The Google Monopoly drama should have a lot of technical edginess

“Google is a monopolist and has acted as one to maintain its monopoly,” Mehta wrote.

The Justice Department is now considering whether to seek a possible breakup of the company, Bloomberg reported earlier this week.

Google previously said it plans to appeal Judge Mehta’s decision and that the decision “recognizes that Google offers the best search engine, but concludes that we should not be allowed to make it readily available.” Business Insider has reached out to the company for further comment.

With Google on the trail – the developments are a clear signal to other Big Tech companies that they should be concerned.

This isn’t the first time Big Tech has lost an antitrust lawsuit and faced a potential breakup. Microsoft was ruled by monopoly in the 90s, and while the initial remedy was to break up the company, the tech giant ended up settling.

But Google’s development is the biggest Big Tech antitrust ruling since, Wedbush Securities analyst Dan Ives wrote in an analyst note Wednesday. that decision comes after the industry has become stronger under the AI ​​revolution. He told Business Insider that Google’s loss gives the Justice Department momentum in the “Big Tech battle.”

“Big Tech’s antitrust drumbeat will continue,” Ives told BI, adding that “Big Tech has a target on its back.”

Under President Joe Biden’s administration — and notably, with the appointment of FTC Commissioner Lina Khan — the US government has taken an aggressive antitrust approach toward big tech companies.

In addition to the case against Alphabet that Mehta presided over, the Justice Department and a number of states have brought antitrust lawsuits against Apple for the way it treats competitors with its internal iPhone apps, Amazon for using its dominance in retail to collect third parties. sellers on its platform and Meta amid its attempts to dominate the social media market through acquisitions such as Instagram and WhatsApp.

All of these cases are resource-intensive, have few precedents, and are the most ambitious antitrust lawsuits in decades. A big consequence of Google’s ruling is that it will give federal agencies a boost of confidence that the risk is worth it, according to former Federal Trade Commission Chairman William Kovacic.

“It’s a huge shot in the arm for your team,” Kovacic, now a professor at George Washington University Law School, told BI. “And your success in all these other matters involves having more people fully engaged and willing to work their fingers to the bone to make it happen. Judge Mehta’s ruling suggests that the sacrifice, the effort, is worth it.”

Apple, Meta and Amazon did not immediately respond to requests for comment.

What is a “market”, anyway?

To win an antitrust case, plaintiffs must prove that a particular company illegally dominates a particular market.

Cases often get stuck on the question of how to define a particular market in the first place.

Defendants typically define the market broadly, arguing that they are just a fish in a big pond. Plaintiffs try to define the market in narrow terms, arguing that the companies are such big fish that they illegally occupy space in a very small pond.

A federal judge previously launched a lawsuit against Meta over those ambiguities, ruling that regulators had not sufficiently defined the social media market that the FTC alleged was monopolized by Meta before the regulator filed its case.

Judge Mehta’s mammoth Google decision shows judges exactly how to deal with the market definition puzzle, according to Bill Baer, ​​a former top antitrust lawyer at the Justice Department.

The judge used a landmark 2001 US Court of Appeals decision against Microsoft and demonstrated how its conclusions could be mapped onto Alphabet’s behavior to dominate the search market for Google. The same strategy could be used by other judges overseeing cases against Amazon, Apple or other tech companies, Baer told BI.

“This analytical process of finding out what, in real terms, is competing with other things, and not letting the defendant throw spaghetti at the wall and see what sticks, is one of the hallmarks of Google’s decision,” Baer said.

Big tech companies normally hire econometricians to create big, complicated models to define big, complicated markets, according to Rebecca Allensworth, a professor of antitrust law at Vanderbilt University School of Law.

It is an expensive, resource-intensive approach to defining markets for these cases.

Mehta, however, adopted a more conventional standard favored by the Justice Department.

Instead of complex mathematical models, Mehta looked at internal documents, the behavior of the businesses themselves and the testimony of rival companies to define the “search market” monopolized by Google.

If other judges follow suit and follow the same standard, it could lower the bar for bringing antitrust suits in the first place.

“If the bar is that you have to prove it with mathematical certainty, you’re just going to throw out a lot of cases,” Allensworth said.

Big Tech companies may be more cautious about acquisitions

Tech companies may not be rushing to change their entire business model, but the recent court decision could make them more cautious about acquisitions.

But Google’s ruling does not necessarily mean regulators will face success in pursuing similar judgments against other tech giants.

Wolfe Research analyst Shweta Khajuria told BI that Google’s process may be different from other Big Tech players because Google has a “much more dominant presence” in Search than any other company has in its respective categories.

Meta still competes with Snapchat and TikTok, Khajuria said. But the Google lawsuit is significant because it is “by far the biggest” antitrust case and will serve as a wake-up call for other companies, Khajuria said.

“The bottom line is that no company, no matter how big, is above the law,” Khajuria said.

Emarketer analyst Max Willens isn’t convinced the decision should worry other tech giants. He told BI that the ruling against Google “shouldn’t necessarily signal that these other companies” are in bad shape.

“All of these lawsuits involve very different circumstances,” Willens said.

Aside from the difference in the lawsuits, Willens also said that Google will “vigorously defend itself” and appeal the decision, which will likely delay the final verdict by years. Until the final verdict comes out, the companies will not preemptively change their businesses, Willens said.

“It’s a change of pace to Big Tech,” Willens said. “It’s new, but it’s not going to cause them to take such drastic action that it affects their businesses.”

Khajuria also said he doesn’t anticipate companies taking proactive steps to prevent a similar outcome. However, she said tech giants may be more cautious about making big acquisitions that could draw attention to themselves.

Ives also said business models are unlikely to change dramatically, but said the ruling could push Apple to settle its lawsuit before it goes to court.

Ives wrote in a Wedbush note to investors that while the case is expected to drag on for years, he predicted a settlement would likely be reached in the next 12 to 18 months.

But it is clear that Judge Mehta’s decision in the Alphabet cases shattered any perception that Big Tech companies – with their powerful lawyers and massive resources – are invincible in the courts.

“There’s an atmosphere and that’s very important,” Allensworth told BI. “There’s a sense that in a high-profile case, by a very careful, legalistic, nonpartisan judge, who says this Big Tech company is a monopolist.”

Such a bombshell decision will make the other tech giants sit up straight.