A federal judge ruled last month that Google is a monopolist and that, along with the penalties it still faces, the corporate could have so as to add a brand new multi-billion dollar problem to its list of headaches.
Together with the Ministry of JusticeIn addition to Google’s proposed remedies, which could reportedly include breaking up the corporate, Google could also face several class motion lawsuits. Complaints from advertisers demanding fines to repay years of excessive fees. Overall, the bill for the tech giant could exceed $100 billion, along with possible lawsuits from competitors that would end in further penalties, Bernstein analysts said in a note on Tuesday.
The antitrust lawsuit, in addition to potentially billions of dollars in penalties sought in possible future lawsuits, could prompt Google to take a less aggressive strategic stance at a time when generative AI is revolutionizing the search business, said Mark Shmulik, senior analyst at Bernstein. Assets.
“The reality of an internet company is that progress never stops. And if you’re stymied, maybe with one hand tied behind your back, it becomes very difficult to move forward as quickly as you want and maybe need to,” Shmulik said.
The Verdict The study concluded that Google used its dominance in text ads to charge “above-competitive prices,” that’s, prices above what can be acceptable in a competitive market. This enabled the corporate to make “monopoly profits” on text ads that appear at the highest of search results, for instance.
Although text ads could appear outdated, they make up 65% of the larger search ad market, in keeping with the ruling. In 2020, text ads made up about 80% of Google search ads by revenue. In the identical 12 months, the corporate generated revenue of 104 billion US dollars from its product category “Google Search and Others”, in keeping with a submission with the SEC.
The court found that Google used its monopoly position to extend the costs of its search text ads by 5 to fifteen percent to satisfy its revenue targets without losing customers to competitors. The ruling also found that Google didn’t have in mind what competing corporations were charging for similar text ads when setting its prices.
When asked for comment, a Google spokesperson said: Assets to a previous statement by Kent Walker, Google’s president of worldwide affairs. He praised Google and said the $1.9 trillion company plans to appeal the ruling.
Although indirectly related to text ads, the review and reservation company Yelp has already taken up last month’s ruling to sue Google alleged that the corporate exploited its dominance within the search space to unfairly exclude competitors out there for “local search services and local search advertising.” A Google spokesperson said, “Yelp’s allegations are not new.”
“Similar lawsuits were dismissed years ago by the FTC (Federal Trade Commission) and recently by the judge in the DOJ (Department of Justice) case. We are appealing the other aspects of the decision that Yelp is citing. Google will vigorously defend against Yelp’s meritless claims,” a Google spokesperson said in an announcement sent to several media outlets.
Shmulik said Yelp’s lawsuit was one in all the primary filed after the ruling, and it’s possible that other competitors within the search space could now sue due to the ruling. That includes Microsoft, the developer of rival search engine Bing, which has spent over $100 billion on search over the past 20 years, CEO Satya Nadella said through the antitrust case against Google, in keeping with the ruling.
“[Microsoft] one can argue that “part of the reason [Bing] “The reason it never took off was due to Google’s illegal activities, and that is why we wish a return on all those investments,” he said.
More than 20 years ago, Microsoft itself faced an antitrust lawsuit, and the flood of lawsuits that followed may very well be an example of what is yet to come back for Google, Bernstein analysts say. After a federal judge ruled against the tech giant in 2000, buyers of Microsoft’s PC operating system and other software products sued the corporate to attempt to recoup inflated prices, mostly over a two-and-a-half-year period, Shmulik said.
Microsoft agreed to settle these and a number of other other lawsuits brought by competitors. The settlement included a payment of $1.9 billion to Sun Microsystems, $775 million to IBM, $536 million to Novell and an extra $150 million to Gateway.
In total, Microsoft paid about $10 billion in settlements between 2002 and 2008, which corresponds to about 11 percent of its net profit, Bernstein analysts found.
All indications are that the judge’s antitrust ruling against Google could lead on to years of litigation to capitalize on it, Shmulik said.
“It’s far from me to judge how excited lawyers sound,” he said. “But the ones I spoke to seemed very eager to get to work.”
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