The court’s ruling that Google is a “monopoly” could have ripple effects throughout the tech industry.
A recent analyst note from WedBush Securities lays out a few possible scenarios. Some are more likely than others, and not all are favorable to Google — though some could be. Options on the table include a ban on the billions of dollars in exclusivity agreements Google has with other companies, a massive fine, or the unlikely possibility that Apple will jump at the chance to parachute into the search engine business itself, perhaps with a massive player like OpenAI, according to Wedbush.
For consumers, the end of the “let me Google it for you” phrase, which became a verb in 2006, could mean that it will eventually be easier for them to access other search engines. But just because access is easier doesn’t mean Google’s business will evaporate. Consumers may simply choose it over its competitors. However, if Google’s position weakens, Google could lose out. open the door For other search engines now they can compete more fairly.
On Monday, U.S. District Court Judge Amit Mehta of the District of Columbia ruled that Google acted as a monopoly by using its position as the market-leading search engine to unfairly disadvantage its smaller competitors. In the ruling, Mehta said Google used its size and influence to secure exclusive deals that made its search engine the default. In 2021, Google spent a total of $26 billion to secure these agreements through revenue-sharing deals with smartphone makers like Apple, various wireless carriers and web browser developers, according to Mehta’s ruling.
in Summary of 286 pagesMehta acknowledged the superiority of Google’s product, calling it “the highest quality search engine in the industry.”
Google pointed to this fact in its response to the ruling, which it plans to appeal. “This decision recognizes that Google provides the best search engine, but concludes that we should not be allowed to make it easily available,” said Kent Walker, Google’s head of global affairs.
The agreements that Google has signed with other companies have paid off greatly – in 2023, Google Search made profits $175 billion In revenue — keeping competitors off consumers’ devices. In 2020, Google had a 95% share of the smartphone market and a 90% share of overall online searches, according to Mehta’s ruling. Microsoft-owned Bing, which came in second, accounted for just 6% of all searches, court filings said.
With the appeal pending and Mehta yet to decide what sanctions he will impose on Google, there are a few possible outcomes that could follow. These outcomes range from maintaining the status quo to upending the search industry, according to Wedbush analysts.
What could happen to Google?
The most obvious outcome is that Google wins its appeal. In that case, the current ruling would be overturned and the case would remain unchanged. Wedbush analyst Dan Ives estimates that Google has a 30% to 40% chance of winning its appeal. The appeal would likely take months, if not years, and even then it could be a case of waiting.
If Google loses the appeal, Mehta could impose a penalty that would force the company to either pay a fine, change the way it does business, or both. A fine would likely have little impact on Google’s business, especially if the agreements that allow it to remain the default search engine remain in place, according to Wedbush analysts. It’s also a long shot for the $2 trillion tech giant and others like it. In the European Union, Google has been fined. $2.7 billion fine In June 2017, the European Union’s antitrust authority imposed similar fines on other tech companies totaling billions of dollars. In 2019, the Federal Trade Commission fined Meta. $5 billion fine For violating privacy rules.
What would be a major blow to Google’s business would be for the government to force smartphone companies to offer consumers the option to change their default search engine. Wedbush called this a “net negative” outcome, though it expects most users to continue using Google.
In that case, Google’s appeal would end up in a sort of compromise, where it abides by its agreements but with certain conditions, according to Dan Ives. I likened It goes back to the famous antitrust case brought by Microsoft in 2001, where the company was allowed on appeal to stay together, but had to offer competitors Access to its APIswhich she had previously resisted.
“If they lose, they will likely come to a structured agreement with Apple that would straighten everything out,” Ives said, “and give (consumers) some other options from a search perspective on iOS for iPhones, while keeping Google as the primary search partner.”
Other analysts also It is considered This could be possible.
One of the most likely outcomes is a ruling that would require “companies like Apple to proactively prompt users to choose their search engine rather than setting a default and allow consumers to make changes to the settings if they wish,” said Evercore analyst Amit Daryanani.
Google’s agreements with companies like Apple ensure that devices are not preloaded with other search engines. There is a strong possibility that this will change and that when purchasing a new device, users will be forced to search for other search engines. The option was requested. To select a default search engine from the list of options.
There are two less likely scenarios. The first is that companies like Apple, no longer burdened by lucrative but restrictive default agreements, simply replace Google with a different search engine. Wedbush doesn’t see that happening because Google is widely considered the best search engine on the market.
The second unlikely scenario is that Apple will use this as an opportunity to start developing its own competitor to Google.
If done right, Apple could seamlessly integrate its AI search tool across its myriad devices around the world, said Jim Kascade, CEO of Conversica, a cloud-based company that develops conversational AI. “This is a potentially huge win and will help displace Google’s dominance,” he said.
One of the reasons Google struck a huge deal with Apple was to prevent it from developing its own search tools, According to to The New York Times Report from 2023. Apple and Google are already competing in the iOS and Android smartphone market.
Finally, Wedbush’s memo suggests a partnership between two of Google’s main tech rivals. Apple and OpenAI could team up to develop a next-generation AI search engine. Ives admits that’s a long shot, but it’s still an option. “I might have a better chance of running the 200 meters in Paris,” he says, “but you have to consider all the options.”
Both companies already have an agreement OpenAI plans to integrate ChatGPT into Apple’s existing Siri features, which it calls Apple Intelligence. While that’s unlikely, Wedbush acknowledges that if it does happen, it could be a big blow to Google. “An unexpected challenge from Apple could result in Google losing even more market share,” the research note says.
But Apple, a company known for its precision, is said to be Keeping OpenAI at arm’s length Due to concerns about consumer privacy and its business image.
It’s still early days, Kaskaid says. “We shouldn’t confuse the ruling and the challenges associated with it with the breakthroughs that the two companies are making in bringing products to market. The ruling applies regardless of how competitive Google and Apple are.”