Google Antitrust Trial: No Breakup, But Search Deals End

Google Antitrust Ruling: Business Practices Under Scrutiny

A federal judge has issued a tentative order regarding Google’s business practices, stopping short of forcing a breakup of its search division but mandating alterations to prevent further anticompetitive conduct.

Restrictions on Exclusive Deals

U.S. District Court Judge Amit P. Mehta stipulated that Google is prohibited from establishing or upholding exclusive agreements that link the distribution of Search, Chrome, Google Assistant, or Gemini with other applications or financial arrangements.

Specifically, Google will be unable to make Play Store licensing contingent upon the distribution of specific apps, nor can it tie revenue-sharing to the continued inclusion of certain applications.

Data Sharing with Competitors

To foster competition, Google is required to share specific search index and user-interaction data with “qualified competitors.”

Furthermore, the company must offer search and search ad syndication services to rivals at standard rates, enabling them to deliver high-quality results while independently developing their technologies.

Next Steps and Final Judgment

Judge Mehta has not yet finalized his judgment. He has directed Google and the Department of Justice to collaborate and submit a revised final judgment by September 10th, aligning with his outlined opinion.

This decision follows Mehta’s earlier ruling that Google illegally maintained a monopoly in the online search market.

DOJ's Initial Proposals and Apple's Role

The Department of Justice, which initiated its antitrust suit in 2020, initially sought more substantial penalties. These included forcing Google to divest its Chrome browser and potentially Android.

The DOJ also aimed to terminate Google’s agreements with companies like Apple and Samsung, where Google pays billions to be the default search engine on their devices.

Following the news, Apple’s stock experienced an increase, as the company can continue its agreement with Google, albeit potentially without exclusivity.

In 2021, Google spent over $26 billion to secure default search placements, with approximately $18 billion allocated solely to Apple, receiving 36% of Google’s search ad revenue from Safari.

The Value of Default Search Placement

During the trial, the judge highlighted that default search placements are “extremely valuable real estate,” effectively hindering competitors and solidifying Google’s market dominance.

Google's Arguments and Concerns

Google, maintaining around a 90% market share in search for the past decade, contends that the government’s proposals would stifle innovation, compromise user privacy, and impede its investment in research and development.

CEO Sundar Pichai argued that mandated data-sharing would equate to a “de facto divestiture” of Google Search.

Comparison to Europe’s Digital Markets Act

Judge Mehta referenced Europe’s Digital Markets Act (DMA) during the remedies hearing. The DMA mandates Google to share certain click and query data with third parties.

However, Mehta’s order is more focused and temporary, unlike the DMA’s ongoing requirements.

It also falls short of the extensive access requested by the DOJ, which included source code and full search ranking algorithms.

Expert Perspectives on Regulatory Approaches

William Kovacic, a global competition law professor, noted the debate surrounding whether descriptive rules, like those in the DMA, or case-by-case adjudication are more effective.

The question remains whether the European experience provides insights into feasibility and what Google can realistically accommodate.

Implications for Future Antitrust Battles

This decision will significantly influence the outcome of Google’s other ongoing antitrust cases.

Impact on Google’s Advertising Technology Business

Judge Mehta’s ruling may also affect a separate antitrust trial concerning Google’s advertising technology business.

Judge Leonie Brinkema previously found that Google illegally monopolized ad-tech markets, and a remedies trial is scheduled for late September.

A Prolonged Legal Process

Kovacic emphasized that despite the release of the remedies, the legal process is far from over, with potential appeals and escalation to the Supreme Court.

He anticipates the case could continue until late 2027 or early 2028.