The world’s single largest internet service provider, Google, is now staring down the barrel of its single largest legal challenge since its inception. On 3rd May, the two parties to the case presented their closing arguments in the lawsuit that accuses Google of creating and maintaining a monopoly over the internet as most of the world knows it. Irrespective of whether the judge’s ruling on the antitrust case finds Google guilty or not, it will likely set perimeters on how Google is allowed to run its stranglehold on the internet browser empire. As incredible as it seems, the antitrust is just one of two, and will likely be how the other turns out.
At present, Google—and parent company Alphabet—are performing well despite the turbulent tech market. Alphabet is now valued at $2 trillion, after a stock buyback of $70 billion. Google alone generated $307 billion in revenue for the company in 2023. The brand’s strength is undeniable, so much so that ‘Google’ is now a brand name, and noun, and a verb. The search engine is set to control 92% of the market, which is equal to about 4.9 billion people. The closest runner-up, Microsoft, holds 3% of the market. The Google homepage is visited 86 billion times a month. Google’s web browser, Chrome, is the strongest on the market, with 3.4 billion users in 2023. The browser helps Google gather millions of points of data on these users, which in turn fuel the advertising and e-commerce industries on the internet, driving value for national economies worldwide while padding out its own bottom line.
The lawsuit saw prosecutors from the federal government and 14 states presenting evidence that Google used anti-competitive tactics to monopolise its hold over the internet and the search engine and advertising markets form the bulk of its economic value. Department of Justice prosecutors directed the court’s attention to one particular instance where Google violated competition laws, as per Bloomberg: “Alphabet Inc. paid Apple Inc. $20 billion in 2022 for Google to be the default search engine in the Safari browser, according to newly unsealed court documents in the Justice Department’s antitrust lawsuit against Google. The deal between the two tech giants is at the heart of the landmark case, in which antitrust enforcers allege Google has illegally monopolised the market for online search and related advertising.”
In addition to securing its position on the Safari browser, Google is also the company behind Android, the smartphone OS with the widest spread over the market. This makes Google the one portal to the internet for almost everyone with a smartphone. If Google’s strong position in the market was simply due to it being the superior product on the market, these tactics to ensure that it is the only product on the market make very little sense.
The key element of antitrust is the prevention of the creation of companies that kill competition in the market and thereby kill innovation, reduce consumer satisfaction, and drive prices ever higher. Also, despite what you may think, Google does have a clientele that pays it money—its seemingly inexhaustible list of advertisers that pay hard-earned money to catch browsers’ eyes. In addition to having no competition in deciding advertising fees, Google’s latest innovations are suffocating them entirely. This innovation, of course, is the incorporation of an AI element into Google’s search results page. This tool synthesises information and provides answers to user questions and prompts, potentially diverting web traffic away from relevant answer pages that have invested significant efforts and resources in claiming the coveted high ranks in the results pages.
Google was already in hot water with the justice system when it was found in the course of the lawsuit that it had instructed employees to potentially destroy evidence that was relevant to the case. This includes asking its employees to delete their chat histories when sensitive topics, such as Google’s revenue-sharing and mobile application distribution agreements (exclusive contracts), are being discussed. The Department of Justice is arguing that Google had destroyed chat histories numbering in the hundreds of thousands during the litigation process. It is, of course, possible to argue that this was simply company best practice; however, as US District Judge Amit Mehta deliberated during the proceedings, Google has so far been conspicuously “deliberate in advising employees about what to say and what not to say” in relation to any strategy that could be interpreted as evidence of monopolistic behaviour.
The verdict, when it comes later on in this year, will decide on the fate of a sizable fraction of Google’s profits moving forward, as well as for several other Big Tech companies, including the same ones that signed exclusive contracts with Google.
(Theruni Liyanage)