The Google ruling: Monopoly confirmed, breakup rejected, the stock market's reaction, and what are the conditions?

AI saves Google: How ChatGPT & Co. saved the tech giant from splitting up

In one of the most important and long-awaited antitrust cases in modern business history, a US court has decided the fate of Google. After a five-year legal battle initiated by the US government, nothing less than the breakup of the tech giant was at stake. The demands were drastic: the forced sale of the globally dominant Chrome browser and the Android operating system. But in a groundbreaking ruling, federal judge Amit Mehta rejected these radical measures and saved Google from being split up.

But the ruling is by no means an acquittal. The judge unequivocally confirmed that Google holds a monopoly in web search and has defended it using anti-competitive means. Instead of breaking it up, however, the court imposed stringent conditions: Google must now share parts of its most valuable data – its search engine index – with competitors such as Microsoft and AI companies such as OpenAI. Furthermore, exclusive contracts that stifle competition will be prohibited in the future, even though multi-billion dollar payments to partners such as Apple remain generally permitted. The ruling, which was also influenced by the rise of AI competitors such as ChatGPT, marks a turning point for the regulation of "Big Tech" and will shape the digital landscape for years to come, as champagne corks popped on the stock market and Alphabet shares shot to a record high.

Suitable for:

• Google's empire is shaky: Google spin-off strategies – What do the antitrust proceedings mean for the advertising business?

What was the background to the lawsuit against Google?

The proceedings against Google have their roots in a 2020 lawsuit filed by the U.S. Department of Justice at the end of Donald Trump's first term in office. The lawsuit was the result of a years-long investigation into Google's market practices, accusing the company of abusing its dominant position in the search engine space.

The case is being called the most important antitrust case of a generation. The lawsuit received support from both Republican and Democratic politicians, which is unusual in today's polarized U.S. political landscape. Republican Senator Josh Hawley called it perhaps the most important antitrust case in a generation, while Democratic Senator Elizabeth Warren called for swift, forceful action against Google.

The case spanned five years of intense legal wrangling. It involved fundamental questions about market power in the digital economy and how large a technology company can grow before it becomes problematic under antitrust law.

What specific monopoly position did Google hold?

Federal Judge Amit Mehta ruled just over a year ago that Google had a monopoly on web search and was using unfair means to defend itself against competition. The company controls approximately 90 percent of the search engine market and captures the lion's share of global online advertising spending.

Google's dominance is impressive: According to various sources, Google's global market share is over 91 percent. In the US, Google's market share is approximately 86.99 percent, followed by Bing with only 7.02 percent and Yahoo with 3.11 percent. Even alternative search engines like DuckDuckGo only achieve a market share of 2.42 percent.

This dominance was built through years of strategic practices. The report of the U.S. House Judiciary Committee found that Google had cemented its monopoly in internet search over 20 years by acquiring over 200 competitors and their successful technologies.

What were the main allegations against Google?

The main allegations centered on several practices deemed anti-competitive. A central issue was the exclusive agreements with other companies. For example, Google pays Apple billions of dollars to have Google Search pre-installed on iPhones. According to information from the trial, Apple receives billions of dollars for this pre-installed feature.

Another key point was Google's relationship with Mozilla, the developer of the Firefox browser. For Mozilla, the pre-installation of Google Search in Firefox is a key source of revenue. Last year alone, Google reportedly spent around $26 billion on exclusive revenue for its search engine.

The Department of Justice argued that Google had created a wall around its search engine monopoly through these payments to hardware and web browser manufacturers. It accused the company of systematically blocking alternative search engines from the market and making it difficult for consumers to choose other options.

What drastic measures did the US government originally demand?

The US government had made far-reaching demands that would have amounted to a complete breakup of the Google corporation. The main demand was the forced sale of the Chrome browser, by far the most successful internet browser in the world. Chrome is not only used on the majority of smartphones worldwide, but also accounts for a large portion of Google's advertising revenue.

In addition, Google would have to divest itself of its own Android apps. The Android operating system would have had to be sold as well, which would have represented a huge disruption to Google's business model. Analysts estimated the value of Chrome alone at up to $100 billion.

