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Was the Google monopoly lawsuit five years too late or two years too early?

TechBrunchBy TechBrunchAugust 29, 20246 Mins Read
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Alphabet Inc. CEO Sundar Pichai at Google's Bay View campus in Mountain View, California, USA, Wednesday, May 1, 2024. Image by David Paul Morris/Bloomberg/Getty Images

Google suffered a major defeat when U.S. District Judge Amit Mehta ruled that the tech giant acted illegally to maintain its monopoly on online search. While Mehta has yet to decide on the outcome of his ruling (which Google will undoubtedly fight), many speculate that the ruling could change the way Google does business, alter the structure of the internet, and shake up opportunities for startups.

On Wednesday's episode of Equity, Rebecca Beran speaks with lawyer, computer scientist, and Abundance Institute AI policy director Neil Chilson to understand the peril facing Google in the online search lawsuit, what to expect in Google's upcoming ad tech antitrust trial, and what generative AI could mean for Google and for antitrust law in general.

Google's upcoming ad tech deals

Opening arguments in another case investigating Google's anti-competitive tendencies are scheduled to begin on September 9. This time, the court will decide whether Google has created an ad tech monopoly that stifles competition and forces publishers and advertisers to use Google's ad tech products, as the Department of Justice alleged in its initial complaint in January 2023.

“In its complaint, the Department of Justice alleges a narrow market focused on a very specific ad tech stack,” Chilson said — the display ads that appear on the side of web pages, in which Google dominates.

The Justice Department alleges that Google controls key parts of the advertising tech ecosystem, including the tools that advertisers use to buy display ads and publishers sell ad space, allowing the company to manipulate ad prices, disadvantage competitors and favor its own service.

Chilson said he expects Google will insist that advertisers have more choices when it comes to display ads.

“Whether it's TV, The New York Times, Facebook, they're all competitors because advertisers are choosing between them when deciding how to display their ads,” Chilson said.

Chilson noted that the Justice Department would likely bring up Google's history of acquisitions. Google bought DoubleClick in 2008, which became the backbone of the company's advertising business. Google also bought Admeld in 2011 to gain more control over the supply side of the advertising market. But Google would likely deny those acquisitions, pointing out that those deals were approved by the FTC and the Justice Department at the time.

Obtaining and maintaining a monopoly

The main difference between the two cases is how Google gained its monopoly position and how it maintained that monopoly position.

“[ Mehta] A great deal of effort was put into [in the online search case] “Google has achieved market power because consumers find it so popular that they want to use it,” Chilson said of the online search litigation.

“The Google Search litigation is about Google maintaining its top monopoly through agreements that courts have found to be anti-competitive, such as its agreement to give Apple the default position of the iPhone's search engine,” Chilson continued.[The ad tech case] “This case focuses on how Google gained this market share through its growth actions, and the search case focuses on how Google used these exclusivity agreements to maintain its top position.”

How does that affect potential outcomes?

Many have speculated that the online search monopoly ruling could force Google to split up its business, share data with competitors, or even open up its APIs. Chilson doesn't think so.

Chilson noted that Mehta early on dismissed some of the complaints that suggested breaking up Google's businesses as the right solution to the exclusivity deals. “It's hard to imagine that breaking up Google is the right solution here,” Chilson said. “The obvious solution is to say Google can't make those deals anymore.”

That means it could set a precedent to ban such conduct if a company becomes a monopoly.

Meanwhile, the ad tech lawsuit alleges that Google achieved its monopoly through anticompetitive conduct, which could bolster the argument for a breakup.

“You run into a lot of rule of law concerns when you're trying to unwind a merger that's 16 years old,” Chilson said. “People might start thinking, 'If this merger goes through and we might get sued 16 years from now, maybe we'll think twice about doing something that makes business sense.'”

Five years too late or two years too early?

Generative AI is changing the very nature of how people search for information. Ironically, it was Google that invented the latest advancements, such as the Transformer architecture that underpins large-scale language models. But then much smaller companies like OpenAI came on board and forced Google to start doing something completely different to traditional search.

When Beran asked Chilson whether the Google monopoly lawsuit was five years too late, Chilson argued that it may have been two years too early: “The issue here is that Google is facing competition. We may be filing this lawsuit at a time when Google's business model is under serious threat, so we may look back in two years and wonder why we were suing Google for being anti-competitive. They're being crushed.”

Generative AI will not only transform online search, but also display advertising and digital advertising in general.

Google uses clicks through link-based search to determine which advertisers should and who gets paid, but this doesn't work well with a model like Perplexity, where publishers get a cut of the ad revenue when their content appears in response to a query.

“For example, if you search for car insurance on Google, that ad buy is very precise because you know someone is looking for insurance, and if you can get that click, it could be worth hundreds of thousands of dollars over the consumer's lifetime,” Chilson says. “So these are very, very useful ads. You just don't know how exactly it matches up with an ad that an AI has placed.”

Chilson noted that Perplexity's model, which represents new entrants in the display advertising market in the Justice Department's lawsuit against Google, could be featured in the Google case.

Chilson argued that in 10 years' time, the online ecosystem will be significantly changed by the use of AI, and that the debate over antitrust law may also be dramatically different.

“If small and medium-sized enterprises use AI, they will be able to achieve results beyond their capabilities and become increasingly efficient,” he said, noting that this could lead to a shift in allocation, with agile small and medium-sized enterprises using AI to take on many of the bureaucratic tasks that large companies currently leave to humans.

For more information on the string of big tech lawsuits and their influence and actions in the marketplace, check out Rebecca Beran's conversation with Alex Wilhelm back in November. You can watch that episode here.

Equity will be back on Friday with our weekly news roundup, so stay tuned!



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