August 13, 2024
📰 FEATURE STORY
Will the antitrust ruling hurt Google in the long run?
Big Tech is an interesting place right now. Companies are investing large sums of money and resources in integrating AI into almost every aspect of their products and services. At the same time, policymakers and regulators are beginning to tighten the screws to ensure the market stays fair and competitive.
Google has been receiving a fair amount of scrutiny. The latest is significant. A US district judge ruled that its Search function and text advertising are monopolies. It’s the first anti-monopoly ruling against a technology company in decades. Is Google’s long-term business on the ropes?
Context
There are a few things to know about the case first. It’s perhaps the most significant antitrust case brought by the US Department of Justice (DOJ) since the late 1990s. That’s a big deal. It’s a case of antitrust law on two questions – Has a company achieved a certain level of success that’s a monopoly? Has that monopoly been used to stay ahead in ways that abused the competitive process? Prosecutors needed to meet the minimum legal standard for these questions to have a case. It seems they did since the judge didn’t throw it out.
So, what has Google been accused of? We know Google is the dominant player in the search market. Millions of people use it every day. A big reason is that Google signs contracts with many smartphone and computer manufacturers to ensure its search engine is the default on those devices.
The concern is that these contracts hinder new players who might want to compete in the search business and get their service in front of people. Some estimates showed that almost 80-90% of devices have Google as the default search engine.
Google’s contract with Apple caught people’s attention. Apple is dominant in the US smartphone market and is the primary competitor to Google’s Android. The contract ensures Google is the default search engine. Google pays Apple in proportion to the number of searches Google gets from those devices.
As you can imagine, a lot of money changes hands. It was supposedly $10 billion last year. During the trial, Microsoft CEO Satya Nadella testified that he worried about a “Google Web” and that the contract with Apple was oligopolistic.
US district judge Amit Mehta said in his ruling that Google is a monopolist and acted as one to maintain that position. That alleged monopoly generated billions of dollars in profits from search alone annually. It also spends billions on those contracts to ensure that Google search remains the default.
Google’s argument post-ruling cited Judge Mehta’s line that what the company offers is the best in the field. The company said while the judge recognised the importance of Google search, he concluded that it shouldn’t be easily available. Does this ruling mean anything significant for the company, or will it be business as usual?
VIEW: A big influence
For starters, this lawsuit and the ruling will serve as an important precedent in future lawsuits against big technology companies. The DOJ has already sued Apple, arguing that it makes it hard for consumers to ditch the iPhone ecosystem. Coming back to Google, it’s another setback. The company has faced antitrust scrutiny in the European Union (EU), where it was charged last year with undermining rivals in the online ad space.
While all this might be nothing more than a hefty fine and bad publicity, there’s a real danger to its business. When Microsoft was sued by the DOJ in the late 1990s, some argued it hadn’t fully recovered its dominance. That’s a risk for Google. The company may be forced to change its contracts and agreements with companies. The money coming in from these might not be as much as before.
Another important aspect is people’s data. It’s a valuable asset and one that Google needs for advertising. The more people use Google search, the better it is for collecting data. More data means more resources to give better search results, which is better for advertising. All this could change considerably if the company is forced to abandon or significantly alter its contracts with companies. The company is sure to face new constraints with court-imposed rules. This might give up-and-comers a chance to compete.
COUNTERVIEW: Little effect
Google isn’t going anywhere. Its search engine isn’t either. It will remain a digital Goliath. That’s because the company remains the market leader in search. It’s too far ahead for something like Apple’s Safari to offer any meaningful competition. In fact, the ruling could hurt Apple since it might not receive billions from Google as part of its contract. Microsoft isn’t really in the picture here even though it added AI to its Bing search engine.
Some have argued that Judge Mehta’s decision was correct but has come way too late. Google’s market share might be dented by a percentage or two, nothing more. Whatever the fallout, Google might be too big to fail. The window for a real competitor, including the big guns, seems to have been shut a while back. It’s just hard to imagine anything else from the current Google-dominated internet.
From a user standpoint, nothing much will change. Nothing much happened after Google was found to have broken the EU’s anti-monopoly laws. Also, the rise of AI could mean this ruling is irrelevant. There are AI applications like ChatGPT where people can get information and answers. Google is already investing a lot of money in integrating AI into its search function. Ultimately, given how ubiquitous Google search is, people are more likely to stick with the familiar.
Reference Links:
- Google loses antitrust case over search – CNBC
- A historic ruling against Google could change the internet as we know it – Vox
- How the Google Antitrust Ruling May Influence Tech Competition – The New York Times
- Google’s antitrust loss puts a quarter of its search revenue at stake – Quartz
- End of the Google era – Axios
- What Google rivals want after DOJ’s antitrust trial win – The Verge
- What Happens Now That Google Has Been Declared a Monopoly – Lifehacker
What is your opinion on this?
(Only subscribers can participate in polls)
a) The antitrust ruling will hurt Google in the long run.
b) The antitrust ruling won’t hurt Google in the long run.
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