A federal court today ruled that Google LLC has illegally maintained a monopoly in the search and search text advertising markets.

The U.S. District Court for the District of Columbia issued the decision in connection with an antitrust lawsuit brought against the company by the Justice Department. A bipartisan group of state attorneys general participated in the litigation as well. The case revolved around a series of agreements that Google has inked with fellow tech firms to promote its search engine.

In 2021, Google spent $26.3 billion to remain the default search engine provider across several popular browsers and mobile devices. The products on the list included, among others, Apple Inc.’s iPhones and Safari browser. The Justice Department alleged that Google’s practice of inking such agreements amounts to monopolistic behavior, an argument that the court accepted in today’s ruling.

The lawsuit charged that the company’s default search engine deal with Apple requires Google to “be the default – and de facto exclusive – general search engine” on Safari. In other cases, the Alphabet Inc. unit allegedly prohibited partners from installing rival search engines on their platforms.

The Justice Department filed the lawsuit in 2020. Discovery, the process whereby the plaintiffs collect evidence such as internal business documents from the defendant, concluded last March. A more than two-month trial followed later in 2023 that included the testimonies of executives from Apple, Microsoft Corp. and other market players.

In today’s decision, Judge Amit Mehta ruled that Google illegally maintained a monopoly across two markets: the search engine and general search text advertising segments. Text advertising refers to the ads that Google embeds in search results.

Mehta’s conclusion about the search engine segment took several factors into account. One was the competitive importance of default search engine agreements of the kind that Google inked with Apple. To illustrate the impact of such agreements, Mehta pointed out that Bing has an 80% market share on Microsoft’s Edge browser, in which it’s set as the default search engine.

Mehta added that “if there is genuine competition in the market for general search, it has not manifested in familiar ways, such as fluid market shares, lost business, or new entrants.” At the same time, the ruling highlighted that Google’s feature set is also a factor in its market dominance, with the ruling stating that “Google is widely recognized as the best (general search engine) available in the United States.”

The second segment in which Google was found to have an illegal monopoly is the search text advertising market. The ruling focused on the prices that the company charges for ads. Mehta wrote that Google’s default search engine agreements allowed it to raise ad prices “without any meaningful competitive constraint.”

The manner in which Google will have to remedy the situation is set to be decided in a separate trial down the road. According to Bloomberg, the Justice Department may ask the court to break up the company by separating its core search business. However, investors are betting the remedies won’t be that severe, knocking Alphabet’s stock down less than 5% today.

Google, for its part, stated that it plans to appeal today’s ruling. “As this process continues, we will remain focused on making products that people find helpful and easy to use,” said Kent Walker, Google’s president of global affairs.

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