In Landmark Decision, D.C. Federal Court Holds Google Maintained an Illegal Monopoly in Internet Search and Advertising Markets and Sets the Stage For Future Enforcement Actions

White & Case Tech Newsflash

On August 8, 2024, Judge Amit P. Mehta of the United States District Court for the District of Columbia issued his much anticipated and long-awaited opinion in the U.S. Department of Justice's (DOJ) case challenging Google's alleged dominance in online search markets.¹ In his nearly 300-page opinion, Judge Mehta held that Google is dominant in two online search markets, and that its agreements with major original equipment manufacturers requiring Google to be the default search engine are de facto exclusive-dealing agreements that should be deemed exclusionary under the antitrust laws. The landmark ruling provides guideposts for future antitrust actions challenging tech firms, including in emerging areas such as artificial intelligence.

Google Maintained its Illegal Monopoly in Online Search Markets.

Following a 10-week bench trial, Judge Mehta concluded that Google possessed monopoly power in the "general search" and "general search text advertising" markets and violated Section 2 of the Sherman Act by entering exclusive dealing agreements with certain equipment manufacturers (e.g., Apple, Samsung, Verizon, and others) which made Google's search engine the exclusive default on smart phones and web browsers. The Court found that Google illegally maintained its monopoly in the relevant markets through these agreements. The Court credited Google's investment and innovation in search and recognized that Google's partners view Google search as vastly superior to competing products. It thus noted that Google had likely initially obtained its monopoly status through competitive and lawful means. But the Court held that Google's exclusive agreements allowed it to unlawfully maintain that monopoly. More specifically, Judge Mehta held that these agreements caused anticompetitive effects because they: 1) foreclosed a substantial share of the markets; 2) deprived rivals of sufficient user data scale to compete with Google; and 3) reduced the incentives of rivals and nascent competitors from investing and innovating in the markets. Notably, as part of the agreements, Google paid its partners tens of billions of dollars in exchange for exclusive default status which the Court found had allowed Google to maintain a dominant share in the markets for more than a decade.

The case is far from over and the issue of remedy has not yet been addressed. Such remedies may range from simply prohibiting Google from entering into exclusive agreements for default search engine status, to requiring Google to share its data and/or code with its search competitors like Microsoft, and/or, at the extreme, ordering a breakup of Google. Separately, Google has already announced that it intends to appeal the ruling although the timing and scope of that appeal is not yet clear.

In short, the outcome and exact impact of the ruling will not be known for potentially many years. Nonetheless, this is a high profile ruling that may be used as a template for U.S. plaintiffs/enforcers looking to challenge firms perceived to be in a similar "dominant" position as Google where such firms have licensing and/or distribution agreements that are arguably exclusionary.

A Sign of Things to Come? 

In combination with the Google decision, pledges from enforcers around the world to protect competition in artificial intelligence (AI) have made the situation for regulators and private plaintiffs to advance a claim against tech firms more ripe than ever. For example, on July 23, 2024, the U.S. DOJ, the U.S. FTC, the European Commission, and the UK's CMA issued a "Joint Statement on Competition in Generative AI Foundation Models and AI Products"² warning that, in their view, we are at a global "inflection point" as to AI technology ("including foundational models") and that they see a variety of antitrust risks involving AI. Specific areas of risk cited are:

that firms may attempt to restrict key inputs for the development of AI technologies; that firms with existing market power in digital markets could entrench or extend that power in adjacent AI markets or across ecosystems, taking advantage of feedback and network effects to increase barriers to entry and harm competition; that lack of choice for content creators among buyers could enable the exercise of monopsony power; and that AI may be developed or wielded in ways that harm consumers, entrepreneurs, or other market participants.³

The enforcers thus have vowed to remain vigilant of these risks and to monitor and address them.⁴ Judge Mehta's ruling against Google provides a roadmap for doing so and it will likely be seized on by U.S. enforcers and/or private plaintiffs to support arguments that other allegedly "dominant" tech firms have crossed the antitrust line through agreements with major downstream clients which can be portrayed as limiting rivals' access to such clients.

_{1 United States, et al. v. Google, LLC, No. 20-cv-3010 (APM) (D.D.C. Aug. 5, 2024), Dkt. No. 1033. 
2 Joint Statement on Competition in Generative AI Foundation Models and AI Products (July 23, 2024),
3 Id.
4 Id.}

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