In a landmark antitrust trial in Washington, the U.S. Justice Department slammed Alphabet Inc's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google for maintaining a monopoly by allegedly paying over $10 billion annually to secure its position as the default search engine on web browsers and mobile devices.
This move, the government argues, stifles competition and hampers innovation in the online search market, Bloomberg reports.
Kenneth Dintzer, a government lawyer, highlighted that Google achieved a monopoly by at least 2010 and currently holds over 89% of the online search market.
The Justice Department and 52 attorneys general from states and U.S. territories allege that Google unlawfully maintained its monopoly by making substantial payments to tech rivals, smartphone manufacturers, and wireless providers.
These payments were in exchange for Google being set as the preselected option or default on mobile phones and web browsers.
The government argues that Google used default agreements to discourage rivals and wielded its market power to prevent Apple Inc (NASDAQ: AAPL) from pursuing alternatives better than Google as the default browser on its devices.
Google's move left Apple with no choice but to concede to Google's demands.
By 2020, Google reportedly paid Apple between $4 billion - $7 billion to maintain its default position on Safari. The government also contends that Google paid over $1 billion to wireless carriers to secure its status as the default on Android smartphones.
The trial's first phase will determine whether Google illegally monopolized the online search market.
If the Justice Department prevails, it may seek remedies in the second phase, potentially separating Alphabet's search business from other products, such as Android and Google Maps.
Tech titans, including Google and Amazon.Com Inc (NASDAQ: AMZN), attracted global regulatory scrutiny for exploiting their influence over smaller players that could cost them the breakup of their businesses.
Price Action: GOOG shares traded lower by 0.92% at $136.47 on the last check Tuesday.