Since Google’s $175bn search business was declared a “monopolist” by a US court last month the potential consequences have been widely debated, especially since it threatens its profitability.
Possible outcomes include separating Google’s search business from its other divisions, and selling off the Chrome browser and Android operating system. Both of those would be unavoidable if the US government follows through on its newfound muscle to tackle the digital behemoths of Silicon Valley.
After a significant 10-week trial that began last October, US district judge Amit Mehta found that “Google is a monopolist, and it has acted as one to maintain its monopoly”. Such antitrust action is the first of several major legal efforts to break up the unconstrained power Google, Facebook, Amazon and Apple have built up.
Google’s monopoly was common cause to any rational person, but the US government has now proved it in a court of law. “The trial evidence firmly established that Google’s monopoly power, maintained by the exclusive distribution agreements, has enabled Google to increase text ads prices without any meaningful competitive constraint,” wrote the aptly named judge Mehta.
Google’s search business is facing a more existential threat from artificial intelligence (AI). It makes its money from our current habit of typing a string of words into a search field. From that Google spits out a set of links (underlined in blue) that are most appropriate to that search, except the era of that being an organic — and truthful — result is long gone. Google has been repeatedly shown to manipulate those results, charge for text links to be higher up on the page, and to always prefer its own offerings in search results.
Forget that long-eclipsed era of trying to appear “above the fold” as it were, or even on the first page of Google results — the results from Google searches are heavily manipulated nowadays. They aren’t very good either — the quality of Google search has declined noticeably over the years.
Generates something
Generative AI and the thousands of chatbots it has launched since OpenAI’s ChatGPT took the world by storm in 2022 do what Google search does not — provide an answer, not a bunch of links. That is far more useful.
Named generative because it generates something rather than offering a list of options, Gen AI (for short) presents an existential threat to Google’s eye-wateringly profitable $175bn annual search business.
As respected tech commentator Om Malik succinctly put it, “AI-based competitors pose a different, more existential threat to Google because they offer what most users have wanted all along: an answer machine, not a search engine”.
In the almost two years since OpenAI launched ChatGPT we are increasingly using this kind of service, as illustrated by the innumerable use cases that are emerging. What Gen AI does well is generate summaries of emails, documents and search results.
It is also fairly good at giving a concise answer to a web search — bar the inconvenient instances in which it is inclined to make up facts when it can’t find any. It’s simplistic now, but it will get much better.
You will get the answer — or a decent stab at it — instead of the set of links Google now offers. That is a bad thing for Google, which promised to search the web’s information for us but has long since focused on extracting profit — as judge Mehta concluded.
“Unconstrained price increases have fuelled Google’s dramatic revenue growth and allowed it to maintain high and remarkably stable operating profits,” he wrote.
Most important
Google is a network business, and the bigger the network the better it is. Or so goes the logic. But that is the ultimate problem — Google has created a self-serving network that is its priority, not the customer using it.
As Rebecca Haw Allensworth, a professor at Vanderbilt University’s law school who studies antitrust, told The New York Times: “This is the most important antitrust case of the century, and it’s the first of a big slate of cases to come down against Big Tech.”
She added: “It’s a huge turning point”, and it certainly is, but so is the new epoch of generative AI and increased regulatory scrutiny. This marks the end of Google’s monopoly, and its runaway profits.
And it’s not just in search in which it is under intense scrutiny. The US justice department began its second significant antitrust case against Google earlier this week — for abusing its dominance in advertising technology (adtech), where it has about 87% of the market. This division brought in revenue of $31bn last year — about 10% of Google’s entire revenue.
“Google is not here because they are big,” the US government’s lead trial lawyer, Julia Tarver Wood, said on Monday. “They are here because they used that size to crush competition.”
Google has its own advertising exchange (AdX), uses its own programmatic advertising servers for displaying ads on web publishers’ sites, and does its own advertiser networking.
“One monopoly is bad enough, but a trifecta of monopolies is what we have here,” said Wood, describing how these three aspects of the adtech business allow Google to control it. “The rules are set such that all roads lead back to Google.”
• Shapshak is editor-in-chief of Stuff.co.za and executive director of Scrolla.Africa.
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