The company paid tens of billions of dollars to become the world’s dominant search engine. Even Microsoft couldn’t compete.
The US government’s landmark case against Google was widely seen as coming down to one question: Is the company utterly dominant in internet searches because its services are great, or because it paid Apple, Samsung and others billions of dollars to set it as the default option on their devices and software?But the court didn’t answer that. Federal judge Amit Mehta explicitly ruled on Tuesday that it wasn’t necessary for the court to consider a world in which Google hadn’t made those payments.
It didn’t matter. In the world that does exist, Mehta ruled, Google lost. “Google is a monopolist, and it has acted as one to maintain its monopoly,” his 277-page judgment reads.The US Department of Justice and a bipartisan coalition of state attorneys-general sued Google in 2020 alleging a host of monopoly breaches. Most of those claims failed, but the central one succeeded.
It’s hard to overstate the importance of those deals. Evidence before the court showed half of all Google searches in the US came from those contracts. Internal Google modelling predicted it would lose up to 80 per cent of its search traffic on iPhones and iPads if it were replaced as the default, costing net revenue losses between $US28.2 billion and $US32.7 billion.
And Mehta found that cycle was self-sustaining as Google got better through the data it gathered from users’ searches, making its search engine more powerful. With more than 90 per cent of the market in the US, Google was free to abuse its dominance to charge ever more for ads. In one 2017 internal Google experiment cited by the court called “Gamma Yellow”, the company dramatically raised prices for 15 per cent of advertisers over six weeks. It caused “no evidence of notable format opt-out behaviour”. In other words, the advertisers simply paid up. The company did not even consider its rivals’ search ad pricing when it made changes to how much its ads cost, Mehta noted, such was its power.
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