Earlier this month, Google lost an antitrust suit in the US regarding its monopoly as the most used search engine.
It’s an interesting case, because users are free to choose any search engine they please. They’re not forced to use Google, nor do they pay to. The judge even accepted that users choose Google because it’s the best search engine. Or do they?
The court determined that the problem wasn’t with Google having 91% of the search market, but with its efforts to sustain that market share.
If you have ever browsed the web using Safari, for example, you might have thought it odd that Google is the default search engine. After all, Safari is an Apple product, so why don’t Apple bring out their own search engine and install that by default?
The reason is that Google pay them not to. And they pay well, to the tune of over $20 billion dollars per year, and have similar arrangements in place with other big companies.
You might wonder why. Google is free, so why make so much effort to be #1 for a product no-one pays for? The answer is advertising. The pay per click and other ads we and other companies all over the world place on Google amount to three-quarters of their revenue, or a tidy $238 billion dollars. So well worth a few multi-billion backhanders to Apple, Samsung, Sony, Motorola, T-Mobile, the list goes on.
And this, the court said, is the problem. If 91% of users were choosing Google on a level playing field, it would be ok. But using their weight to ensure that Google stays the default in so many platforms prevents other companies from scaling and getting their own piece of that advertising pie. And that, said the judge, is an unfair monopoly.
Google reacted snarkily, and the market reacted badly, with Alphabet shares closing 4.6% down following the ruling, contributing to Alphabet’s market value falling by around $27 billion between the start of July and the days following the ruling. Shame, Google must be thinking, could have done some cheeky backhanders with that.
Exactly how this will play out in the real world is yet to be seen, but we may well be seeing the beginning of the end of the Google-dominance era, as other players will no longer have an incentive not to install their own search engines and advertising platforms on their own devices.
