On 8th of August 2024, US District court judge Amit Mehta ruled that Google purposefully crushed its competitors and is currently operating a monopoly in online search and advertising across the States and the entire world. This decision came after a 10 week-long trial of Google’s parent company Alphabet Inc. This landmark ruling established Google’s monopoly status and further led US regulators and DOJ to break the company in pieces. The DOJ has now called for breakup of the companies in smaller units which will begin sale of its widely used Chrome Browser which is estimated to be worth a minimum of $20 Billion. This is till date the biggest crackdown in the history of United States.
Court Ruling -
The Court opinion/judgement held that Google operates a monopoly in “General Search” and “General Search Text Advertising” which violates the provisions of Sherman Act (american law preventing monopolies). The court held that Google entered into exclusive sharing agreements with companies such as Apple, Samsung, Verizon, etc which made Google the default browser in their Operating Systems. It held that Google unlawfully maintained its monopoly using these exclusive agreements. However, the court also held that Google may have initially obtained its monopoly status through its stellar products and innovation but it maintained it through unlawful means. The judge further held 3 major anti competitive effects that these exclusive agreements had –
a) Captured a majority share of the market
b) Deprived the rival companies of sufficient user data needed to scale
c) Reduced incentives and opportunities of rivals by paying excess money for maintain these agreements.
Too Big to Handle –
Google currently control 89.2% share of general search services across all devices and it is 94.9% on mobile devices. Google currently operates 70 offices across 50 countries. More than 70% of android phones today have Google as a default browser and uses its operating system. Google today has a direct customer base of $4 Billion through its browser. Currently Google processes 90,000 searches per second which is over 8 billion searches in a day. Google on a daily basis manages over 2.5 exabytes (2,500,000,000 gigabytes) of data.
DOJ ‘s proposed Breakup -
In light of this judgement, the American Department of Justice in a 23 page proposal has called for breakup of Google’s parent company Alphabet Inc into smaller units. This breakup would begin by the sale of Google’s widely used chrome browser. The Google’s minimum sale price is estimated to be in the ballpark of $20 Billion. As per reports, the sale plan will ban Google from releasing a new browser for five years. However, if google still is able to maintain a monopoly then it would also have to sell its android operating system as well. The DOJ has argued that this sale would “inject more innovation and competition into the web browser market.” After the sale of Chrome browser, DOJ would further move on segregating the company.
Other remedies proposed by DOJ include the following :
In Search Distribution and Exclusive agreements
a) Limit exclusive deals and agreements
b) Modify deals that require google as default browser
In Data Management
a) Required to share search index and data with competitors to maintain equilibrium
b) Restrict use of protected data or data barred by law to use
Trump vs Biden -
As per reports, Biden administration’s anti-trust regulators are taking its final shots on Alphabet. This comes under the light of successful lawsuit by the DOJ which gave Google its “monopoly” tag. This successful breakup would record a legacy in history for Biden’s administration. While the lawsuit began during the end Trump’s first term but Trump has maintained a stand against the breakup. As per President Trump the breakup would “harm consumers, developers and American technological leadership at precisely the moment it is most needed.”
Not DOJ’s first rodeo -
In a manner similar to Google, a US district court on 3rd April 2000 held that Microsoft was in violation of the provisions of Sherman Act (same in google case). It was held that Microsoft dominated the market by bundling additional Microsoft applications into its operating systems, it also restricted consumers of downloading third party software and started to pre-install windows in new laptops and computers without giving customers choices. After the passing of this verdict, DOJ and court together proposed the breakup of Microsoft into 2 separate entities. It aimed to sale one part and leave one with Gates. This move was aimed at breaking monopoly of Microsoft. This breakup never took place since Microsoft appealed the District court’s decision and won the appeal.
The outcome of this battle will not only pave Google’s future but also influence future regulatory approaches. Though the proposed breakup is perceived to be unlikely, still the world awaits to see what will unfold next.
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