As I reported yesterday, a U.S. judge has ruled that Google exerts monopolistic control over the search engine market. The extensive 286-page report cites various evidence, emphasizing Google's deal with Apple to remain the default search provider on Safari. However, it seems despite Google's actions, Apple will never consider Bing for its default search.
Google as Apple's Sole Search Solution
Eddy Cue, Apple's SVP of Services, testified during the trial, shedding light on the tech giant's dependence on Google's search engine. Cue disclosed that despite Microsoft's offer to provide Bing free of charge, Apple opted to keep Google, citing its superiority. This was a key factor in Judge Amit Mehta's determination of Google being the predominant option for general search engines.
Court documents unveiled that Google compensates Apple with a substantial share of its net ad revenue, totaling $20 billion in 2022—a significant increase from $10 billion in 2020. This agreement, renewed in 2021, contains conditions that limit changes Apple can make to search functionalities, securing Google's leading position. Google processes around 95% of searches on iPhones.
Challenges for Rivals
The ruling highlights hurdles competitors face in contesting Google's market position. Apple projected it would require about $6 billion annually to build a competitive search engine, while Google's internal estimates placed the cost at $20 billion to develop similar infrastructure. Judge Mehta noted that vertical search providers like Amazon and platforms such as TikTok do not rival general search engines. Although TikTok is popular among younger users, it lacks the comprehensive search capabilities found in Google.
The court also examined the potential influence of AI on search engines. Judge Mehta highlighted that while AI may change future search methodologies, it currently cannot replace crucial functions such as web crawling and indexing. Google's Vice President of Search, Pandu Nayak, affirmed that conventional ranking systems are still essential for high-quality search results.
Significance of the Ruling
The ruling emphasizes Google's substantial market power and outlines the considerable challenges potential competitors face. The findings offer a thorough examination of the financial and contractual aspects that enable Google's continued dominance.
The decision for a wider DoJ investigation was made last September and could have a huge impact on Google and its parent Alphabet. Last year, the DoJ accused the company of destroying evidence by deleting chats between employees. In November 2022, Google agreed to pay hundreds of millions of dollars to 40 states in the biggest anti-trust settlement in U.S. law.
Google has consistently argued that the failure of rivals such as Microsoft Bing was not down to its own practices but rather the failures of Microsoft. The trial also looked into Google's search ad practices. As we reported in September, the DOJ alleges that Google's market dominance allows it to hike ad prices without significant consequences.
