A United States district judge ruled Monday that Google illegally used its market power to create a monopoly over online search, a decision with far-ranging ramifications including in travel, where the four biggest online travel agencies spent a combined $16.8 billion on sales and marketing last year — much of it going to Google.
Travel companies have been complaining for years about Google’s digital search and advertising dominance. During the 10-week antitrust trial last year in Washington, D.C., a 2019 letter to Google from Expedia Group chairman Barry Diller surfaced in which he expressed his frustration with search results.
“I must say I’m on the edge of revolt now that Google’s actions are so punitive, not just for Expedia but also for … all the players that depend upon something of a level playing field,” Diller wrote.
His words proved prophetic. As U.S. District Judge Amit Mehta wrote in his 277-page ruling, “Google is a monopolist, and it has acted as one to maintain its monopoly.”
The judge found that Google violated Section 2 of the Sherman Antitrust Act, illegally securing its dominance in the search market by paying billions of dollars to smartphone carriers like Apple and Samsung to make Google the automatic search engine for their phones.
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“This landmark decision holds Google accountable,” Justice Department antitrust official Jonathan Kanter said in a statement. “It paves the path for innovation for generations to come and protects access to information for all Americans.”
Google said it will appeal the ruling.
“This decision recognizes that Google offers the best search engine but concludes that we shouldn’t be allowed to make it easily available,” Kent Walker, Google’s president for global affairs, said in a statement.
The ruling concerned only whether Google violated antitrust laws. The judge will decide what steps should be taken to address Google’s monopoly in a separate proceeding. They could range from specific orders regarding the company’s business practices or even a directive that Google sell of parts off its business.
A separate federal trial is scheduled in September over allegations from the Justice Department that Google’s advertising technology represents an illegal monopoly.
While the full impact on travel companies won’t be immediately clear, it could lead to lower advertising costs, said Brennan Bliss, CEO of digital travel marketing agency Propellic.
“Today’s antitrust ruling against Google could significantly impact travel companies that depend on Google for bookings – mostly for the better,” Bliss told PhocusWire in an email response, adding, “We might see lower advertising costs and new opportunities on different platforms – Bing, DuckDuckGo, and more.”
Hospitality and technology consultant Max Starkov said he believes there will be no short term impact: “The current ruling and anticipated appeals by Google will take years to pan out. Mid Term: Google’s exclusive contracts with a number of platforms will be revised (Apple, etc.) to make them non-exclusive. But where would one find a better alternative search engine?”
And in the long term, generative artificial intelligence search engines such as OpenAI Search and Claude will develop in the search space giving consumers plenty of choice, he added.
“Will these new search engines have the deep pockets to finance an undertaking like this one and the tech talent to execute it? Will they have the market acumen and persistence to establish new search products in the marketplace? Remains to be seen.”
He also questioned whether consumers would abandon Google for a generative AI-powered search engine.
“Even today consumers have the choice to abandon Google and switch to Bing or DuckDuckGo. How many have done it? Google gets 82 billion visits per month! YouTube – another 31 billion. ChatGPT? A paltry 3 billion!”
Christian Watts, CEO of Magpie, said Google hadn’t done anything wrong in its deal with Apple but added that “monopolies are clearly bad, and Google has been too successful.”
“So the government steps in. I suspect armies of attorneys will argue for the next few years, Google will pay a settlement of a few [billion dollars], and Apple users will be delighted with default icons for Bing, Yahoo and Alta Vista. It’s a bit ironic that Booking is getting the same treatment in Europe, and one of the best tools to disintermediate the [online travel agencies] — Google Travel — has also been attacked by the Europeans as anti-competitive. This will all get resolved just after the entire search infrastructure has been turned upside down by AI, and the government their lawyers will have to start again.”
The U.S. Justice Department first brought the antitrust suit in 2020. The government argued that by paying billions of dollars to be the automatic search engine, Google denied competitors the chance to compete with its search engine. With the data Google collected from consumers, it made its search engine even better.
Its dominance also allowed the company to raise advertising prices, practically at will, the judge found.
“The only apparent constraint on Google’s pricing decisions are potential advertiser outcry and bad publicity,” he wrote.
Travel companies were making noise about Google’s behavior before the suit was filed.
In May 2020, Expedia Group’s then CEO Peter Kern said the company had been “over-reliant” on Google. Also that year, Tripadvisor’s then-CEO Steve Kaufer complained that the company’s earnings had suffered “as Google continues to siphon off high-quality traffic that would otherwise have visited Tripadvisor.”
With the filing of the suit that October, Viator founder Rod Cuthbert predicted trouble for Google.
“While up until now Google has been cavalier in placing its own offerings first in search results, thus abusing its monopoly power, sometime in the not too distant future it will start to ask itself how well such actions are perceived by the world at large, including the Justice Department and its end-users,” Cuthbert said, adding, “Once Google has to fight for users on even ground, it will lose its enthusiasm for competing with its advertising customers.”
Cuthbert has been more vocal recently. In a recent interview with WiT founder and managing director Yeoh Siew Hoon, he said, “We were the ones who were out there with the risk capital doing the development, figuring out how to do this. Everybody else followed along, right? We spent absolute fortunes with Google. We spent billions and billions of dollars. And now they come along and they say, ‘You know what? We don’t really need you.’ Man, that drives me crazy. And it also says to me, ‘Don’t invest in anything because Google will probably take that.’ Take it direct.”
And commenting on the ruling, Cuthbert said: “The court has confirmed what we knew already – Google is a monopoly and acts like one. But now what? The ruling comes as the whole search industry is bracing for AI-driven change that seems certain to upend everything anyway, court ruling or not. One thing seems certain: Google has the inside running in both paid and organic search, and is unlikely to give it up anytime soon.”
*PhocusWire senior reporters Morgan Hines and Linda Fox contributed to this report.