Last week, a federal judge ruled that Google's search engine business is a monopolist. We explore the implications.

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August 13th, 2024 // Did someone forward you this newsletter? Sign up to receive your own copy here. ([link removed] )

Federal Judge's ruling could redefine online search

One man, a US Federal Judge, may have just changed the future of online search for decades.

Judge Amit Mehta ([link removed] ) from the US District Court for the District of Columbia ruled last week that Google acted illegally to maintain a monopoly in online search. “Google is a monopolist,” Mehta said. “And it has acted as one to maintain its monopoly.”

The ruling has the potential to shake-up the landscape of online search—a domain that Google has dominated for years—while also returning more power and choice back into the hands of users about how they search for information on the internet.

In this week’s newsletter, we explore the implications of this ruling, if it could usher in a new era of expanded government regulation over big tech, and how online search might change (and stay the same) in the future.

// The ruling

Last Monday, in a ​​277-page ruling, Federal Judge Amit Mehta found that Google acted illegally to maintain a monopoly in online search.

- The US Justice Department sued Google in 2020 ([link removed] ) (along with 35 US states ([link removed] ) ). The lawsuits claimed the tech giant engaged in monopolistic practices to maintain its search engine dominance.
- Google commands a 90% market share ([link removed] ) of the global search engine market. The lawsuit alleged that such market share was possible because Google made average annual payments of around $10 billion ([link removed] ) over the last 12 years to firms like Apple, Samsung, and Mozilla to be their default search engine on devices and browsers. According to reporting by The New York Times, Google paid Apple $18 billion in 2021 ([link removed] ) to keep Google as the default search engine on iPhones, disincentivizing Apple from creating its own competing search engine.
- Almost half ([link removed] ) of Google’s search traffic comes from Apple devices, and Google’s annual payment made up 18% of Apple’s profit ([link removed] ) in 2023.
- Upstart search engines, like DuckDuckGo, have complained ([link removed] ) that Google intentionally suppressed links to their sites and blocked them from gaining further market share.

In Mehta’s decision, he argued that Google was a monopolist for three reasons ([link removed] ) :

- Its 90% market share is so dominant that it gives Google an unfair advantage in profiting from advertisers.
- The dominance of Google’s particular business model of harvesting user data to sell ads prevents rival search engines that prioritize user privacy from gaining traction, forcing consumers to use a search engine that doesn’t protect their data.
- Google’s payments to other tech companies like Apple amount to buying off of potential competitors and stifling innovation.

But the case is not cut and dry. As The Wall Street Journal Editorial Board argued in an op-ed ([link removed] ) , the standard for violating antitrust laws for 40 years has been harming consumers, and there isn’t clear evidence that consumers have been harmed, or even would prefer a different product.

Google has vowed to appeal ([link removed] ) . Kent Walker, Google’s President of Global Affairs, found inconsistencies in Mehta’s logic: “This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available.”

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“This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available.”

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// The implications

While Mehta has found Google guilty of monopolistic behavior, he has yet to select a punishment. It’s possible that Mehta will force Google to end contracts with firms like Apple. However, that might have little impact ([link removed] ) : Apple might still decide on its own to make Google the default browser on its devices.

But the ruling has other implications:

- A new era of regulating big tech: This is far from the only antitrust case ([link removed] ) against big tech, but the success in this case by the Justice Department might pave the way for more cases in the future. Bill Kovacic ([link removed] ) , an antitrust law professor at George Washington University and a former chair of the Federal Trade Commission, said the win by the Justice Department could lay the groundwork ([link removed] ) for future lawsuits. “It's a crucial foundation for the government's current effort to prosecute misconduct by dominant tech companies,” he said.
- Tech firms need to partner wisely: The ruling might lead tech companies to think carefully about partnering together. Herbert Hovenkamp ([link removed] ) , an antitrust scholar at the University of Pennsylvania, said ([link removed] ) , “What it signals is that if you’ve got a dominant product, you’ve got to be very careful to make sure that your licensing and contract agreements are open, because making them exclusive can be dangerous.”
- More consumer choice: For those who believe that consumers should have more power and choice over their online experiences, the ruling might lead to fewer default settings and more individual choice. But would more choice lead users to frequent different search engines? There are clues in the EU; It ruled in 2018 that Google needed to provide Android phone users a choice about which search engine to use as their device’s default. European consumers faced with more options ultimately selected brands they already knew—Google’s market share in Europe hasn't changed ([link removed] ) .

