Google's monopoly drama should have Apple, Meta, and Amazon nervous

• The court ruling that Google illegally monopolized search has Big Tech companies on their heels.
• It gives a road map for other antitrust rulings and makes cases easier to bring in the first place.
• Analysts say companies facing antitrust suits may try to fly under the radar and avoid acquisitions.

A federal judge's blistering ruling describing Google as a monopoly should have other Big Tech companies worried.

In the nearly 300-page ruling, US District Judge Amit Mehta said Alphabet's deals to make Google the default search engine on other platforms violated corporate competition laws while accruing billions of dollars in revenue.

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

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

Google has said it plans to appeal Mehta's ruling, arguing that the decision "recognizes that Google offers the best search engine, but concludes that we shouldn't be allowed to make it easily available." The company did not immediately respond to a request for additional comment from Business Insider.

The developments are a signal to other Big Tech companies that they should be worried .

It's not the first time Big Tech has lost an antitrust suit and faced a split. Microsoft was found in the 1990s to be a monopoly, and while the initial remedy was to break up the company, the tech giant ended up settling.

The Google development is the biggest Big Tech antitrust ruling since then. Dan Ives, an analyst at Wedbush Securities, said in a note on Wednesday that the industry had gotten stronger under the AI revolution, and he told Business Insider that Google's loss gave the Justice Department momentum in its "Big Tech battle."

"The Big Tech antitrust drumroll will continue," Ives told BI, adding that "Big Tech has a target on its back."

Under the Biden administration — and with the appointment of Lina Khan as the commissioner of the Federal Trade Commission — the US government has taken an aggressive approach toward major tech companies.

In addition to the case against Alphabet that Mehta presided over, the Justice Department and several states have brought antitrust lawsuits against Apple over its treatment of competitors to its in-house iPhone apps ; against Amazon, accusing it of using its retail dominance to squeeze third-party sellers on its platform; and against Meta over its attempts to dominate the social-media market through its acquisitions of Instagram and WhatsApp.

These cases are resource-intensive, have little precedent, and are the most ambitious antitrust lawsuits in decades. William Kovacic, a former FTC chair, said a big consequence of the Google ruling was that it would give federal agencies a boost of confidence that the risk is worth it.

"It's a huge shot in the arm to your team," Kovacic, now a professor at the George Washington University Law School, told BI. "And your success in all these other matters involves having more people fully committed and willing to work their fingers to the bone to make this work. 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 need to prove that a particular company illegally dominates a particular market.

Often the cases get stuck on the question of how to define a market in the first place.

Defendants typically define the market broadly, arguing that they're just one fish in a big pond. Plaintiffs try to define the market narrowly, arguing that the companies are such big fish that they are illegally taking up space in a very small pond.

A federal judge previously tossed a lawsuit against Meta over these ambiguities, ruling that regulators didn't sufficiently define the social-media market the FTC had alleged Meta monopolized before the regulator refiled its case .

Bill Baer, a former top antitrust lawyer at the Justice Department, said Mehta's mammoth Google ruling showed judges exactly how to handle the market-definition puzzle.

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

"That analytical process of figuring out what, in real terms, competes with other things, and not let the defendant kind of throw spaghetti at the wall and see what sticks, is one of the hallmarks of the Google decision," Baer said.

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

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

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

Instead of complex mathematical models, Mehta looked at internal documents, the conduct of the businesses themselves, and testimony from rival companies to define the "search market" Google monopolized.

If other judges follow that standard, it could lower the bar for bringing antitrust lawsuits in the first place.

"If the bar is you have to prove this to a mathematical certainty, you're just going to throw out a lot of cases," Allensworth said.

Big Tech companies may be more cautious about acquisitions

While tech companies may not be rushing to change their business models, the recent court decision could make them more cautious about acquisitions.

But the Google ruling doesn't necessarily mean regulators will succeed in pursuing similar judgments against other tech giants.

Shweta Khajuria, an analyst at Wolfe Research, told BI that Google's lawsuit may be different from other Big Tech companies' because Google has a "much more dominant presence" in search than any other company has in its category.

Meta still competes with Snapchat and TikTok, Khajuria said. But she described the Google lawsuit as "by far the biggest" antitrust case and said it could serve as a bellwether for other companies.

"The underlying takeaway is that no company, no matter how big they are, is above the law," Khajuria said.

Max Willens, an analyst at eMarketer, isn't convinced that the ruling should make other tech giants concerned. He told BI that it "shouldn't necessarily signal that these other companies" are in bad shape.

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

Willens argued that Google would "vigorously defend itself" and appeal the decision, which could delay the final verdict by years. He predicted that companies wouldn't preemptively change their businesses before then.

"It's a change of pace to Big Tech," Willens said. "It's new, but it's not going to cause them to take a measure so drastic that it would impair their businesses."

Khajuria also said she didn't expect companies to act to prevent a similar outcome. But she said the tech giants might be more cautious about making large acquisitions that could draw attention to them.

Ives also argued that while business models are unlikely to dramatically change, the decision may push Apple to settle its lawsuit before it goes to court. In a note to investors, Ives predicted that a settlement would be reached in the next 12 to 18 months .

It's clear that Mehta's decision in the Alphabet cases has pierced perceptions that Big Tech companies — with their high-powered lawyers and massive resources — are invincible in the courts.

"There's a vibe, and that's really important," Allensworth told BI. "There's a sense that in a very high-profile case by a very thoughtful, legalistic, kind of nonpartisan judge saying that this Big Tech company is a monopolist."

A bombshell ruling like that is bound to make the other tech giants sit up straight.