for prime placement on smartphones and browsers, antitrust enforcers claimed Google kept a monopoly over online search and related advertising. With this posture, Google has been able to create the most used search engine worldwide and make more than $300 billion yearly from search ads.
Market Reactions
After the verdict, alphabet shares dropped almost 4.5% to $159.25. Apple’s shares dropped 4.8% to $209.27 after perhaps losing billions in payments from Google for its default browser posture on iPhones.
Government Response
Declaring, “No company — no matter how large or influential — is above the law,” Attorney General Merrick Garland praised the decision as a historic triumph for the American people. Emphasizing their dedication to create simple and useful products, Google intends to appeal the ruling.
Google’s Market Position
Judge Mehta noted that rivals like Amazon and Walmart provide search-related advertising on their websites, hence Google does not have a monopoly in the whole search advertising market. Google does, however, hold a monopoly over search text ads—which show at the top of search results pages.
Next Steps
Nine months after the Justice Department and a group of states conducted a 10-week trial in federal court, Mehta’s ruling just addresses Google’s liability. Next month is a hearing set aside to go over the schedule for a separate trial on the cure. The Justice Department might demand Alphabet’s search company to be kept apart from other products, such as Android or Chrome, but it has not yet indicated the changes it wants.
Possible Remedies
The judge could revoke exclusive search agreements or mandate Google license of its search index. Separate from this, antitrust enforcers are suing Google for allegedly monopolizing the technology used for purchasing, distributing, and running online display advertising. The government is trying to make Google sell some of its products related to advertising technologies.
Industry Reactions
Senior portfolio manager Dan Morgan of Synovus Trust pointed out that the choice accentuates the “black cloud of legal and regulatory uncertainty hovering over the business”. “It does cause some uncertainty in a company that already sorts of disappointed on the quarter,” he said.
Expert Opinions
Teaching antitrust at George Washington Law School, William Kovacic said Mehta’s ruling was “reasonable and balanced,” probably going to support any appeals. Professor of antitrust Rebecca Allensworth of Vanderbilt Law School said the ruling is “bold in a legally careful way that will do well on appeal” and “lay the blueprint for other tech cases going forward.”
Conclusion
With Judge Mehta’s decision against Google, antitrust enforcement takes a major turn and might change the competitive scene for tech giants. The future effect on Google and the larger tech sector will be decided by the forthcoming remedy trial and appeals.
Disclaimer
This is just meant to be information; it is not financial or investment advise. Unexpected changes in market conditions mean that before making any financial decisions, one must carefully study and consult a professional.
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