May 26, 2024

The United States Department of Justice (DOJ) and Google wrapped up closing arguments in a potentially historic antitrust lawsuit on Friday. The DOJ has released a 370-page slideshow supporting its case that Google holds a monopoly over the search engine market — and offered a revealing look at the business maneuvers of the digital giant.

The DOJ sued Google in 2020 for allegedly monopolizing digital search, pushing out competitors such as DuckDuckGo and Microsoft’s Bing. It’s the first major tech antitrust lawsuit since U.S. vs. Microsoft, a 1998 case that found Microsoft monopolized computer operating systems.

Regulators in the last several years have ramped up their antitrust scrutiny of Big Tech, and this year the U.S. Federal Trade Commission and Department of Justice have collectively filed major lawsuits against Amazon, Apple, and Meta — as well as a second antitrust case against Google, which alleges monopolistic practices in the digital advertising market.

In its final compilation for the case, the DOJ airs out some compelling evidence about just how much Google controls in the search market.

Google allegedly holds a near-90% share of the search market

According to the prosecution, Google has cornered 89% of the search engine market. By contrast, the federal regulator said Microsoft’s Bing holds a 5.5% share, Yahoo a 2.2% stake, and DuckDuckGo a 2.1% share. Google’s search market share is even bigger for mobile devices: 98%. On desktop, it’s a little less (84%). Businesses can begin to face antitrust allegations when they hold more than a mere 50% share of a given market.

That’s why the Google case has been likened to U.S. vs. Microsoft, which alleged Microsoft held a similarly overwhelming share — more than 90% — of the computer operating system market. The fact that Microsoft lost that doesn’t bode well for Google.

Google gave Apple nearly 40% of its ad revenue to help maintain its monopoly

In 2016, Google inked a deal with Apple inked in order to be the default search engine on its Safari web browser. In return, it agreed to share 36% of its net ad revenue that comes from Safari. Its payments to Apple totaled $18 billion in 2021 and $20 billion in 2022. Google has similar exclusivity agreements with other device manufacturers like Samsung, along with web browser developers like Mozilla. Those exclusive contracts account for 50% of all U.S. search queries on any given browser.

But Apple also explored having versions of Safari with different search defaults than Google, or giving consumers the option to choose another search engine, the DOJ reveals. Google firmly rejected these proposals from Apple, according to the agency.

Apple executives considered making DuckDuckGo the default for Safari’s private browsing mode, mainly due to concerns of Google’s lack of protection for user privacy. But Apple’s partnership with DuckDuckGo was restricted because of its agreement with Google.

“[Google’s exclusivity agreements] basically freeze the ecosystem in place effectively,” said Snowflake CEO Sridhar Ramaswamy, who testified for the plaintiffs.

Google can raise prices without worrying about competitors 

Under the legal standard, a monopoly occurs when a company is able to set prices without worrying about any impact to their business. The DOJ found that Google is able to raise prices 10% to 15% without any threat to its profits.

“As a general matter, Google does not regularly or systematically compare ‘the relative pricing’ of different Google digital advertising products,” prosecutors wrote, “nor does Google regularly or systematically compare ‘the relative pricing’ of ‘Google search advertising’ to advertising provided by different sellers.”

When Google executives were questioned during the trial about whether they considered Facebook’s or Bing’s ad pricing, they responded that they did no no.

Google reportedly made sure Microsoft’s Bing couldn’t compete

Google staffers studied how much Microsoft’s search engine, Bing, would need to pay Apple in order to effectively rival their own agreement terms.

The company called the project “Alice in Wonderland,” referring to Bing as the codename Alice, according to an email between staffers referenced by the DOJ. The team found that Bing would need to offer Apple 122% of its ad revenue to match Google’s, if Google only paid about 34% of its own ad revenue. Google currently shares 36% of its search ad revenue from Safari with Apple.

Google’s 2022 payment to Apple was almost double Microsoft Bing’s total global ad revenue for the entire year.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *