Last year, Google received a landmark ruling against its actions in the online search engine segment. A judge ruled the Mountain View giant’s most iconic business monopolistic. The US Department of Justice (DOJ) was the main proponent of the lawsuit against Google for its monopoly position.
How did Google get into this situation?
The ruling against Google was the outcome of a long legal battle that began in 2020. In 2020, the DOJ initiated the lawsuit amidst a political climate in which Donald Trump, then in his first presidential term, urged authorities to closely monitor potential monopolistic moves by big tech companies. The administration of his successor in Washington, Joe Biden, continued these guidelines.
The DOJ’s lawsuit primarily alleged that Google had taken steps to monopolize the internet search engine market. The company allegedly achieved this through questionable practices. The list includes billion-dollar exclusivity deals and potentially unfair terms regarding the integration of Google services (including the search engine) by default on mobile devices.
According to the plaintiff, the exclusivity agreements Google reached with third parties limited competition in the market. These agreements sought to make other tech companies set Google Search as the default search engine in their products. The firm did this with both small names and others as large as Apple. The lawsuit revealed that Google paid up to $18 billion to Apple in 2021 for this purpose, for instance. These investments established Google Search as the default search engine in Safari. We all know the massive popularity of Apple products and, therefore, the Safari browser among users of the Cupertino giant’s ecosystem.
That said, these deals could also be beneficial for the internet industry, especially when we talk about funding smaller developers. For example, Mozilla obtains much of its funding from Google. However, the situation becomes more delicate for antitrust watchdogs when the investments, beyond providing a competitive advantage, guarantee the product’s reach in a majority of the market without doing so organically (with customers looking for it).
It’s not that Google Search lacks popularity among the mainstream. In fact, Google has established itself as synonymous with searches online. However, these investments likely contributed to Google’s continued dominance through increased exposure. This is one of the DOJ’s main allegations of Google exercising a monopoly.
The DOJ also alleged that Google leveraged Android to strengthen its monopolistic position in search engines. The company may have done this through the conditions for receiving Google Play certification. This certification enables Android phone makers to integrate the Google Play Store and related services into their devices. In order to get it, Google requires them to integrate not only the Play Store but also a suite of additional tools, including Google Search. The lawsuit also mentioned that the company requires the Google Search bar to occupy a certain position on the device’s home screen. This could make it easier for people to access and promote its use.
Both the DOJ and Google have suggested potential remedies to resolve the monopoly situation
Following the ruling, the DOJ offered a preliminary list of remedies to resolve Google’s monopoly ruling. The list included some extreme measures, including the sale of both Google Chrome and Android to a third party. The original proposal also contemplated Google’s divestment in AI startups. Somehow, the DOJ believed the AI funding was impacting the search engine market as well.
However, the DOJ recently presented a revised proposal. The new remedies maintain the need to sell Google Chrome but not Android. The agency will suggest some changes to Android to try to make the market more competitive, though. The DOJ made another “concession” to Google, this time related to artificial intelligence. Under the new remedies, Google could continue funding AI startups. After consideration, the agency determined that prohibiting Google from such investments would have a negative impact on the US AI industry. However, the Mountain View giant may have to submit a notice before founding new AI startups in the future.
Another request from the DOJ is to limit or eliminate exclusivity deals. This refers to the lucrative agreements Google enters into with other companies to set Google Search as the default search engine in browsers and mobile devices. The agency also wants the firm to not give more prominence to its own services in Google Search results, in addition to being more transparent about its advertising and data practices.
Meanwhile, Google has also shared its own proposed remedies. The document agrees with the DOJ regarding third-party deals. That is, Google is willing to stop paying for its search engine to have prominence or be set as the default in third-party products.
There is a hearing pending in April, where both parties will discuss their proposals and perhaps find more common ground. Later this year, we will probably know the court’s decision on which remedies to implement. That said, Google doesn’t want to give up without a fight. The firm has already confirmed that it will appeal the antitrust ruling it received last year. So, a radical turnaround in the situation is still possible.
What are the best options for Google?
Google definitely doesn’t want to get rid of either Chrome or Android. Google’s own proposed solutions do not include either of these options, and that’s normal. After all, we’re talking about two of the company’s main products. Both underpin a large part of Google’s AdTech-based business model. Fortunately for the company, the DOJ dropped the requirement to sell Android. Sadly, the agency still wants Google to sell the Chrome browser.
However, the Mountain View giant seems willing to change some key aspects of its business model to resolve its antitrust situation—in case the appeal of the underlying ruling doesn’t work. The most convenient option for Google seems to be to limit third-party deals related to Search. Today, the Google name is extremely popular in the world. Many people will likely continue to use Google due to habit or convenience. So, it doesn’t seem entirely necessary for the company to promote setting its search engine as the default in browsers or mobile devices.
Changing the requirements for Android phone makers to receive Google Play certification wouldn’t cause too much harm to the company either. The tweak could mean that manufacturers could be free to opt out of pre-installing certain Google products and services. However, the company has deeply integrated some key services into Android. For example, the Gemini assistant wouldn’t be available without the Google app. But as in the previous case, many have grown accustomed to having Google search just a tap away. So, even if the Google app doesn’t come pre-installed on Android devices, many would end up downloading it themselves anyway.
What are the best and worst case scenarios?
For Google, it would be great not to have to get rid of either Chrome or Android. However, the most ideal scenario for the company would be to win the appeal they are preparing. This would invalidate all potential remedies under discussion. It’s also possible that Google’s appeal won’t overturn the full antitrust ruling obtained by the DOJ. However, it could change some things to the point that more extreme remedies are no longer necessary.
On the other hand, considering the worst-case scenario, we must separate the possible impact of the remedies for both Google and consumers.
Starting with Google, the worst thing that could happen to them right now would be to ditch Chrome. After all, much of the data Google collects to develop its products and services, as well as to send targeted ads, comes from its browser. Furthermore, Google Chrome is the most popular web browser in the world by far. So, it would be a significant loss, no matter how much money the company would receive from a potential sale.
In turn, this could have negative consequences for consumers. Chrome is not only the popular browser but also the Chromium project. This open-source project serves as the foundation for several third-party browsers, boosting the competition in the segment. However, a third party could decide to close the code, affecting many current browsers and users and reducing development options as well as innovation.
Consequences of the DOJ’s monopoly case against Google could impact the whole industry
The requirement to limit Google Search-related deals with third parties could also have negative consequences for the browser market. This applies primarily to non-profit projects, such as Mozilla. Most of Firefox’s parent company’s resources come from its agreement with Google to set Google Search as the default search engine. For this reason, Mozilla itself has publicly spoken out against the DOJ’s proposed remedies.
It’s clear that companies as massive as Apple won’t fail even if these exclusivity agreements disappear. Even so, we’re talking about tens of billions of dollars at stake. So, one way or another, the hole would be visible in the Cupertino giant’s accounts. This led Apple to request its direct involvement in the case, defending Google’s deals with third parties as something positive for the industry.
Overall, there’s a lot to consider regarding Google’s current situation. There are divided opinions on the matter, or even those who believe that while Google is actually a monopoly, as the DOJ claims, some of the suggested remedies are excessive and could cause more harm than good. Only time will tell how this matter plays out and what its impact will be on both businesses and consumers. Ultimately, ensuring a competitive and fair market without affecting users is crucial.
