“Google is a monopolist.”
No need to say “allegedly” anymore, because that’s a direct quote from Judge Amit Mehta’s ruling against Google and in favor of the Department of Justice.
The decision, which came down on Monday afternoon, is the culmination of the DOJ’s case arguing that Google maintains an illegal monopoly over the search market.
You can read the whole shebang here. (It’s 286 pages long, just FYI.)
During the 10-week trial, which concluded last year (although closing arguments took place in May), witnesses for the prosecution and the defense alike shared revelations about Google’s search advertising business that Google no doubt would rather have kept out of the spotlight.
Who can forget the email, cited during testimony, in which Jerry Dischler, at that time Google’s VP and GM of ads, acknowledged that Google has often and repeatedly raised the price of search ads without telling advertisers in order to hit revenue targets and keep Wall Street happy? (Dischler jocularly referred to the practice as “shaking the cushions.”)
Or how about when an expert witness (for the defense!) mistakenly revealed that Google pays Apple a 36% revenue share, totaling roughly $20 billion a year, to be the default search engine for the Safari browser?
Or when an email written by Adam Juda, Google’s VP of product management for search ads quality, was read aloud in which he jokes that he’d have “another bad year” if he had to tell advertisers that “we randomly disable you if you don’t bid high enough” in second-price search ads auctions?
Juda concluded his email with a winky-face emoji.
But perhaps a more appropriate emoji for right now is that one with the wide eyes (this guy: 😳) – because Google losing its case is a very big deal.
Now what?
Now that the court has concluded Google violated Section 2 of the Sherman Act by maintaining a monopoly in search, what happens next?
Google’s lawyers are probably already filing their appeals.
And there will probably also be a trial (exact timing TBD) to decide on remedies, which could run the gamut from forcing a breakup to banning certain business practices.
A breakup is unlikely, because it’s a rather extreme and messy fix. But the court has a lot of flexibility when it comes to determining a remedy, so we might see a creative one. It’s possible, for example, that the court could outlaw the type of contract – like the one between Google and Apple – that all but guarantees a company’s market dominance.
It’s worth noting, however, that Judge Mehta didn’t go so far as to rule that Google has a monopoly over search advertising. Google, he wrote, “lacks monopoly power in that market” and is not liable for its actions involving Google Search Ads 360.
Not so lucky next time?
Regardless, the government’s victory in this case will likely make its upcoming ad tech-focused antitrust lawsuit against Google easier to prove.
That next case, in which the DOJ alleges that Google monopolizes the digital advertising market by controlling both sides of the ad stack, begins in Virginia on September 9.
The fact that the DOJ has already convinced one court that Google is a monopolist makes follow-on cases “somewhat simpler,” according to Eric Posner, an antitrust scholar and professor at the University of Chicago Law School, speaking at an event hosted by adMarketplace in New York last year.
Meanwhile, any relevant statements made during the concluded search antitrust trial are more than fair game for the DOJ’s lawyers to bring up as evidence at the soon-to-start ad tech trial.
That “shaking the cushions” quote could have a second life, for example.
The court is also wise to Google’s tactics.
For instance, Judge Mehta had been considering sanctioning Google for destroying evidence by instructing employees to keep their chat history off by default when talking about sensitive topics, including the company’s mobile app distribution agreements.
In his ruling, Mehta said that the court ultimately decided not to sanction Google for failing to preserve employee chat messages – but he also issued a warning.
“Any company that puts the onus on its employees to identify and preserve relevant evidence does so at its own peril. Google avoided sanctions in this case,” he wrote. “It may not be so lucky in the next one.”
