Starting tomorrow (Sep. 12), Google, the world’s most-used search engine, has to prove that it is not using its pole position in the sector to cannibalize its competition.
In October 2020, the US Department of Justice (DoJ) filed a civil antitrust suit against Google for monopolizing search and search advertising. Two months later, the attorneys general of 35 states, the District of Columbia, Puerto Rico and Guam, filed a separate complaint. These cases have now been combined.
At the trial, which is expected to last 10 weeks, Google’s “exclusive dealing arrangements” with the likes of Apple and Samsung will be under scrutiny, as will Google’s habit of preloading its services on Android devices.
Google doesn’t just become an offender by virtue of its near-monopoly on the search market. “It must act in a manner that produces anticompetitive effects in the defined markets,” Judge Amit Mehta of the US District Court for the District of Columbia wrote in his opinion (pdf), which was unsealed on Aug. 3. “That is, a company with monopoly power acts unlawfully only when its conduct stifles competition.”
To Google’s relief, Mehta narrowed the scope of the suit by dismissing some accusations, including a major allegation that Google rigged its search engine design to boost its own products over those of competitors like Amazon, OpenTable, Expedia, or eBay.
For its part, Google maintains that its partners pick its search engine “based on the quality of our services and the preferences of consumers,” Kent Walker, Google’s president of global affairs, wrote in a Sep. 8 statement. “In sum, people don’t use Google because they have to—they use it because they want to.”
Quotable: Google says the antitrust lawsuit is a “backwards-looking case”
“This lawsuit simply ignores how intensely competitive and dynamic the technology industry is today. Just look at the rapid AI advances across the industry (including Microsoft’s investment in AI in search, Amazon and Apple’s growing success in digital ads, or the ever-growing number of apps people use to find information like ChatGPT, TikTok and Wikipedia). Meanwhile, we’re not standing still: We invest billions of dollars in R&D and make thousands of quality improvements to Search every year to ensure we’re delivering the most helpful results. This competition benefits consumers by giving them better, more innovative services.
“We respectfully disagree with those who want to change antitrust law to promote the welfare of competitors rather than consumers. We put people first, and focus on getting them the services they need to find high-quality information easily and quickly. We look forward to making our case in court.”
—Kent Walker, Google’s president of global affairs, in a Sep. 8 statement
Google’s case against the anti-trust allegations
🔎 There’s competition. Google search isn’t the only way to seek out information on the internet. “Just think about how you use the internet—you may look for recommendations on TikTok, Reddit or Instagram, find music and podcasts on Spotify, ask ChatGPT a question, or shop on Amazon,” Walker said.
🫴 Browser- and device-makers have options. Browser makers like Apple and Mozilla “opt to show Google Search based on the quality of our products,” Walker argues, pointing out that the browser agreements are not exclusive. On Android, too, Google offers phone makers the option to preload popular Google services on the device’s home screen for free, and it pays for “additional promotion of services” like Chrome and Search, “similar to the way a supermarket might charge a cereal brand to promote its products at eye-level on a shelf or at the end of an aisle,” Walker explained. However, these agreements are optional.
✊ Consumers choose Google. In 2014, Mozilla signed a five-year deal making Yahoo! its default search engine on Firefox, but users kept resetting the default choice to Google. Three years later, Mozilla switched the Firefox browser back to Google. On Microsoft’s search engine Bing, “google” is the number one search query. “Contrary to the DOJ’s theory, people know they have choices, and they make them,” Walker wrote.
Companies of interest: IBM, Microsoft
Regulators routinely file lawsuits to block acquisitions by tech bigwigs. Sometimes they succeed, as in the case of the collapsed AT&T and T-Mobile merger. Sometimes they don’t, as when the Federal Trade Commission (FTC) failed to stop Meta from buying the virtual reality startup Within and Microsoft from buying the video game publisher Activision Blizzard.
But it’s been a while—almost two decades—since federal regulators took on a Silicon Valley behemoth in a direct and sweeping manner. The last major tech monopoly trial was back in 1998, when the DoJ and 20 state attorneys general sued Microsoft for running an anti-competitive monopoly in the personal computer (PC) market. Among other things, the suit specifically alleged that Microsoft crippled its rival browser publisher Netscape by bundling its Internet Explorer broswer for free into the Windows operating system.
The Microsoft case, in turn, was reminiscent of a similar federal action three decades earlier. In 1969, the US government dragged IBM to court for undertaking “exclusionary and predatory conduct with the aim and effect of eliminating competition so that IBM could maintain its monopoly position in general purpose digital computers.” In this complaint, too, it noted that giving away software services for free was an attempt to stifle competition.
The IBM case defined the PC era, and the Microsoft one the shift to web. The onset of artificial intelligence (AI) will define the next big tech war frontier with Google.
Even if Google loses the suit, it could still appeal. That’s how Microsoft largely reversed a 2000 decision ordering the company to be split in two.
By the digits: Google search
90%: The proportion of search engine traffic that Google retains. It’s even higher on mobile
6%: The proportion of search engine traffic that Google’s closest rival, Bing, accounts for
$20 billion: The annual payment that Google makes to Apple to be Safari’s default search engine, according to a Bank of America estimate
$55 billion: The market value that Google’s parent company, Alphabet, lost in April, after reports suggested that Samsung was weighing dropping Google for Microsoft’s Bing. It was taken as a sign that competition in search is stiff
2: The number of clicks it takes to switch the default search engine on the desktop Safari browser, and also the number of taps it takes to delete the Search widget in Android
$162.45 billion: Google’s search engine advertising revenue in 2022, accounting for 58% of the company’s total revenue
Trial of interest: Google’s online advertising antitrust case
In January this year, the DoJ filed another antitrust case against Google, accusing Google of subverting the competition in online ad tech with “serial acquisitions and anticompetitive auction manipulation.” A trial date is set for March next year.
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