A federal court ruled Monday that Google illegally maintained a monopoly on Internet search by entering into exclusivity agreements to build and maintain its monopoly on search services.
According to the ruling, Google “has 89.2% of the market share for general search services, a share that increases to 94.9% on mobile devices.” The ruling says this is due in part to the technical excellence of Google and its engineers, but also to massive exclusivity agreements in which Google pays to be the default search provider at key access points.
In 2021, the company paid $26 billion to device makers, carriers, browser makers, and more to become the default search engine. In doing so, Google not only gets a much larger share of the ad market, but also a vast trove of data that is used to further improve its search performance.
It’s important to note that Google is reportedly paying Apple a large chunk of this sum to make it the default search engine for Safari on iPhone and iPad. You can change the default search engine in Settings > Safaribut most users don’t – as is often the case with defaults, most don’t even know there are other options.
A years-long federal lawsuit, brought by the Justice Department and nearly every state attorney general, concluded its closing arguments in May of this year.
The court ruled against Google in four distinct ways:
Specifically, the Court finds 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 failed to provide valid procompetitive justifications for these agreements.
The court also found that Google exercised its monopoly power by charging supracompetitive prices for general search text ads. This behavior allowed Google to earn monopoly profits.
On other important points, the court ruled in favor of Google:
The court held that (1) there is a product market for search engine advertising, but that Google does not have monopoly power in that market; (2) there is no product market for search engine advertising in general; and (3) Google is not liable for its actions involving its advertising platform, SA360. The court also declined to sanction Google under Federal Rule of Civil Procedure 37(e) for its failure to preserve its employees’ chat messages.
No measures or injunctions have been ordered by the court yet. We won’t know exactly what this will mean for Apple users in the future until we have a clearer idea of what exactly the court is demanding.
It’s likely that Google and Apple will be barred from entering into a default search exclusivity deal in the future, for which Google pays Apple billions a year. It’s entirely possible that we’ll see a “Choose your default search engine” interface on a future version of iOS, iPadOS, and macOS, similar to the “browser ballots” where default web browsers must be chosen.
Apple might even decide that, without billions to be made by selling access to default search on its platforms, the time has come for the company to build (or acquire) its own privacy-friendly web search tools.
