Search Engine Monopolies: The US vs Google

January 26, 2024

A monopoly is when a company or group have exclusive control over a commodity or service. These companies typically do not have many competitors in its given markets and little opportunities for companies to create substitutes to the dominant product.

Antitrust is the act of preventing/controlling trusts or other monopolies in order to promote fair completion in business. Antitrust laws, also referred to as competition laws, are regulations that ‘encourage competition by limiting the market power of any particular firm’

A search engine monopoly is a search engine entity that manipulates the search engine market to stifle competitors and remain the dominant search engine. Some people argue that the a large data scale and the quality of a search engine’s algorithm can create a natural monopoly, but this is disputed in the case of Google.

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Over the past few years, Google has come under legal fire for its ‘monopoly power’. These ordeals have not been anything new for Google.

In 2020, it was reported that Google paid Apple up to $12 billion for a deal of exclusivity on Apple devices, making it the default search engine. The lawsuit from the US Justice department (DOJ) presented three claims under the Sherman Antitrust Act (1980), contending that ‘Google illegally maintains monopolies over markets for (I) general search services, (II) search advertising, and (III) general search test advertising’.

The lawsuit claimed that Apple CEO Tim Cook and Google CEO Sundar Pichai met in 2018 to discuss their deal and, according to the DOJ, an anonymous senior Apple employee wrote to a Google counterpart that ‘our vision is that we work as if we are one company,’ after the meeting.

Google maintained that the suit was ‘deeply flawed’ and that its distributions deals are common in the business world. It compares its interactions with Apple to a cereal brand paying a supermarket to stock its products ‘at the end of a row or on a shelf at eye level’.

In the most significant antitrust case in more than two decades, the US justice department (alongside eight attorney generals of eight states) is suing Google. This is reportedly for locking down avenues through which consumers can find alternative search engines and for ‘abusively monopolising digital advertising technologies’.

The trial began in September 2023 and is reportedly the ‘biggest US antitrust shutdown since Microsoft’. (In 2001, the US government sued Microsoft for illegally tying its Internet Explorer browser to Windows in a ‘campaign to destroy’ its browser competitor, at the time: Netscape).

The trial appears to include a myriad of cases and claims against Google.

For example, the DOJ claims Google has done the following things to stifle growth in the search engine marketplace:

Entered into exclusivity agreements that forbid pre-installation of any competing search service

Entered into tying and other arrangements that force pre-installation of its search applications in prime locations on mobile devices and make it undeletable, regardless of consumer preference

Entered into long-term agreements with Apple that require Google to be the default —and de facto exclusive—general search engine on Apple’s popular Safari browser and other Apple search tools

It has been reported that since 2021, Google has spent $26.3 billion to maintain its position as the default search engine on mobile phones.

In its defence, Google protests that you can switch the default search engine on your devices, but people don’t switch because ‘they prefer Google’. In the latest news updates, it appears that this case is still ongoing.

In other news, in the same month, US States reached a tentative settlement with Google in another antitrust case over the company’s mobile app store. The lawsuit alleged that Google imposes technical barriers for third-party app developers and that it forces app developers and users to use its payment processing service, Google Play Billing, which charges fees as high as 30% per transaction.

In the most recent case, the DOJ is suing Google for allegedly monopolising the advertising market. A few days ago, Attorney General Merrick Garland announced that the DOJ filed an antitrust lawsuit against Google’s parent company, Alphabet Inc.

The government’s complaint outlines three different advertising technologies and alleges Google has tied the technologies together to maintain its dominance in the digital ad market.

Publisher ad server: the tool that allows major website publishers to sell ads on its websites.

Advertiser ad network: the tool that allows advertisers to purchase space.

Ad exchange: Technology that pairs buyers and sellers of advertising together.

These cases are evidently an attempt from the US to thoroughly hold Google accountable for all forms of non-competitive behaviour and arguably speaks to Biden administration’s desire and efforts to ‘break up Google’. Click here to find out what Europe are also doing to try and achieve a similar thing.

Google’s market dominance and trillion-dollar empire has often left it unscathed by the multitude of lawsuits brought against it, and in other cases ‘scot-free’. It is uncertain what the future looks like for Google, but these cases will undoubtedly impact: (1) Google’s strength as a tech giant, (2) the stability of its current business models and (3) its consumers.

Google is only one company from the latest generation of dominant tech companies, and we can expect to see more tech giants under legal fire. Other dominant search engines include Microsoft Bing and Yahoo!

Get ready for your law interviews and challenge yourself to take an a closer look at the topic of antitrust laws and search engine monopolies with these questions:

Assess the arguments surrounding the claim that Google’s market dominance is a result of its superior algorithm and data scale. How does this relate to the concept of natural monopoly and innovation?

Explore the economic implications of breaking up a company like Google. How might it impact market competition, innovation, and consumer welfare in the long term?

Explore the role of consumer behavior in maintaining Google’s dominance. How much influence do consumers have in shaping the competitive landscape, and how might this influence change over time?

Considering the ongoing legal challenges, what implications could these cases have on the broader landscape of Big Tech and antitrust regulations?