What if you found an antitrust violation… and almost all of the remedies wouldn’t actually do much to fix things? That might be the situation we’re in with Google’s antitrust loss this week. It’s not a good situation by any means, but it’s not clear what to do about it either. The DOJ’s historic antitrust win against Google raises a troubling question: what if the cure is almost as bad as the disease?
On Monday, the judge in Google’s big antitrust trial (the first of a few) found that the company had, in fact, violated antitrust laws. The ruling is massive (286 pages), so it took a few days for me to get through it. You can read straightforward coverage of it elsewhere, so I wanted to focus some of my thoughts on what this actually means.
And my general conclusion is… not very much? At best, it’s marginally helpful to Microsoft (one of just three companies that is larger than Google) and marginally harmful to Mozilla. But… not all that helpful at all to people who want there to be more competition and better search.
From the beginning, I thought this was a particularly weak antitrust case (apparently I was wrong!). I also thought that one of the other antitrust cases the company is facing (about advertising tech) was a hell of a lot stronger. So I’m a bit surprised by the conclusion here, but still left perplexed by what actual benefit this outcome has (should it stand).
And, of course, none of it really matters at all right now, because Google will appeal, and the case will go on for another five or so years before anything is decided. And, at that point, it’s possible that we’ll be living in an entirely different world, perhaps one where AI-driven search engines make Google’s position less dominant anyway.
However, let’s take a step back first, and start with a few key points before delving into this ruling in particular.
All of that means that the situation here is uncomfortable. Judge Amit Mehta says that Google has a monopoly in search. He says the agreements it has made with Apple and Mozilla are a form of illegal tying. In these agreements, Google pays both of those companies lots of money to offer up Google search as a default in browsers and operating systems.
But, it’s a weird sort of monopoly in which the main evidence against the monopolist is that it pays billions of dollars to other companies. But, of course, the reasoning in the ruling is that Google pays that to effectively keep the market uncompetitive.
The judge finds that Google’s market share and the barrier to entry for new search engines is strong evidence that it has market power in search. The court found that Google did not have a monopoly in the search ads market, except in search text ads. It appears that Amazon’s product page ads somehow saved Google from also having a monopoly in regular search ads.
After establishing that Google has a monopoly in search and in text ads, it then explores whether or not its behavior is anti-competitive. Again, the Judge flat out says that everyone basically agrees that Google is the better product:
In a sense, Google is not wrong. It has long been the best search engine, particularly on mobile devices… Nor has Google sat still; it has continued to innovate in search…. Google’s partners value its quality, and they continue to select Google as the default because its search engine provides the best bet for monetizing queries…. Apple and Mozilla occasionally assess Google’s search quality relative to its rivals and find Google’s to be superior. … And Google’s rivals have tried to oust it as the default GSE. Microsoft, most notably, has pitched Apple on making Bing the default multiple times, and DDG made a bid to be the default for private browsing mode searches on Safari. …These firms have not succeeded in part due to their inferior quality. …. It is also true that Google foresaw that the future of search was on mobile. Microsoft acknowledges that it was slow to recognize the importance of developing a search product for mobile, and it has been trying to catch up—unsuccessfully—ever since.
The judge even quotes Apple’s Eddy Cue admitting that it wouldn’t be worth it for the degraded user experience, even if Microsoft paid them much more money:
The market reality is that Google is the only real choice as the default GSE. Apple’s Senior Vice President of Services, Eddy Cue, put it succinctly when, in a moment of (perhaps inadvertent) candor, he said: “[T]here’s no price that Microsoft could ever offer [Apple] to” preload Bing. Tr. at 2519:10-11 (Cue) (emphasis added). “No price.” Mozilla stated something similar in a letter to the Department of Justice prior to the filing of this lawsuit. It wrote that switching the Firefox default to a rival search engine “would be a losing proposition” because no competitor could monetize search as effectively as Google.
This again highlights the issue described above. But to the court, it is an argument that there is no real competition.
If “no price” could entice a partner to switch, or if doing so is viewed as a “losing proposition,” Google does not face true market competition in search
But also, that raises the issue of the other oddity mentioned above. If there’s no one else who’s better, then why is Google paying so much to Apple and Mozilla? Microsoft can’t outbid them, so why not pay less?
And here, the judge speculates that the payments disincentivize others from entering the space at all, based in large part on the founder of the defunct search engine Neeva.
That was the key takeaway from the testimony of Neeva’s founder and former Google Senior Vice President of Ads and Commerce, Dr. Ramaswamy. The court found him to be a particularly compelling witness. He put it best. When the court asked why Google pays billions in revenue share when it already has the best search engine, he answered that the payments “provide an incredibly strong incentive for the ecosystem to not do anything”; they “effectively make the ecosystem exceptionally resist[ant] to change”; and their “net effect . . . [is to] basically freeze the ecosystem in place[.]” Tr. at 3796:8–3798:22 (Ramaswamy). No one would ever describe a competitive marketplace in those terms. When the distribution agreements have created an ecosystem that has a “strong incentive” to do “nothing,” is “resist[ant] to change,” and is “basically [frozen] in place,” there is no genuine “competition for the contract” in search. It is illusory.
But all of that seems based on… pure hypotheticals. After all Neeva did enter the market. And failed. But others continue to try (like Kagi). Could Apple have made its own search engine? Maybe? Would it really have done so? Dunno. Would it have been any good? Also don’t know. Microsoft has spent billions on it and hasn’t done all that well. It seems more likely that the attempts by companies to use AI to reinvigorate search will have a better chance, and that’s unrelated to the issue of Google’s agreements.
And so, again, we get to remedies. The court can’t force someone else to create a good search engine that can compete with Google. Nor can it force Apple and Mozilla to default to other search engines when neither seem interested in doing so. About the only obvious move is to present a user choice screen of what search engine they want to use, which many users will see more as a nuisance than anything else. And… Europe already did this, and basically everyone still chose to use Google.
Some people point to reports about similar choice screens for browsers “working” in the EU, but that really depends on how you define “working.” Some reports highlighted how smaller browsers saw a large bump in users, but it still appears negligible relative to the market leaders.
So all of this leaves everyone in an uncomfortable and not very helpful position. Yes, it would be nice if there were other competitors in the market. But what about this ruling will actually make that happen? At best, this seems to give Google an excuse to pay less to Apple and Mozilla, which helps Google out and harms Mozilla, one of the few companies that is actually competing in the browser space.
That doesn’t seem like a good or healthy result.
Some are arguing that this calls for a “breakup” of Google, but it’s also difficult to see. What in breaking up Google enables more successful search engines to hit the market? Again, that kind of remedy seems more reasonable (and more likely to have an impact) in the other case about adtech.
And, again, by the time this case is actually over, years down the road, the entire market may have already shifted. This leaves things in an uncomfortable position. Yes, Google is dominant in the market. And, no, that’s not great. But how do you get someone else to build a really good search engine out of this remains unclear.
So, in the end, I still find this case frustrating. What do you do when the status quo seems way less than ideal, but the remedies presented don’t seem likely to help, and could actually do damage to a competitive player like Mozilla?
It’s also made more problematic by having different antitrust cases targeting different parts of Google’s business. If you could take a more holistic view of the company and its impact on various markets, it seems like the issues, the impact, and the potential remedies would take a more comprehensive view. But, instead, this is what we’re left with.
The DOJ won a historic antitrust case, which might not have any significant impact at all.