Further demands included requiring Google to license its own search index to counteract a monopoly. Furthermore, all deals in which Google pays other browser developers, such as Firefox and Apple, large sums of money to have the company's search engine set as the default should be ended.

The Justice Department also wanted a spin-off of Google's most widely used mobile operating system, Android, to be explicitly kept on the table as a possible future request. These measures would have divided the company into several separate entities.

What was Justice Amit Mehta's actual decision?

Judge Amit Mehta rejected the US government's far-reaching demands and ruled that Google does not have to sell Chrome or Android. In his 230-page ruling, he wrote that the government's demands had gone too far.

The judge explained that conditions in antitrust proceedings should be imposed with a healthy dose of humility, which he had done in this case. He said there are good reasons not to disrupt the system and allow market forces to take effect. He also noted that the government had gone too far in demanding breakup.

Mehta noted that Google remains the dominant search engine, but the rise of AI services like ChatGPT, Perplexity, and Claude has changed the landscape and could potentially be game changers. Many people already use these alternatives instead of traditional search engines to obtain information.

Despite rejecting the most drastic measures, the judge nevertheless imposed significant conditions on Google. These are intended to ensure that competition is promoted in the search engine industry without completely dismantling the company.

What constraints were actually imposed on Google?

Although Google is allowed to keep Chrome and Android, the company still has to make important concessions. A key requirement is that Google must share some data from its search engine with competitors. This includes parts of the search engine index that Google creates when crawling the internet, as well as some information about user interactions.

This data is intended to help rival search engines like Microsoft's Bing and DuckDuckGo, as well as AI companies like ChatGPT developer OpenAI and Perplexity, develop their competing products. This represents a significant opening of Google's previously closely guarded data sets.

Another important requirement concerns Google's business practices. The company is no longer permitted to enter into exclusive agreements that would prevent device manufacturers from pre-installing competing products. This applies to services such as web search, Chrome, or the AI ​​software Gemini.

However, Google retains important flexibility: The company will essentially continue to be able to pay other companies, such as Apple or Firefox developer Mozilla, to pre-install or prominently display its services. This means that the lucrative deals with Apple and Mozilla can essentially continue, albeit under less restrictive conditions.

How did the stock market react to the ruling?

The financial markets clearly viewed the ruling as a victory for Google. Shares of parent company Alphabet temporarily rose by seven percent in after-hours trading. Apple's stock also rose by three percent, as it also benefited from the more lenient ruling.

The stock market reaction was so positive that Alphabet shares climbed to a new all-time high. In the after-hours, the stock reached above the $229 mark, setting a new record high. This development reflected the relief of investors who had feared that a breakup of the company could lead to significant losses in value.

Fund manager Robert Pavlik of SlateStone Wealth explained the positive reaction by arguing that there were doubts about whether Google had any real reason to fear government authorities, given the numerous political animosities. Markets interpreted the ruling as confirmation that the worst-feared scenarios would not materialize.

Analysts estimated the potential value of Chrome alone at up to $100 billion. The fact that this business unit could remain within the company was seen as a huge boost to Alphabet's stock.

What parallels are there to previous antitrust proceedings?

The case against Google draws clear parallels to the famous Microsoft antitrust case of 1998. At that time, the U.S. Department of Justice sued software giant Microsoft for making it difficult for users and PC manufacturers to use any web browser other than Microsoft Internet Explorer.

In Microsoft's case, the issue was the bundling of browser and operating system, which was considered the reason for the company's great success and was deemed an illegal monopoly under the Antitrust Act of 1890. At the time, Microsoft argued that the two products belong together—an argument that Google also uses today.

A court initially ruled that Microsoft should be broken up, but the company successfully appealed. Ultimately, the Department of Justice opted for a settlement: Microsoft remained intact and, in return, agreed to grant competitors access to technical details of its interfaces.

Interestingly, in 1998, when the Microsoft lawsuit was underway, Google was still an up-and-coming startup, advertising with the slogan "Don't be evil" to distinguish itself from the large Microsoft corporation. Today, Google is itself one of the largest companies in the world, with revenues of $162 billion.

What significance does the first browser war have for today’s process?

The first browser war between Microsoft and Netscape, from 1995 to 1998, provides important insights into today's Google approach. At that time, Netscape Navigator's market share fell from over 80 percent to under four percent, while Internet Explorer's market share rose from under three percent to over 95 percent during the same period.

