Google monopolizes the market for internet search and users don’t even have a choice because the default settings are “all locked up,” according to Satya Nadella, CEO of Microsoft.
“Everybody talks about the open web, but there is really the Google web,” said Nadella in testimony in federal court for the Google antitrust case in Washington, D.C. Hilariously, Nadella admitted that “Google” is the most searched word on Microsoft’s Bing.
So, the Justice Department and 38 states and territories are suing Google for suppressing competition in online search by paying Apple billions to make its search engine the default choice in Safari and all Apple devices.
Google also pays Verizon for the default position on mobile phones. The Justice Department claims these payments add up to over $10 billion every year.
And these bribes have paid off in spades: a Verizon executive testified that when the company renegotiated its contract with Google in 2014, they didn’t even solicit bids from competing search platforms.
That wasn’t always the case. In 2010, Verizon agreed to pre-install Bing as the default. However, in 2011, Google convinced Verizon to switch in exchange for 40% of ad revenue from searches on Verizon devices.
Google Crushes Competitors
Inside the tech industry, internet search is called a “no fly zone” because of the dominance of Google. Nevertheless, Microsoft has continued to invest in Bing to the tune of $100 billion over the past 20 years, believing that there are opportunities for other players to compete with Google. That investment has earned Bing a whopping 6.33% share of the search engine market.
Google has become entrenched in search and advertising, both of which are causes of ongoing antitrust lawsuits. At the heart of the antitrust case is the issue of interoperability, which Google’s strategic actions have gradually removed from the information architecture of the internet.
In the olden days of the internet, it used to be that consumer data from clicks on ads was accessible to all marketers through Double Click ID, which was founded in 1995 and acquired by Google in 2008 for $3.1 billion. Then, in 2010, it gobbled up AdMob. The next year, it added AdMeld.
Nobody at the Antitrust Division raised umbrage, and Google promised at the time not to combine all the consumer data from these and other properties. Oh, but except in 2016, when Google decided to combine them.
Then, in 2018, Google decided to close off this massive database of consumer insights for its own use, citing GDPR, the European online privacy law, which caused much consternation in the US.
Nadella testified that Google refuses to make its products interoperable with Microsoft’s, citing Bing’s search ad tools as an example. According to Nadella, Microsoft has requested that Google add some features that would make it easy for advertisers to seamlessly switch their campaigns between the Google and Bing platforms, but Google ignores them and does nothing.
Meanwhile, advertisers cite this lack of interoperability between Google and Bing as a reason why they don’t want to invest time or money into Bing.
Antitrust Division
Microsoft knows a thing or two about antitrust cases. The company lost its antitrust suit around the turn of the century but managed to hold off the Antitrust Division’s desire to break it apart.
Now the Division is back with a new case that has enlisted Microsoft executives as witnesses against another company. It’s not exactly an ideal mechanism for real change, not to mention a bit ironic as it’s been argued that Microsoft’s antitrust kneecapping in the late 90s and early 2000s allowed Google to emerge in the first place.
Past Antitrust litigation has failed or been too limited because federal law has not evolved to follow the evolution of tech innovation. Nowadays, tech companies use network effects and the control of consumer data to outmaneuver their competitors, none of which is against the law.
You’d think that the Division would be back with new laws to combat the new strategies tech companies are using to destroy competition. You’d expect them to update their list of concerns to take into account the paradigm shift underway with the use of AI in search results.
But no! They are still using laws from the days when the internet was just a gleam in the eye of Vinton Cerf to regulate the tech industry. However, it’s not the fault of the Antitrust Division.
Google Money in Congress
However, two bipartisan bills currently stalled in Congress would severely restrict the power of this newfangled tech monopoly. The American Innovation and Choice Online Act (S.2992) would apply to Amazon, Apple, Alphabet (Google’s parent company), and Meta, although not X (the annual profits are too low) and possibly not Microsoft.
The Act would create civil penalties and injunctions for companies that, among other things, unfairly preference their products, unfairly limit competitor’s products, or restrict interoperability with other platforms’ operating systems.
You’ll never guess who Google lobbyist bought off, according to the journalist Glenn Greenwald.
Turns out, Apple and Google contributed to the campaigns of none other than Jim Jordan (R-OH). According to Open Secrets, Verizon, Oracle, Microsoft, Comcast, and AT&T also contributed. That pretty much qualifies Jordan as a shill of Big Tech, which is odd considering how much the Ohio Congressman loves to bloviate about the evils of Big Tech.
T’was only yesteryear that Jim Jordan sent letters to several of his Big Tech contributors regarding what he called “the nature and extent of your companies’ collusion with the Biden Administration.” In 2020, the same year Google gave him 10 grand, Jordan got into a shouting match with the chairman of the communications committee right after declaring “Big tech’s just out to get conservatives!”
