Google avoids harshest penalties in landmark search monopoly ruling

By David Mccabe

WASHINGTON – Google must hand over its search results and some data to rival companies, but does not need to break itself up by selling its Chrome web browser, a federal judge ruled on Tuesday (2).

The decision, by Judge Amit P. Mehta of the US District Court for the District of Columbia, falls short of the sweeping changes proposed by the government to rein in the power of Silicon Valley.

Mehta said in the 223-page ruling that Google must share some of its search data with “qualified competitors” to resolve its monopoly. The Justice Department had asked the judge to force the company to share even more of its data, arguing it was key to Google’s dominance.

Mehta also put restrictions on payments that Google uses to ensure its search engine gets prime placement in web browsers and on smartphones. But he stopped short of banning those payments entirely and did not grant the government’s request that Google be forced to sell Chrome, which the government said was necessary to remedy the company’s power as a search monopoly.

“Notwithstanding this power, courts must approach the task of crafting remedies with a healthy dose of humility,” Mehta said in Tuesday’s decision. “This court has done so.”

The decision on how to remedy a monopoly — the first of its kind in the modern internet era — is the most significant attempt to level the tech playing field since an antitrust ruling against Microsoft more than 20 years ago. Google had planned to appeal, and the case is likely to be mired in the courts for years.

The conservative ruling is a blow to the government’s all-out push in recent years to challenge the dominance of the biggest tech companies. Under both the Biden and Trump administrations, the federal government accused Google, Apple, Amazon and Meta of anti-competitive behaviour meant to illegally monopolize parts of the internet.

That ruling comes as generative artificial intelligence is threatening to replace traditional search engines. AI startups, including OpenAI, Anthropic and Perplexity, have built humanlike chatbots that can field queries, summarize huge swaths of research and even plan a trip with step-by-step suggestions.

Google has already embedded its own AI answers at the top of its search results, and added a tab to its search results page where users can converse with a chatbot about their query.

Mehta wrote in his ruling that the emergence of generative AI “changed the course of this case”.

Google’s stock price shot up about 8% in after-hours trading on the news to more than $229 per share.

“It’s certainly better than the worst-case scenario that DOJ and the state attorneys general would have had the judge impose,” said Bill Baer, who was an assistant attorney general for antitrust in the Obama administration. “The real question is going to be: Are these data licensing requirements and related requirements going to be sufficient to create the potential for a more competitive search market?”

Google said it had concerns about how the data-sharing requirements could affect the privacy of its users. But Lee-Anne Mulholland, Google’s vice president of regulatory affairs, praised Mehta’s finding that AI had altered the landscape.

“This underlines what we’ve been saying since this case was filed in 2020: Competition is intense, and people can easily choose the services they want,” she said in a statement.

Gail Slater, the top antitrust official at the Department of Justice, said in a statement that the ruling would restore competition and that the agency would “consider the department’s options and next steps regarding seeking additional relief”.

Mehta’s decision in the case, which is the first government monopoly lawsuit against a modern tech giant to go from filing to remedies, will set the tone as courts consider other antitrust cases accusing large tech companies of abusing their power, most prominently against Google.

In April, a federal judge in Virginia found that Google had a monopoly over some types of advertising technology, the system of software that marketers use to place advertisements on sites around the web. The government wants the court to force Google to spin off part of that system. Google says it should be required to change internal policies that entrenched its dominance. The judge in that case will consider remedies this month.

Meta, which owns Facebook, Instagram and WhatsApp, faces a ruling from a judge as soon as this fall in a lawsuit by the Federal Trade Commission over allegations that the social media giant snuffed out its nascent competitors. An FTC lawsuit against Amazon over allegations that it squeezed small merchants is scheduled to go to trial in 2027. The Justice Department has also sued Apple, saying the company makes it hard for consumers to ditch its devices.

Mehta’s ruling capped a years-long case, US et al. v. Google, which the Justice Department and a group of states filed in 2020. The department said Google’s search engine, which generates billions in annual profits, conducted nearly 90% of web searches, a number the company disputed.

The company spends billions every year to be the built-in search engine on browsers like Apple’s Safari and Mozilla’s Firefox. Google paid $26.3 billion for those deals in 2021, according to evidence presented in court.

That created a cycle that benefited Google, the government argued during a 10-week trial in 2023. The prime placement meant more people used Google, which gave it more data to make its search engine better than its competitors’. That advantage allowed it to attract more customers and further elbow out its competitors.

“Google is a monopolist, and it has acted as one to maintain its monopoly,” Mehta said in a ruling last year.

This spring, both sides presented testimony and evidence to support their proposed remedies.

The government said Google should be forced to sell Chrome, share data with its rivals and stop entering into contracts that gave its search engine visible placement around the web. Google said that it should still be allowed to enter into the contracts at the heart of the case, but that companies like Apple and Samsung should have more freedom to abandon the deals or feature other search engines.

Mehta said in his ruling Tuesday that he lacked expertise in the business of search engines and AI, and that “unlike the typical case where the court’s job is to resolve a dispute based on historic facts, here the court is asked to gaze into a crystal ball and look to the future.”

“Not exactly a judge’s forte,” he added.

In the ruling, which will apply for six years, he barred Google from obtaining “exclusive” contracts that make its product the search engine that automatically comes up when someone opens a browser or smartphone home screen. That includes forbidding Google to pay smartphone makers only if they accept bundles of multiple of the company’s applications, like requiring a phone maker to install an AI chatbot if it wants to be paid for offering search.

But he allowed Google to continue to pay for that prime placement in many cases. He said new AI developments meant that Google might have a harder time using its financial clout to keep competitors from becoming the built-in search engines on smartphones and browsers.

“The money flowing into this space, and how quickly it has arrived, is astonishing,” he wrote. “These new realities give the court hope that Google will not simply outbid competitors for distribution if superior products emerge.”

Mehta was similarly cautious when forcing the company to share data. The company will need to share parts of its search index, the corpus of webpages and information that feeds its results page. But Google does not need to share other data associated with those results, including information about the quality of webpages, he added.

Google must syndicate its search results to its competitors, Mehta said, adding that the company could do so using the terms it already provides to commercial partners using the company’s results.

It will take time for rival search companies to determine if that data can be helpful. The CEO of DuckDuckGo, Gabriel Weinberg, who testified against Google in the antitrust hearing, said it probably would not enable his startup to do much.

“It’s a nothingburger,” he said.

The impacts of antitrust decisions can also be unpredictable, said Rebecca Haw Allensworth, a professor at Vanderbilt Law School who is an expert in antitrust law. The remedies in the Microsoft case, which were considered weak, nonetheless constrained the company and opened the door to competition from upstarts, including Google, she said.

“I think you can have a company be chilled — be afraid of further antitrust action — even without a particularly strong remedy,” she said.

-New York Times