What the Google Antitrust Case Reveals About Competitive Foreclosure

Judge Amit Mehta is expected to rule on the remedies phase of the Google search engine antitrust case in August of 2025. My last column dealt with the possible remedies and discussed the importance of user data. This time around, I’ll look at the case’s valuable takeaways on competitive foreclosure. 

Google had entered into various agreements with makers of devices such as mobile phones and computers to be the default general search engine. Some of the agreements expressly required Google’s search engine to be exclusive. Some of the agreements were held to be effectively exclusive agreements.

But in his 2024 opinion on United States, et al. v. Google, LLC, Judge Mehta noted that an exclusive agreement does not necessarily violate Section 2 of the Sherman Act even if entered into by a dominant firm. He noted that exclusive agreements are often entered into for procompetitive reasons.

Establishing Prima Facie

To determine whether conduct violates Section 2, Judge Mehta applied the stepwise, burden-shifting approach developed by the D.C. Court of Appeals in the United States v. Microsoft Corp. antitrust case. Under the first step of that approach, the plaintiff must establish a prima facie case of anticompetitive effect. Judge Mehta stated that, under Microsoft, an anticompetitive effect must harm the competitive process. Harm to competitors does not necessarily harm the competitive process.

The concept of “foreclosure” played a significant role in Judge Mehta’s analysis.  For an exclusive agreement to harm competition, the opportunities for rivals must be substantially limited to preserve the defendant’s monopoly. Foreclosure can prevent a potential rival from achieving a critical level of activity necessary to threaten the defendant’s monopoly.

Judge Mehta found that Google’s agreements only foreclosed 50% of the market. But he noted that there is no specific foreclosure percentage that should be condemned. Rather, he applied a multi-part analysis to assess whether the foreclosure is significant. These are (1) the duration of the exclusive agreements; (2) the ease of terminability of the agreements; (3) barriers to entry; (4) the availability of alternative means of distribution; and (5) the willingness of consumers to switch to another general search engine.

Short-term Agreements and Competition

Judge Mehta noted that short-term exclusive agreements present little threat to competition. A rival has a chance to frequently bid for its own exclusive agreements. He noted that courts have held that contracts with a duration of one year or less are presumed reasonable.  However, he found that Google’s contract with Apple was for five years with options to extend.  For Android devices, the contracts were for two or three years with opportunities to renew.

Judge Mehta also noted that cases support the idea that an exclusive contract that is easily terminable can lead to an inference that the agreement does not substantially foreclose competition.  Significantly, however, he concluded that Google’s contracts with device makers were not easily terminable.

As to barriers to entry, he found significant barriers to the general search engine market.  He found that users’ queries, which he called “scale,” were essential for building, improving, and sustaining a general search engine. But he found that Google’s agreements as the exclusive default search engine gave it access to user search queries that its rivals could not match except by spending billions of dollars. He found that Google’s massive “scale” advantage to user search data created a barrier to entry. He specifically found that, for a new entrant to become the default general search engine, it would have to overcome the scale barrier to create a quality search engine; it would have to build an ads platform on par with Google to monetize the search engine; and it would have to agree to offset any revenue loss to device makers because of reduced search volume as users stayed with Google.

Means of Distribution

As to the availability of alternative means of distribution, Judge Mehta found that such other channels of distribution existed, but they were more costly and less effective.  In addition, they would not permit a new entry to achieve the size and quality to challenge Google’s monopoly.

Finally, he found that Google’s advantage in user query data achieved by its unlawful conduct meant that users may not be willing to switch to a potential entrant’s search engine.

It has been frequently reported that Google intends to appeal Judge Mehta’s ruling regardless of the remedies he decides to impose.  However, Google will clearly have an uphill climb to overcome the factual findings by Judge Mehta, particularly as to the role of foreclosure.