Microsoft used strategies similar to those used by Google today: The company bundled its browser with the Windows operating system, making it difficult for other browsers to establish themselves. This aggressive market behavior led to numerous lawsuits from competitors, although Microsoft was usually able to settle out of court for substantial monetary payments.

The consequences of Microsoft's monopoly were clearly visible: After the release of Internet Explorer 6, the development team was almost completely disbanded, and it took five years before a new version was released. Its widespread use led to websites being optimized to work only in Internet Explorer, which excluded users of alternative browsers from certain services.

The Department of Justice's current lawsuit against Google draws inspiration from the Microsoft lawsuit, but has a narrower focus that increases its chances of success. However, history also shows that even successful antitrust cases don't necessarily lead to lasting change.

How has the search engine market developed over the years?

The evolution of the search engine market demonstrates how monopolies can form and consolidate in the technology industry. Google started as a small search engine in 1997 and now dominates with a global market share of over 91 percent. This development was not foreseeable from the outset, but rather the result of strategic decisions and market practices.

Market shares vary slightly across the world, but Google's dominance is evident everywhere. In Europe, Google's market share is 91.91 percent, followed by Bing with just 3.87 percent. Even in technologically advanced markets like Germany and the United Kingdom, Google achieves market shares of over 90 percent.

It's noteworthy that Google doesn't dominate in only a few markets. In China, Baidu leads with 75.54 percent, ahead of Bing with 11.47 percent, while Google achieves only 3.56 percent. In Russia, Google shares the market relatively evenly with 48.08 percent and Yandex with 49.02 percent.

The competition is struggling to compete with Google's established position. Despite massive investments, Microsoft's Bing only achieves a 3.19 percent market share worldwide. Alternative search engines like DuckDuckGo, which specialize in privacy, remain niche players with less than one percent market share.

From local to global: SMEs conquer the global market with clever strategies - Image: Xpert.Digital

At a time when a company's digital presence determines its success, the challenge is how to make this presence authentic, individual and far-reaching. Xpert.Digital offers an innovative solution that positions itself as an intersection between an industry hub, a blog and a brand ambassador. It combines the advantages of communication and sales channels in a single platform and enables publication in 18 different languages. The cooperation with partner portals and the possibility of publishing articles on Google News and a press distribution list with around 8,000 journalists and readers maximize the reach and visibility of the content. This represents an essential factor in external sales & marketing (SMarketing).

More about it here:

• Authentic. Individually. Global: The Xpert.Digital strategy for your company

What role do payments to Apple and other partners play?

Google's payments to partners like Apple are a central component of the monopoly allegations. According to information from the lawsuit, Apple receives billions of dollars for having Google Search pre-installed on iPhones. These payments to Apple could reportedly amount to more than $18 billion annually.

These sums are not only a significant cost factor for Google, but also a vital source of revenue for Apple. The agreement ensures that millions of iPhone users automatically use Google as their search engine without actively choosing another option. This significantly strengthens Google's market position.

The situation is similar with Mozilla, the developer of the Firefox browser. For Mozilla, the pre-installation of Google Search is a key source of revenue. Without these payments, it would be difficult for Mozilla to continue developing and operating the free browser.

Judge Mehta's ruling essentially allows these payments to continue. Google may continue to pay other companies like Apple or Mozilla to pre-install or prominently display Google services. However, exclusive agreements that would prevent device manufacturers from pre-installing competing products are prohibited.

Suitable for:

• Google and Meta in the crossfire of the US competition keeper: Antitrust procedure despite the trump proximity

How is the situation different in Europe?

In the European Union, the regulation has already led to changes. Users are now explicitly asked which search engine they want to use. However, Judge Mehta rejected such a mandatory choice for the United States, which would prevent implicit default settings.

The EU has already cracked down on Google in the past. Between 2017 and 2019, the European Union repeatedly imposed billions of euros in fines on the company for abusing its market power and discriminating against other companies. The company had to pay billions in total fines.

The Digital Markets Act (DMA) introduced further regulations. Since March 2024, users of Google services have been able to choose whether they want to be linked to each other, thus exchanging personal data. Users will now be able to decide whether they want to be linked to Google Search, YouTube, advertising services, Google Play, Google Chrome, Google Shopping, and Google Maps.

