So a pretty big piece of news broke last night, after months of rumblings.
The US Department of Justice ruled that Google acted illegally in maintaining a monopoly in online search.
This is a very nuanced debate, but for me there are 3 main questions to unpack around the decision.
1. Does Google have a monopoly in online search?
An unequivocal yes! It’s hard to argue against market shares of 90%.
2. Did Google abuse its power once it became a monopoly?
Also yes. This has been well-documented, but plenty of evidence emerged during the hearing which detailed how Google artificially tweaked their auction with the intention of increasing the prices advertisers had to pay for clicks.
The hearing found that, because of the lack of scale in alternative search engines, these price rises were indeed profitable for Google - ie advertisers tended to swallow these costs, rather than shifting ad budgets elsewhere.
In Google’s defense, I do think this was a natural step for any share-value-driven organisation. That’s not to say price rises are a good thing for the digital economy - but if any other company had been in Google’s shoes, it's likely they'd take the same path.
3. Did Google act illegally to attain its status as a monopoly?
This is what the ruling really hinges on... but for me, this is where things get a little fuzzy.
I’ve seen good arguments in either direction, but if I were to give my by-no-means-legal-expert-opinion, I’d probably err on the side of “no”.
The crux of the argument against is that Google pay a lot of money to the likes of Apple & Samsung to come pre-installed as the default search engine.
That’s true, but that on its own is not sufficient for a guilty verdict - we have to ask whether the agreement is illegal.
To me this feels within the realm of fair business practice – and feels like there are many analagous commercial arrangements which we wouldn’t raise an eyebrow at. FMCG orgs essentially pay retailers for distribution (in their case, shelf space) – and it’s often the case that the majority of brands on the shelf are manufactured by the same parent company.
I may be overlooking some intricacy here, but other than the scale of the agreement, why is the deal between Google & Apple any different?
It’s also worth noting that Google weren’t the only ones trying to establish these agreements - Microsoft went on record to say that they attempted similar conversations with Apple, but naturally, they weren’t able to place a bid as favourable as Google’s.
What happens next?
All we know for now is that Google will appeal the decision. Their initial response to the ruling is a very pointed one - but for the time being, I don’t think I disagree with it?
📣 “This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available.”
https://lnkd.in/e7MAd39B
