Could Google Lose ‘Verb’ Status After Antitrust Ruling?
After a landmark antitrust case verdict last week, Google parent Alphabet faces an uncertain future as regulators turn their eye to Big Tech.
Technology companies born out of the internet boom of the 1990s have enjoyed a couple of decades of relative market freedom -- with brands such as Google, Amazon, and Meta taking their spots in the top echelon of technology companies.
Those companies enjoy a huge market share in their respective business focuses -- but maybe none more than Google with a search engine market share of more than 91% globally, according to Statcounter. According to parent company Alphabet’s most recent financials, Google’s quarterly revenue -- coming mostly from advertising revenue from its massively popular search engine -- amounted to $305.6 billion in 2023 alone.
Google, of course, has become synonymous with search. We don’t “search” the internet … we “google” it.’
Google’s next closest competitor in the search engine market would be Microsoft’s Bing, which helped generate $12.2 billion in revenue from search and news advertising. While that haul is nothing to scoff at, Microsoft accounts for just 3.86% of the market share worldwide.
Google’s dominance in the search engine market has amounted to an illegal monopoly, a US District Court judge ruled last week. The case contended that Google held its dominance in the market by unfairly blocking competitors through lucrative exclusive contracts for its search engine with Apple and Android devices. The court said that constituted a violation of Section 2 of the Sherman Act.
“Google is a monopolist, and it has acted as one to maintain its monopoly,” US District Court judge Amit Mehta wrote in his ruling.
Google says it’s filing an appeal, a process that could play out over months or even years and could wind up being decided by the US Supreme Court. A second trial is expected to determine potential remedies, which could include the break up of Alphabet. In 1984, the US broke up the “Bell System,” which was comprised of 22 AT&T-controlled telecom companies. The breakup cost AT&T value to drop by 70% and created seven independent telecoms, known as the “Baby Bells.”
Google Could Appeal, or Negotiate
A breakup of Alphabet would be the most extreme scenario. The more likely scenario is a breakup of companies’ exclusive contracts, opening the door to other search engines.
Jeffrey Kessler, a veteran antitrust lawyer and co-executive chairman of NYC law firm Winston & Strawn, says while the case outcome is a big deal for the technology sector, the ruling was not a far stretch from previous decisions on antitrust. “The Google decision itself is pretty much traditional antitrust principles and precedents,” Kessler tells InformationWeek in a phone interview. “I don’t view it as breaking any big new legal ground or changing legal rules … What is new is that this administration is applying these principles to the technology industry.”
Kessler notes that the court case originated under the Trump administration. “So, it’s not even a product of the Biden Administration’s approach to antitrust. It’s a continuation of this idea that antitrust should come to bear on the tech industry.”
More likely than a breakup of Alphabet into smaller companies like the Bell System case, Kessler says the government was more focused on the contractual agreements. “So, to me, that’s the logical focus of what the relief is likely to be,” Kessler says. “The goal is not to harm Google. The goal of any relief is to make it possible for other search engines to compete fairly.”
Kessler thinks the appeal is likely to take more than a year, and then it could be further delayed if taken up by different courts. “And it’s always possible that Google and the government could sit down and settle and agree on a remedy,” he says.
Searching for Competition
Aside from Google’s main competitors down market, there are emerging GenAI search engines that will likely make a move for more market share. While Google’s search engine is language based, sophisticated GenAI is using multi-modal search that uses video and other media as part of the search process. Google’s AI Overviews is likely to see stiffer competition from relatively new players in search, like OpenAI’s ChatGPT Search, and Perplexity AI.
Jim Yu, founder and executive chairman of enterprise SEO and content platform company BrightEdge, says Google is already retooling its focus to AI-powered search. “I think that will be the new battleground for Google to play in. And I think the antitrust piece will play into how Google hedges that default search engine in iOS devices,” he says.
Yu adds, “In the next 24 months, you’re going to see a huge amount of change around multi-modal AI search.”
While Google’s own business model may be forced to change to comply with courts, the company is also trying to stake its claim in emerging search technologies, and it will lose a huge advantage with the loss of Apple iOS and Android contracts. For Yu, the market disruption could be a positive for commercial search users.
“It will be good for the whole ecosystem,” he says of changes coming for Google. “The disruption is good because it’s going to drive more openness and transparency … and even though that creates some more complexity, it’s creating a moment where they have to adapt, and that actually opens up a whole new set of opportunities.”
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