Experts are turning to the 25-year-old Microsoft case for guidance on Google's antitrust ruling.

• On Monday, a U.S. judge determined that Google has a monopoly in the search market and referenced the Microsoft case from 1998.
• According to Sam Weinstein, a law professor at Cardozo Law School and a former DOJ antitrust lawyer, the government has made it clear that their case is based on the Microsoft case.
• Google may argue that the emergence of AI services like ChatGPT has created new competition in its appeal.

U.S. judge Amit Mehta ruled that Google has held a monopoly in internet search, invoking the company at the center of the most famous tech antitrust case in U.S. history.

In 1999, a federal judge ruled that Microsoft had illegally used its Windows operating system's market power to prevent competitors, specifically Netscape Navigator, from gaining a foothold in the browser market. A settlement reached in 2001 compelled Microsoft to cease discriminating against competitors in its PC sales.

In 2020, the government filed a landmark case against Google, accusing the company of maintaining its search market dominance through strong barriers to entry and a feedback loop. The court ruled that Google had violated Section 2 of the Sherman Act, which prohibits monopolies.

"Mehta's 300-page ruling concluded that the outcome here is similar to the Microsoft court's conclusion on the browser market. Just as the agreements in that case kept Navigator's usage below the critical level necessary for it to pose a real threat to Microsoft's monopoly, Google's distribution agreements have constrained the query volumes of its rivals, thereby inoculating Google against any genuine competitive threat."

Mehta pointed out that one significant similarity is the "power of the default" for Google, which pertains to its search position on iPhone and Samsung devices, resulting in billions of dollars in payouts annually.

Mehta wrote that users have the option to access Google's competitors through non-default search paths, but they seldom utilize this option.

A separate trial will be held on Sept. 4 to determine the remedies or penalties against Google. At that time, Google can appeal the decision, a process that experts predict could take approximately two years. Microsoft previously appealed its initial ruling but eventually reached a settlement with the Department of Justice.

According to Sam Weinstein, a law professor at Cardozo Law School and a former DOJ antitrust lawyer, the government has made it clear that their case is based on the Microsoft case.

Judge Thomas Penfield Jackson ruled that Microsoft compelled PC manufacturers to include Internet Explorer in Windows and threatened to penalize them for using or promoting Navigator. The judge suggested that Microsoft divest either its operating system or applications business, which both held dominant market positions.

Microsoft was prohibited from retaliating against device manufacturers who shipped PCs with multiple operating systems after a successful appeal. The U.S. district court mandated that Microsoft provide software and hardware companies with the same programming interfaces as Microsoft middleware to work with Windows.

An economics professor at New York University's Stern School of Business, Nicholas Economides, stated that the similarities in the Google case are evident.

""Google appears to lose across the board," Economides said, reminding him of the Justice Department's win against Microsoft."

Risk to core search

Some legal experts predict that the court may order Google to eliminate exclusive agreements and make it simpler for users to switch to other search engines.

The larger threat is that Google may have to modify its business practices, which could negatively impact its profitability. For instance, if Google is no longer the default search engine on smartphones, it could result in a substantial loss of business in its primary market.

In the second quarter, "Google Search & Other" generated $48.5 billion in revenue, which is 57% of Alphabet's total revenue.

Google is likely to present new evidence that AI has played a greater role in competition, a development that was not present when the DOJ first filed its lawsuit. Despite downplaying this perception since being outshone by OpenAI's ChatGPT, Google may introduce fresh evidence to support its argument.

The increased competition for Google, partly driven by AI, could strengthen the company's position.

"Google's monopoly in general search has been deemed illegal by the court due to the inflexible market definitions, but search vertical providers and AI services like ChatGPT pose a threat to the company's entire general search advertising business model," Chilson stated.

Despite Monday's ruling, Google shares remained relatively unchanged as they were already trading lower due to the broader market selloff. On Tuesday, the stock slipped another 0.6% to close at $158.29, and Google did not provide a comment for this story.

Experts predict that Google is unlikely to be forced to split itself apart due to the lack of remedies discussed in Judge Mehta's ruling.

Weinstein stated that while there were clear business lines that could be spun off in the Microsoft case, it is not as evident in the current situation. He also pointed out that divestiture is rarely ordered for a Section 2 case.

The trial starting on Sept. 4 will provide significant responses. According to Bill Baer, who previously led antitrust divisions at both the FTC and DOJ, the Microsoft precedent strengthens the case against Google.

Baer stated that it is uncertain what the DOJ will request and what the judge will approve at this stage.

—CNBC's Jordan Novet contributed to this report.

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