In a landmark ruling on Monday, U.S. Judge Amit Mehta likened Google's antitrust case to the historic Microsoft case from the 1990s, highlighting the tech giant’s alleged monopolistic practices in the search market. The ruling asserts that Google’s dominance mirrors Microsoft's previous attempt to stifle competition by leveraging its Windows operating system.
In 1999, Microsoft was found to have used its market power to suppress rival browsers like Netscape Navigator. The 2001 settlement mandated that Microsoft cease practices that disadvantaged competitors. Now, Google's case, initiated by the government in 2020, echoes this situation, with accusations that the company has maintained its search market share through anti-competitive barriers and a self-sustaining dominance loop. Judge Mehta's extensive ruling confirms that Google violated Section 2 of the Sherman Act, which prohibits monopolistic practices.
"The result here is similar to the Microsoft case," Mehta noted in his 300-page decision. He drew parallels between Microsoft’s efforts to keep Netscape Navigator out of the market and Google’s distribution agreements, which he argues have constrained rivals and protected Google from serious competition.
A central element in both cases is the "power of the default"—for Google, this refers to its pre-installed search position on devices like iPhones and Samsung smartphones, costing the company billions annually. Mehta observed that while users can choose alternative search engines, they rarely do so.
Looking ahead, a separate trial is scheduled for September 4 to determine potential remedies or penalties for Google. This trial will also open the door for Google's appeal, a process that experts anticipate could span about two years. Microsoft's own appeal process led to a settlement with the Department of Justice after its initial ruling.
Sam Weinstein, a law professor and former DOJ antitrust lawyer, remarked that the government’s approach has been heavily influenced by the Microsoft case. In Microsoft’s scenario, Judge Thomas Penfield Jackson recommended splitting the company’s operating system and applications businesses, a decision that faced its own appeals.
Nicholas Economides, an economics professor at NYU, highlighted the similarities in the Google case, suggesting that the ruling represents a significant setback for the company. “This ruling is reminiscent of the Justice Department’s victory against Microsoft,” he said.
The potential outcomes for Google are significant. The court might mandate the end of exclusive agreements or require changes to how users access other search engines. Such changes could impact Google’s profitability, especially if it loses its default search engine status on major devices.
Google’s search division remains crucial to its financial health, contributing $48.5 billion in revenue in the last quarter alone. The company's forthcoming appeal is expected to introduce new evidence on the role of artificial intelligence in competition, an aspect that has evolved since the initial lawsuit was filed.
Despite the ruling, Google’s stock experienced only a minor drop, attributed to a broader market selloff. The company has yet to comment on the decision. Analysts believe a breakup is unlikely, as the specifics of the Microsoft case do not directly apply to Google’s situation.
The upcoming trial will be pivotal in determining the extent of potential penalties and remedies for Google. Bill Baer, former head of antitrust at the FTC and DOJ, affirmed that the Microsoft precedent strengthens the case against Google. “It’s unclear what the DOJ will pursue and what the judge will accept, but the Microsoft case certainly adds weight to the current antitrust challenge,” Baer noted.