These European regulations go further in some respects than what the US court required of Google. However, they also demonstrate that regulatory intervention is possible without completely destroying the company's business model.

What impact does the ruling have on data usage?

A key aspect of the ruling concerns the handling of user data. Google will be required to share some data from its search engine with competitors in the future. This includes parts of the search engine index that Google creates when crawling the internet, as well as some information on user interactions.

This data release is of enormous importance, as Google's search engine index is one of the company's most valuable data assets. It is intended to help rival search engines like Microsoft's Bing and DuckDuckGo, as well as AI companies like ChatGPT developer OpenAI and Perplexity, improve their competing products.

However, other proceedings regarding Google's data usage are also ongoing in parallel. A German court had already found that Google had violated the General Data Protection Regulation (GDPR) during the account registration process. The Berlin Regional Court criticized Google for leaving consumers unclear during registration about which of the more than 70 Google services user data would be processed for.

The data protection issue is also highlighted by class-action lawsuits filed by German consumers. Organizations like Privacy ReClaim offer Android users the opportunity to assert potential claims for damages due to unlawful data collection. They argue that Android phones send massive amounts of data about their users to Google every day without an adequate legal basis for doing so.

What are the next legal steps?

The current ruling is by no means the end of the legal dispute. Google announced its intention to appeal even before the ruling. The internet giant had to wait for the decision on the consequences before also challenging the ruling in the monopoly case.

It could therefore be years before a final decision is reached. The appeals process will likely drag on through multiple courts, and it's quite possible that higher courts will reach different conclusions than Judge Mehta.

At the same time, another major antitrust case is already underway by the Department of Justice against Google's advertising technology business. Just last week, Google suffered another setback in court: A judge in the state of Virginia ruled that the company had achieved a monopoly position in online advertising platforms through unfair competition. A second trial on penalties will follow later.

Google's legal challenges are far from over. The company must prepare for further proceedings and possible appeals that could further challenge its business practices and market position.

What role does the Trump administration play in this process?

The political dimension of the case is complex. The original lawsuit was filed in 2020, at the end of Donald Trump's first term in office. Interestingly, the Trump administration has continued its hard line against Google even after returning to office.

Even under the new Trump presidency, the U.S. Department of Justice maintained that Google should be broken up due to its excessive market power. This demonstrates remarkable continuity in antitrust policy across different administrations.

Trump has been critical of Google in the past and even called for the company's criminal prosecution for alleged election interference. He claimed that the internet search engine displayed a disproportionate number of negative stories about him while only publishing positive articles about his rival, Kamala Harris.

Although Trump is considered pro-business and has expressed skepticism about a potential breakup of tech companies, his administration nevertheless appears determined to continue the proceedings against Google. While the final steps in the ongoing antitrust case were taken under the leadership of Trump's predecessor, Joe Biden, the continuity suggests that the issue enjoys bipartisan support.

What is the significance of artificial intelligence and new competitors?

In his ruling, Judge Mehta acknowledged that the rise of AI services such as ChatGPT, Perplexity, and Claude has changed the landscape. These services could potentially be game changers, as many people already use these alternatives instead of traditional search engines to obtain information.

This development was an important factor in the judge's decision. He noted that while Google remains the dominant search engine, the new AI-based services could pose a real challenge to its position. This distinguishes the current situation from previous monopoly cases, in which no such technological changes were on the horizon.

Google itself had argued in court that the government's demands were backward-looking, pointing to competition from AI offerings for its search engine. The company emphasized that services like ChatGPT already represented competition and challenged the traditional search engine monopoly.

The Department of Justice, however, argued the opposite, emphasizing that regulations must be imposed on Google because of the growing importance of AI. There is a risk that the company will use the same methods it uses with its search engine to become dominant in the AI ​​sector. Therefore, regulations must be forward-looking.

What impact does the ruling have on Chrome and Android?

Although Google is allowed to keep Chrome and Android, these products remain central to the company's future business model. Chrome is by far the most successful internet browser worldwide and is used on the majority of smartphones worldwide. It also accounts for a large portion of Google's advertising revenue.

