Google is legally a monopoly – how will this impact markets?
Google is legally a monopoly, a US court has ruled. What does this mean for the search engine and global markets?


We'd probably suspected for years that Alphabet’s Google (NASDAQ: GOOG) search engine unit effectively had a monopoly on the way we navigate the internet. There are other search engines out there and other web browsers, but hardly anyone ever bothers to use them. And “googling” something has become so commonplace that we have turned it into a verb.
But now it is official. A US court has ruled that Google is legally a “monopoly” and that it was guilty of exploiting its dominance to squash competition and stifle innovation. In a 277-page ruling, Judge Amit P. Mehta argued that the company has done everything in its power to maintain its lock on the market and muscle out potential rivals.
It remains to be seen what happens next. But if the ruling stands, it will enable the US government to take action against the company, and potentially even try to break it up. If that happens, it will be the biggest anti-trust action since the telecoms industry was broken up in the 1980s, or the oil industry at the start of the 20th century.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
How will the fact that Google is legally a monopoly impact global markets?
That matters to investors, of course. Alphabet is a huge company, worth $2 trillion, and Google is at the core of its business model. There is probably not a portfolio in the world that does not have some exposure to it one way or another. How it gets broken up, and whether it can maintain its profitability, will have a huge impact on the markets. It will have greater significance than just that, too, changing the way businesses around the world work. Here are three ways it could fundamentally alter the way the global economy operates.
- First, it would lower advertising costs.
One of the main issues with Google is that its lock on online advertising drives up prices. That makes it harder for smaller companies to break into the market, it potentially offers an unfair advantage to established players and it makes it difficult for start-ups to get any attention.
If online advertising were more competitive, costs would come down and we could expect many markets to become more open, with more choices easily available. It is hard to see how that would not benefit consumers. - Secondly, we would see the launch of more apps, as controls on what can and can’t be sold through the operating system on all of our phones are loosened. Through the app stores, the two major mobile operators keep control of what most of us can and can’t access through our smartphones. If the systems were more open – and especially if Apple were to be broken up at the same time – then it would create space for a lot more new apps to be launched, again widening the choice for consumers, and creating opportunities for rapid innovation.
Indeed, one of the reasons many venture capitalists now support a break-up of Google is precisely because they think it would kick-start an increasingly stagnant industry. Google may well have been one of the great successes of venture capital, but it has become an obstacle to start-ups. - Finally, breaking up Google would lower costs, lead to more innovation and accelerate the shift to a digital economy. We may think the internet is ubiquitous, but McKinsey estimates it accounts for just 3.4% of global GDP. There is huge room for growth – that figure could hit 10% or 20% over the next decade – and breaking up the dominant players may be the key. How the split happens will make a huge difference. Google might be forced to divest its Chrome web browser and its Android mobile operating system. It could be forced to place its search engine into a separate company, ring-fenced from the rest of its operations.
Alternatively, it might have to split out its advertising operation, or accept oversight of how it sets prices. But, however it happens, if Google gets broken up, marketing and product strategies will have to change dramatically. In the end, the change will be for the better, for the simple reason that more competition is always beneficial – but it will be a very long and messy process, with lots of casualties along the way.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years.
He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.
-
8 of the best energy-efficient properties for sale
The best energy-efficient properties for sale – from a HUF HAUS in London’s Dulwich Village to a contemporary property in the Lake District National Park
By Natasha Langan Published
-
Revealed: the new £1 million UK postcodes
We look at some of the priciest parts of the UK, where properties are selling for £1 million or more
By Daniel Hilton Published
-
Find tomorrow’s Asian giants while they are still smaller companies
Opinion Nitin Bajaj, portfolio manager of the Fidelity Asian Values trust, picks three Asian companies to invest in.
By Nitin Bajaj Published
-
AI will maintain Moody’s market lead, says Stephen Connolly
Opinion Veteran data provider Moody's has adapted well to the modern world, and is one of Warren Buffett’s longest-held investments
By Stephen Connolly Published
-
Is BlackRock World Mining gearing for a recovery?
Opinion After a frustrating year, BlackRock World Mining is positioned for growth and to capitalise on the sector's recovery
By Rupert Hargreaves Published
-
Should you limit exposure to US tech stocks?
An end to the AI boom would shake both US funds and global trackers. Here’s one way to trim exposure to US tech stocks
By Cris Sholto Heaton Published
-
The mystery of America’s gold and why an audit matters
How much gold does the US actually have? Dominic Frisby explains why it matters
By Dominic Frisby Published
-
Art vs AI: artists’ uprising takes on the bots
AI performs impressively, but it’s all based on human work that was taken without payment. The government thinks this is fine. Copyright holders beg to differ
By Simon Wilson Published
-
The benefits of a stock bubble
Opinion We tend to think of stock bubbles as bad things but, as the dotcom craze shows, good things can come from them, says Matthew Lynn
By Matthew Lynn Published
-
Why CEOs deserve a pay rise
Opinion The CEOs of big companies often come under fire for being grossly overpaid. But the truth, as per some economists, is the opposite. Do they merit a pay rise?
By Stuart Watkins Published