A US Judge ruled against Google’s market practices, sending the company’s stock price further down.
Google lost a major lawsuit against the United States government that could reshape the way American consumers search for information online. The tech giant will likely appeal the decision, meaning this is only the beginning of a lengthy legal battle that could last years.
The court ruled Google achieved a monopolistic position in the online search market and implemented unfair practices to maintain such a position. The inquiry found Google had over 80% market share in the search industry since 2009, reaching its peak at 90% in 2020. Google also retains an 88% market share in the search advertising market.
A different government lawsuit on Google’s dominant position in the search advertising market will likely reach its verdict in early September.
US District Judge Amit Mehta pointed out that Google signed rich deals with hardware manufacturers to place Chrome as the default search engine. Google partners include Apple, Android, and Mozilla Firefox.
“After having carefully considered and weighed the witness testimony and evidence, the court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly,” Mehta ruled.
According to the ruling, Google’s actions prevented would-be rivals like Microsoft’s Bing or DuckDuckGo from gaining a meaningful market position. This led Google and its rivals to underinvest in technological development and improvement, the ruling concluded.
What happens now
In the short term, the ruling will likely be a bloodbath for Alphabet, Google’s parent company. Alphabet stock dropped over 6% yesterday amid a “Black Monday” for global markets. In pre-market trade, the stock dropped an additional 1.43% today.
Alphabet’s stock has been in steady decline for weeks after the company posted its quarterly earnings. Despite better-than-expected revenues, investors saw the reality of AI R&D costs and were disappointed by its relatively low margins. In the past month, roughly $400 billion was wiped out of Alphabet’s market capitalization.
The long-term effects of the ruling are currently difficult to discern. Google will most likely appeal the decision, delaying a final sentence for months or years. Moreover, Judge Mehta has not yet decided the punishment for Google.
Google could receive a monetary fine, be forced to implement changes in its operating system, or split up into different companies. In any case, analysts agree it could be a landmark decision, giving more opportunities to Google rivals to enter the search engine market.
The US Department of Justice is currently involved in other lawsuits against big tech, most notably against Apple and Meta.
