Alphabet Inc.’s (NASDAQ: GOOGL) Google is facing a high-stakes antitrust trial in Washington, with the US Justice Department asserting that the tech giant pays over $10 billion annually to secure its status as the default search engine on web browsers and mobile devices, thereby stifling competition.
In his opening statement, government lawyer Kenneth Dintzer emphasized the significance of the case, framing it as a pivotal moment for the future of the internet and the potential for meaningful competition in the search engine industry.
Dintzer argued that Google’s demand for default exclusivity effectively blocked rivals, leading to the company’s monopoly status, which he claimed was established as early as 2010. Currently, Google holds sway over more than 89% of the online search market and has been accused of abusing its monopoly power for the past 12 years.
“The company pays billions for defaults because they are uniquely powerful,” he said. “For the last 12 years, Google has abused its monopoly in general search.”
This landmark trial marks the first time in over two decades that the federal government has squared off against a US technology company. The case, brought by the Justice Department and supported by 52 attorneys general from various states and US territories, alleges that Google unlawfully maintained its monopoly by making substantial payments to tech competitors, smartphone manufacturers, and wireless providers in exchange for preferential placement as the default option on mobile phones and web browsers.
Google’s legal team, vehemently denying these allegations, is set to present their opening statements later in the proceedings.
In this initial phase of the trial, the focus is on determining whether Google has engaged in illegal monopolization of the online search market. US District Judge Amit Mehta, overseeing the case, is expected to render a decision next year regarding whether Google violated antitrust laws. If the Justice Department prevails, the next phase of the trial may explore potential remedies, potentially involving the separation of Alphabet’s search business from its other products, such as Android and Google Maps. Such a move would constitute the most significant forced breakup of a US company since the dismantling of AT&T in 1984.
Notably, Google has faced similar probes abroad, with three cases in the European Union resulting in fines exceeding €8 billion ($8.6 billion). These cases revolved around allegations of dominance abuse within its mobile operating system, search business, and display advertising operations.
At the trial’s outset, Kent Walker, Google’s Chief Legal Officer, was present, seated in the front row alongside the company’s legal team. Assistant Attorney General for Antitrust, Jonathan Kanter, also attended on behalf of the Justice Department.
Information for this briefing was found via Bloomberg and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.