The value of these products is enormous: Analysts have estimated the value of Chrome alone at up to $100 billion. Android, as the world's most widely used mobile operating system, is also invaluable to Google, as it gives the company direct access to billions of users.

The decision allowing Google to retain these business units was received positively by the stock market. Investors had feared that a breakup could lead to significant value losses, as these products are so closely linked to Google's advertising business.

Nevertheless, Chrome and Android are now subject to certain restrictions. Google is no longer allowed to enter into exclusive agreements for the distribution of its services such as web search, Chrome, or its AI software Gemini. This could, in the long term, change how these products are marketed and used.

How do experts and the industry assess the ruling?

Reactions to the ruling were mixed. From the perspective of the financial markets, it was clearly a success for Google, as evidenced by the seven percent increase in its share price in after-hours trading. Investors had feared the worst and were relieved that the most drastic measures were off the table.

Google itself criticized the government's original demands as radically interventionist and announced it would appeal. The company argued that the imposed conditions were already sufficient and that dismantling the company would have been disproportionate.

Critics of the ruling, however, argue that the measures don't go far enough. They fear that Google could continue to use its dominant position to disadvantage competitors. The privacy movement and consumer advocates would likely have preferred more drastic cuts.

The international perspective is also interesting: While the US tends toward a moderate approach, the EU has already implemented stricter measures. This could lead to different competitive conditions in different markets.

What does the ruling mean for the future of technology regulation?

The Google ruling sets important precedents for the regulation of large technology companies. It shows that courts are willing to recognize and sanction monopolies, but not necessarily to completely break up established companies.

The case could have implications for other major technology companies. Companies like Amazon, Apple, Meta, and Microsoft are closely monitoring the proceedings, as they all hold similar market positions in their respective fields. The ruling could serve as a guideline for determining which practices are considered acceptable and which are considered anticompetitive.

At the same time, the case also highlights the limitations of traditional antitrust enforcement in the digital economy. The complexity of modern technology companies and their business models makes it difficult to find simple solutions. The ruling attempts to strike a balance between preserving competition and avoiding the breakup of successful companies.

Judge Mehta's emphasis on new technologies like AI as potential game changers suggests that future regulation may focus more on technological developments and less on structural changes. This could represent a new paradigm in technology regulation.

What are the key findings from the Google ruling?

The Google ruling marks a significant turning point in the history of technology regulation. While Judge Amit Mehta upheld Google's monopoly position in web search, he rejected the US government's drastic demands to break it up. Instead, he imposed moderate conditions aimed at promoting competition without destroying the company.

The most important measures include a requirement to share data with competitors and a ban on exclusive agreements that could hinder competitors. At the same time, Google is still allowed to pay partners like Apple and Mozilla for pre-installing its services.

The ruling demonstrates a pragmatic approach to regulating dominant technology companies. It recognizes the realities of the modern market, in which new technologies like AI are challenging traditional business models. This approach could serve as a model for future antitrust proceedings.

For Google, the ruling initially represents a significant relief, as evidenced by the positive stock market reaction. The company can retain its most valuable assets and continue its business model essentially unchanged. However, the imposed conditions are not trivial and could have long-term effects on Google's market position.

However, the case is not yet closed. Google has already announced its intention to appeal, and further antitrust proceedings are underway against the company. A final assessment of the impact will only be possible in the coming years, when it becomes clear how effective the imposed measures are in promoting competition.

The case also underscores the complex challenges of regulating the digital economy. While traditional antitrust approaches may not always be appropriate, the need to control market power and ensure fair competition remains. The Google ruling attempts to manage this difficult balancing act and could point the way for the future of technology regulation.

☑️ Our business language is English or German

☑️ NEW: Correspondence in your national language!

Konrad Wolfenstein

I would be happy to serve you and my team as a personal advisor.

You can contact me by filling out the contact form or simply call me on +49 89 89 674 804 (Munich) . My email address is: wolfenstein ∂ xpert.digital

I'm looking forward to our joint project.

☑️ SME support in strategy, consulting, planning and implementation

☑️ Creation or realignment of the digital strategy and digitalization

☑️ Expansion and optimization of international sales processes

☑️ Global & Digital B2B trading platforms

☑️ Pioneer Business Development / Marketing / PR / Trade Fairs