DOJ Wins, But Google’s Monopoly Status May Now Be in Danger

Why should Europe’s trust busters have so much fun with this?

Last week, the U.S. Department of Justice won its lawsuit alleging that Google illegally conducted business to maintain a monopoly on the search engine industry. The landmark decision marks the first major antitrust victory over Big Tech since the Microsoft case in 1998. It is also the largest regulatory victory this century in a case in which the company alleged it violated Section 2 of the Sherman Act. Perhaps not coincidentally, Google’s monopoly on search is starting to break down.

Search and Destroy

Section 2 of the Sherman Act is pretty clear, stating that no party may “monopolize or attempt to monopolize… any part of the commerce or trade among the several States.” But the modern Supreme Court has found plenty of room for interpretation — and, according to antitrust advocates, plenty of opportunity to weaken the statute’s power. In 2004’s Verizon v. Trinko , for example, the court essentially argued that “the pursuit of monopoly, even for short periods of time, is actually socially beneficial,” Daniel Hanley, senior legal analyst at the Open Markets Institute, told The Daily Upside. Anat Alon-Beck, a professor of corporate law at Case Western Reserve University, told The Daily Upside that the United States has always believed in the social benefits of monopolies — until it didn’t. Like the railroad giants and oil barons of a century ago, Alon-Beck argued that Google has spent years building important and useful infrastructure for the digital world. This inevitably creates insurmountable barriers to market entry for competitors, which may result in antitrust actions.

But if antitrust enforcement is inevitable for monopolies, then complacency may be inevitable. “Between 2010 and 2020, and specifically when COVID hit, I think the pace of (Google’s) innovation actually slowed down,” Udayan Bose, founder and CEO of digital growth marketing agency and Google Premier Partner NetElixir, told The Daily Upside. That’s why Google’s roughly 90% search market share may be slipping, regardless of enforcement:

• Google has long been wary of Gen Z’s habit of using TikTok and Instagram to do the search it traditionally does. Worse, AI chatbots threaten to upend the entire industry.
• Meanwhile, companies using Google’s ad platform have struggled with year-over-year cost-per-click inflation without necessarily seeing increased efficiency. Bose says many small and midsize clients have become increasingly curious about diversifying their strategies off the platform as margins have deteriorated.

Are we special? But it’s the courts that will act as the biggest catalyst for breaking the monopoly. In September, all sides in the case will meet again to discuss remedies for Google’s antitrust violations. That could include forcing the company to get rid of its Chrome browser or, more likely, demanding that Google end exclusivity deals with other tech players (such as paying Apple $20 billion a year to keep it the default search engine on iDevices). Of course, Google will almost certainly appeal the decision, and the process is likely to take years. By then, the world could be very different. As a former Google executive recently told Reuters, “AI is going to advance faster than the speed at which the Department of Justice can act against Google.”