The hypocrisy is strong with this one, but it’s also another sign of Google’s overpowering influence. Even those most vitriolically denouncing Google have its money in their pockets.
Does Google Harm Consumers?
In theory, the Antitrust Division destroys monopolies to protect consumers, but some economists argue that when consumers pay for “free” services with data, they experience no loss. Using this data, Google and other services then target consumers with personalized ads.
Critics say this data-collection and data-based advertising invade consumers’ privacy, but only a minority of consumers seem to care and choose platforms based on their privacy safeguards.
“Tim, that’s blatherskite,” some reader will invariably say, adding, “I value my privacy and that’s why I only use DuckDuckGo.com for search.”
Well, I did too circa, 2011, when Anonymous and Occupy Wall Street were in vogue, and we were all wearing Guy Fawkes masks to protests. Those were the days.
However, I moved on as most other netizens did, as well. Now, the market share of DuckDuckGo, the privacy-focused search engine, is 0.66% globally. In the U.S., it’s a whole 2.45%.
It’s an open question whether Google really harms consumers, but it’s very clear that Google harms small businesses and advertisers who are obliged to improve their Google search results.
The House Judiciary Committee compiled a massive report on how Big Tech has become a web of monopolies. According to the report, Google has shifted its strategy, “to rank search results based on what is best for Google, rather than what is best for search users.”
The report quoted one advertiser who told the Committee that Google, “effectively forces its advertising customers to pay for the ability to reach consumers who are searching specifically for the customer’s brand.”
Anyone with half a brain can realize that this all this is clearly bad for competition. However, big companies have repeatedly wriggled out of Antitrust litigation over and over in the last half-century.
As such, it might be more effective for the government to move the trial to courts where ideology is more important than law.
Welcome to Texas!
Fresh out of an impeachment trial where the Republican jury turned a blind eye to hard evidence of Republican criminality, Texas Attorney General Ken Paxton recently succeeded in forcing Google into a change of venue.
Now the case will be litigated in a Texas federal district court, creating a massive disadvantage for the tech giant. The eastern district of Texas is known as a rocket docket, meaning that hearings and decisions happen faster.
Google complained about the decision, adding, “We’re confident that any court will agree that the Texas Attorney General’s case is wrong on both the facts and the law.”
Meanwhile, Google’s search engine is a less effective service year by year, filling the page with irrelevant paid advertisements above the information you’re actually searching for. Why? Because it can.
Google’s Defense
The government argues that Google’s ever-expanding volume of customer data is responsible for the company’s monopoly on search. The payments to telecoms and computer manufacturers keep the data flowing. Google maintains that innovation, not suppressing competition, is responsible for its dominance.
Google’s VP of search, Pandu Nayak, testified that data is not the game-changer. According to Nayak, sophisticated software matters more than data, pointing to machine learning, deep learning, and large language models.
In Nayak’s telling, possessing an enormous volume of user search queries matters less when it comes to improvements in search quality. In fact, using a third less data brought “no meaningful decline in search quality.”
The government pressed Nayak on the central role that data plays in Google’s ability to dominate search, but Nayak stuck to his guns, arguing, “Bigger is not necessarily better.”
Google’s deals with Samsung, Apple, and Verizon blocked competitors from at least a third and maybe as much as half of all user search queries in the US, according to Michael Whinston, an MIT economist serving as an expert witness for the Justice Department.
The list of other players is rather short, due to the extraordinary amount of resources a competitor would need to unseat Google’s position. Among the top competitors, there’s Bing, Yahoo!, DuckDuckGo, Baidu, a search engine popular in China, and Yandex, the Russian search engine, and Ask.com.
Don’t Be Evil
“Don’t be evil” used to be Google’s motto. The original motto was meant to address ethical concerns regarding search, paid advertising, and transparency about when something is a sponsored result.
In October of 2015, around the time that Google gravitated to the dark side, it borrowed from a Spike Lee movie title and switched to “Do the Right Thing.” In 2016, it did precisely the wrong thing for consumers by compiling all of its customer data, which was the right thing for Google’s bottom line.
Google’s anti-competitive, invasive practices are unlikely to be mitigated by companies accused of the same behavior like Apple and Microsoft. Consumers are unlikely to change their preferences even if Google populates the first 20 results with variations of its own content and properties.
The Antitrust Division is doing the right thing, but its current case may succeed only in making it rain Google money on defense attorneys. At the end of the day, it may still be more profitable for Google to pay fines in Europe, D.C. and 38 states and territories, without changing any of its practices.
We as consumers have only one impactful choice: Use DuckDuckGo!
Author: Tim Tolka, writer, journalist, and BI researcher
The editorial team at #DisruptionBanking has taken all precautions to ensure that no persons or organizations have been adversely affected or offered any sort of financial advice in this article. This article is most definitely not financial advice.
