Quiver Quantitative - The landmark antitrust trial against Alphabet (NASDAQ:GOOGL) (GOOG) is drawing to a close, with the U.S. government making a final push to establish the tech giant's alleged misuse of its dominant market position. The Department of Justice, in its case presented since September 12, accuses Google (GOOGL) of employing anti-competitive tactics to maintain its near-90% market share in the U.S. search engine space. This case, presided over by Judge Amit Mehta of the U.S. District Court for the District of Columbia, is the first of several high-profile trials targeting the unchecked power of leading tech companies.
MIT economics professor Michael Whinston, taking the stand as the government's concluding witness, contended that Google's market dominance significantly dampens its incentive to improve service quality. Whinston challenged Google's defense that its financial arrangements with Apple (NASDAQ:AAPL) and other firms, which amounted to over $26 billion in 2021, were competitive necessities. Instead, he framed these payments as monopolistic profits aimed at securing preferential placement for Google's search engine on various devices, a practice that has underpinned the tech giant's profitability.
The government's assertion is that Google's market power has led to increased costs, particularly for advertisers, with experiments indicating that Google could profitably hike ad rates with minimal backlash. Witnesses from Verizon (NYSE:VZ), Samsung (KS:005930), and Google have shed light on the hefty payments Google makes to default its search engine on smartphones and browsers—tactics that have been critical to maintaining its high market share.
As the evidentiary phase wraps up, the anticipation for Judge Mehta's decision grows, but it remains uncertain whether closing arguments will take place. This trial is part of a broader crackdown on major tech firms, with subsequent cases against Meta (META) and Amazon (NASDAQ:AMZN) also in the pipeline, marking a pivotal moment in the regulation of America's tech giants.
This article was originally published on Quiver Quantitative