*

Ruling paves way for trial on remedies including potential

breakup of Alphabet

*

Google paid $26.3 billion in 2021 to maintain search

engine

dominance, judge noted

*

Senator Klobuchar highlights bipartisan support for

antitrust

enforcement against Big Tech

(Adds White House statement in paragraph 9)

By David Shepardson and Mike Scarcella

WASHINGTON, Aug 5 (Reuters) - A U.S. judge ruled on

Monday that Google violated antitrust law, spending billions of

dollars to create an illegal monopoly and become the world's

default search engine, the first big win for federal authorities

taking on Big Tech's market dominance.

The ruling paves the way for a second trial to determine

potential fixes, possibly including a breakup of Google parent

Alphabet, which would change the landscape of the

online advertising world that Google has dominated for years.

It is also a green light to aggressive U.S. antitrust

enforcers prosecuting Big Tech, a sector that has been under

fire from across the political spectrum.

"The court reaches the following conclusion: Google is a

monopolist, and it has acted as one to maintain its monopoly,"

U.S. District Judge Amit Mehta, Washington, D.C., wrote. Google

controls about 90% of the online search market and 95% on

smartphones.

The "remedy" phase could be lengthy, followed by potential

appeals to the U.S. Court of Appeals, District of Columbia

Circuit and the U.S. Supreme Court. The legal wrangling could

play out into next year, or even 2026.

Shares of Alphabet fell 4.5% on Monday amid a broad decline

in tech shares as the wider stock market cratered on recession

fears. Google advertising was 77% of Alphabet's total sales in

2023.

Alphabet said it 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," Google said in a statement.

U.S. Attorney General Merrick Garland called the ruling "a

historic win for the American people," adding that "no company -

no matter how large or influential - is above the law."

White House press secretary Karine Jean-Pierre said the

"pro-competition ruling is a victory for the American people,"

adding that "Americans deserve an internet that is free, fair,

and open for competition."

BILLIONS PAID

Mehta noted that Google had paid $26.3 billion in 2021 alone

to ensure that its search engine is the default on smartphones

and browsers, and to keep its dominant market share.

"The default is extremely valuable real estate," Mehta

wrote. "Even if a new entrant were positioned from a quality

standpoint to bid for the default when an agreement expires,

such a firm could compete only if it were prepared to pay

partners upwards of billions of dollars in revenue share and

make them whole for any revenue shortfalls resulting from the

change."

He added, "Google, of course, recognizes that losing

defaults would dramatically impact its bottom line. For

instance, Google has projected that losing the Safari default

would result in a significant drop in queries and billions of

dollars in lost revenues."

The ruling is the first major decision in a series of cases

taking on alleged monopolies in Big Tech. This case, filed by

the Trump administration, went before a judge from September to

November of last year.

"A forced divestiture of the search business would sever

Alphabet from its largest source of revenue. But even losing its

capacity to strike exclusive default agreements could be

detrimental for Google," said Emarketer senior analyst Evelyn

Mitchell-Wolf, who said a drawn-out legal process would delay

any immediate effects for consumers.

In the past four years, federal antitrust regulators have

also sued Meta Platforms ( META ), Amazon.com ( AMZN ) and Apple ( AAPL )

, claiming the companies have illegally maintained

monopolies.

Those cases all began under the administration of former

President Donald Trump.

Senator Amy Klobuchar, a Democrat who chairs the Senate

Judiciary Committee's antitrust subcommittee, said the fact that

the case spanned administrations shows strong bipartisan support

for antitrust enforcement.

"It's a huge victory for the American people that antitrust

enforcement is alive and well when it comes to competition," she

said. "Google is a rampant monopolist."

When it was filed in 2020, the Google search case was the

first time in a generation that the U.S. government accused a

major corporation of an illegal monopoly. Microsoft settled with

the Justice Department in 2004 over claims that it forced its

Internet Explorer Web browser on Windows users.