A US judge ruled this week that Google has created an illegal monopoly, violating antitrust law by spending billions to become the world’s default search engine. 

The finding marks a significant victory for US federal authorities in their efforts to curb Big Tech's dominance.

The ruling sets the stage for a follow-up trial to decide on remedies, which might include breaking up Google’s parent company, Alphabet. 

This outcome could drastically alter the online advertising industry - a sector Google has controlled for years.

Google currently controls about 90 per cent of the online search market and 95 per cent on smartphones.

“The court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly,” said Judge Amit Mehta, who delivered the ruling.

In 2021 alone, Google paid US$26.3 billion to ensure its search engine remained the default on various devices, noted Judge Mehta. 

“The default is extremely valuable real estate,” Mehta wrote, adding that new entrants could only compete if prepared to offer similar financial incentives. 

Losing these default positions would significantly impact Google's revenue, with projections indicating billions of dollars in potential losses if defaults like Apple's Safari were lost.

The ‘remedy’ phase of the case could be extensive, potentially involving appeals that might reach the US Supreme Court. This process is expected to extend into 2026. 

Google's shares dropped by 4.5 per cent on Monday amid a broader decline in tech stocks, driven by recession fears. In 2023, advertising accounted for 77 per cent of Alphabet’s total sales.

Alphabet has announced plans to appeal Mehta’s ruling. 

“This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available,” a company statement read.

US Attorney General Merrick Garland praised the ruling as “a historic win for the American people”.

White House press secretary Karine Jean-Pierre called the decision “a victory for the American people” and a step towards a “free, fair, and open” internet.

Analysts say that a forced divestiture of the search business would significantly affect Alphabet's revenue. Even the loss of exclusive default agreements could be detrimental for Google.

The ruling is the first major decision in a series of cases against Big Tech companies. 

Over the past four years, federal regulators have also filed antitrust lawsuits against Meta Platforms, Amazon.com and Apple. 

When the case was filed in 2020, it was the first instance in over a decade that the US government accused a major corporation of an illegal monopoly, reminiscent of the Microsoft case settled in 2004.

The ruling does not yet specify the remedies for Google’s monopolistic practices. A subsequent trial will determine the penalties, which could range from modifications in contract handling to a complete breakup of the company. 

Possible outcomes might include banning Google from making default search agreements or introducing a “choice screen” similar to regulations in Europe.

While Google plans to appeal, drawing out the legal battle, another antitrust lawsuit looms. 

This second case targets Google’s digital advertising practices, accusing the company of stifling competition through its market dominance. The trial is set to begin in September.