// Changing the competitive landscape of tech

In 1998, the same year that Google was founded, the US Justice Department sued Microsoft ([link removed] ) for illegally grouping its various products together in a way that stifled competition and reduced consumer choice. The Judge ruled in favor of the Justice Department, and some employees at Google and Microsoft believe that the 1998 ruling against Microsoft actually created a competitive market that enabled Google ([link removed] ) to become an emerging competitor.

How might this ruling create the conditions for future competition or alter the playing field? Online search is already experiencing a tectonic shift with the rise of AI-powered search.

- OpenAI just announced the launch of SearchGPT ([link removed] ) , a search engine that doesn’t return a long list of search results, but attempts to organize and make sense of them.
- Microsoft’s Bing search engine is similar ([link removed] ) in its use of generative AI to draft cogent summaries of answers to queries.
- Perplexity, an AI-powered search engine, is one of the fastest growing search engines ([link removed] ) on the internet.

It’s unclear if AI-powered search is better for consumers, more respectful of their privacy, or even if they’ll prefer it. Perplexity has faced accusations of building its search engine by stealing other people’s work ([link removed] ) .

// Innovation at the structural level of the internet

The internet is being deconstructed and reconstructed every day. However, there’s a risk that despite changes, the status quo may persist, particularly when innovation doesn’t extend to protocols, governance, and data ownership.

Mehta’s ruling against Google may change the landscape of how people find answers on the internet, but it’s unclear if what will emerge will give users a voice, a choice, and a stake in the future of the internet.

This is the north star driving Project Liberty’s work across our three initiatives: Project Liberty Labs ([link removed] ) , Project Liberty Institute ([link removed] ) , and the Project Liberty Alliance ([link removed] ) . To learn more about our innovations at the structural level of the internet, check out DSNP ([link removed] ) .

Project Liberty news

// Frank McCourt joins the RadicalxChange podcast

Check out the latest RadicalxChange ([link removed] ) podcast episode featuring Project Liberty Founder Frank McCourt ([link removed] ) . He joins host Matt Prewitt to discuss the impact of AI on social media, digital advertising, and data centralization. Listen here ([link removed] ) .

Other notable headlines

// 👁 “Age assurance” checks are popular among lawmakers trying protect kids from harmful content online. But they rely on privacy-violating surveillance, according to an article in The Washington Post ([link removed] ) .

// 💵 According to an article in The Financial Times ([link removed] ) , Google and Meta struck a secret ads deal to target teenagers.

// 🤔 Today's anxiety about the risks posed by artificial intelligence causes us to focus on the wrong issues. More important, according to an article in Project Syndicate ([link removed] ) , is to focus on control, ownership, and governance.

// 🤖 An article in Vox ([link removed] ) argued that it’s practically impossible to run a big AI company ethically. Anthropic was supposed to be the good guy. It can’t be, unless the government changes the incentives in the industry.

// 🏫 California’s two biggest school districts botched AI deals. An article in The Markup ([link removed] ) outlined the lessons from their mistakes.

// 📱 An article in The New York Times ([link removed] ) explained why schools are racing to ban student phones.

// 🏠 An article in The Washington Post ([link removed] ) profiled the friendliest social network you’ve never heard of: Front Porch Forum.

Partner news & opportunities

// All Tech Is Human’s annual Responsible Tech Summit

New York City, September 16th from 2:30-6:30 PM ET

Join All Tech Is Human ([link removed] ) 's Responsible Tech Summit ([link removed] ) in New York City. The event gathers 280 leaders from civil society, government, industry, and academia. Learn more ([link removed] ) .

// Protecting journalists from online harassment

Harvard Law School student Molly Cinnamon, affiliated with the Berkman Klein Center ([link removed] ) , has authored a white paper, "Interventions for Online Harassment of Journalists." This paper outlines action plans and tools to safeguard journalists from online abuse. Read it here ([link removed] ) .

// Celebrate Visionaries at the 21st Annual IP3 Awards

Washington D.C., September 26th, 6:30 PM ET

Public Knowledge ([link removed] ) is hosting their annual IP3 Awards ([link removed] ) ceremony in Washington, D.C., which celebrates the visionaries driving advancements in information policy, intellectual property, and internet protocols. Register here ([link removed] ) .

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