A U.S. District Court just labeled Google a “monopoly in search” and opened the door for the government to break apart one of America’s most successful businesses. But this misguided ruling fails to grasp the realities of the modern digital landscape while also falling short of meeting the requirements of court precedent. Worse, this decision will actually harm consumers while setting back new American innovations.
At the heart of the court’s ruling in U.S. v. Google is the company’s practice of entering into agreements with various companies to feature its search engine as the default option – in particular Google paying Apple $20 billion to be the default search on iPhones. But this is a standard business practice.
The court’s characterization of Google’s agreements as “exclusive dealing” is a misstep. These arrangements don’t prevent users from accessing competitors; they’re more akin to standard product placement deals that still allow for competition. Everytime we walk into a supermarket, products are placed at the end of the aisle or at eye level, and this is typically determined by paid deals for placement. TV ads are additionally timed and placed based on similar deals.
Users also routinely change their default settings, whether for browsers or email clients. The ease of switching, combined with widespread multi-homing behavior, means that Google’s position is far from certain.
Another glaring issue with the decision is its overly narrow definition of the relevant market for online searches. The digital ecosystem is far more dynamic and interconnected than the District Court acknowledges. Users today easily navigate between general search engines (like Bing and DuckDuckGo), specialized vertical providers (like Yelp and Opentable), and social media companies. This fluidity means that these various services are all competing for user attention and advertising dollars in a much broader market than the court recognizes.
The U.S. Supreme Court has emphasized the importance of assessing such “market realities” in antitrust cases. Yet, the District Court’s market definition ignores significant competitive pressures from specialized vertical providers and social media searches. A 2021 study found that 82% of individuals surveyed prefer to use social media for searches rather than traditional search engines. And a 2023 Pew Research survey found that 69% of young Americans and 49% of all Americans get news on social media.
By failing to properly analyze the two-sided nature of the search market, the court has misapplied the Supreme Court’s decision in Ohio v. American Express. This oversight has led to its inflated assessment of Google’s market share.
Further, the District Court shrugged off the potential for sudden market changes in tech, despite the industry’s disruptive history. Today’s rapid rise of generative AI and the swift adoption of tools like ChatGPT, which gained 100 million users in just two months, demonstrate how quickly the competitive landscape can shift in tech. Historical examples abound, from MySpace’s fall to Facebook’s rise, to BlackBerry’s fall to iPhones, or Yahoo’s displacement by Google itself. U.S. tech is littered with former giants who once were claimed to be unassailable due to vibrant innovation and competition throughout the industry.
Google’s substantial R&D investments ($31.6 billion in 2022 alone) and the growth of competitors like DuckDuckGo (which more than doubled its searches in 3 years, from 16.5 billion in 2019 to 35.3 billion in 2022) further undermine the argument of Google’s “durable” monopoly power. If Google’s search success were guaranteed, it wouldn’t need to spend on innovation and improvement.
Google’s conduct has led to substantial benefits for consumers. The company has consistently released new products and features year after year. Speed and accuracy have also demonstrably improved, reflecting continuous R&D, innovation and investment. Meanwhile, prices for its services continue to remain low or free.
This points to the core issue with the court’s ruling: a failure to properly balance procompetitive, pro-consumer benefits against antitrust allegations.
In a zeal to punish the success of an American company, these crucial factors have been overlooked. A deeper analysis reveals that the efficiencies, competitive investments and quality improvements resulting from Google’s agreements hardly render it a monopoly or a boon to consumers.
The U.S. digital economy moves at the blink of an eye, with new challengers and paradigm-shifting technologies emerging constantly. A static view of market power in this dynamic environment is not just misguided—it’s potentially harmful. By penalizing success and discouraging the very practices that have driven innovation and consumer benefits, policymakers and courts risk stifling the engine of progress that has made America the global leader of the digital age.
As the DOJ’s case against Google moves through the appeals process, higher courts should take a more nuanced and realistic view of the digital marketplace. The future of American innovation, and the copious benefits it brings to consumers, depends on it.