The opinion in the Google search antitrust case, published Monday, is extremely long. Because this was a bench trial, Judge Amit Mehta was on the hook to make factual findings as well as legal findings. So, there are over a hundred pages of findings of fact and even more of conclusions of law, adding up to a 286-page document replete with footnotes, redactions, and even an illustrative graphic of a search result for \u201cgolf-shorts\u201d (which, apparently, came up a lot at trial).\u00a0<\/p>\n<\/div>\n
The ruling in United States v. Google <\/em>is a lot to take in. Some of it was previously reported in the press over the course of the weekslong trial; but here, the judge has inadvertently compiled the trial\u2019s greatest hits: catty quotes from executives, embarrassing internal studies, and a bunch of surprising deets about that multibillion-dollar contract that keeps Google the default search engine in Safari.\u00a0<\/p>\n<\/div>\n Google pays Apple billions of dollars a year to be the default search engine in Safari. But according to Eddy Cue, Apple\u2019s senior vice president of services, there\u2019s no other meaningful alternative. During the trial, he said that \u201cthere\u2019s no price that Microsoft could ever offer\u201d to Apple to get the company to preload Bing in Safari.\u00a0<\/p>\n<\/div>\n \u201cI don\u2019t believe there\u2019s a price in the world that Microsoft could offer us,\u201d Cue said at another point. \u201cThey offered to give us Bing for free. They could give us the whole company.\u201d<\/p>\n<\/div>\n For Google, this is a sign that they\u2019ve earned their default status (which, incidentally, they pay Apple gobs of money to maintain). Judge Mehta says that this is an indication that the \u201cmarket reality is that Google is the only real choice as the default GSE [general search engine].\u201d\u00a0<\/p>\n<\/div>\n (Of course, Cue\u2019s opinion doesn\u2019t mean Bing is objectively<\/em> bad. Elsewhere, the opinion notes that Bing\u2019s search quality is comparable to Google\u2019s on desktop, though it falls behind on mobile.)<\/p>\n<\/div>\n In addition to Apple, Google also has contracts with cell carriers and device manufacturers to be the default search engine on Android devices (these contracts operate a little differently since they hinge on Google\u2019s control of the Google Play Store).\u00a0<\/p>\n<\/div>\n It\u2019s not just Eddy Cue refusing to give Bing the time of day \u2014 all of these companies recognize Google as the only game in town. None of these \u201cFortune 500 companies\u201d have a real choice in the matter.<\/p>\n<\/div>\n \u201cGoogle understands there is no genuine competition for the defaults because it knows that its partners cannot afford to go elsewhere,\u201d the judge writes. \u201cTime and again, Google\u2019s partners have concluded that it is financially infeasible to switch default GSEs or seek greater flexibility in search offerings because it would mean sacrificing the hundreds of millions, if not billions, of dollars that Google pays them as revenue share.\u201d<\/p>\n<\/div>\n According to the opinion, \u201c[i]n return for exclusive and non-exclusive default placements (i.e., user-downloaded Chrome and Safari default bookmarks), Google pays Apple a [redacted] percentage of its net ad revenue, which amounted to $20 billion in 2022.\u201d\u00a0<\/p>\n<\/div>\n This is apparently \u201calmost double the payment Google made in 2020, which was at that time 17.5% of Apple\u2019s operating profit.\u201d\u00a0<\/p>\n<\/div>\n Google and Apple entered into their present contract in 2016. Their dealings date way further back,\u00a0but around then, Apple rolled out Suggestions. (Think, for example, when you type something out into Spotlight and Apple suggests a website to you \u2014 that\u2019s not the same as Google Search.)<\/p>\n<\/div>\n This was significant. One Google analysis estimated \u201ca query loss of 10\u201315% of Safari traffic and a revenue loss of 4\u201310% of iOS Safari revenue based on Apple Suggestions.\u201d The new 2016 contract includes a specification that \u201cApple\u2019s implementation of the Safari default must \u2018remain substantially similar\u2019 to prior implementations\u201d so that Apple \u201ccould not expand farther than what they were doing,\u201d lest Apple \u201cbleed off traffic.\u201d\u00a0<\/p>\n<\/div>\n These days, when it comes to iPhones specifically, \u201cGoogle receives almost 95% of all general search queries.\u201d<\/p>\n<\/div>\n The terms of the 2016 contract seem to have worked out for both companies. Google and Apple extended the agreement in 2021: the contract will expire in 2026. Apple \u201ccan unilaterally extend the agreement by two years,\u201d and if both parties agree, they can extend the contract even further, all the way out to 2031. Part of the contract obligates both Google and Apple to defend this agreement \u201cin response to regulatory actions\u201d (e.g., DOJ antitrust lawsuits, like this one).\u00a0<\/p>\n<\/div>\n According to the judge, it\u2019s not just that Google pays Apple not to challenge its search supremacy \u2014 it would be unbelievably difficult for Apple to get in on the action at all. Unsurprisingly, both Google and Apple have looked into this, and their own internal estimates came out at trial.<\/p>\n<\/div>\n Apparently, Apple has calculated that \u201cit would cost $6 billion annually (on top of what it already spends developing search capabilities) to run a GSE.\u201d Meanwhile, in \u201clate 2020, Google estimated how much it would cost Apple to create and maintain a GSE that could compete with Google.\u201d Apple would have to spend something \u201cin the rough order of\u201d $20 billion in order \u201cto reproduce [Google\u2019s technical] infrastructure dedicated to search.\u201d<\/p>\n<\/div>\n And neither is Amazon or Meta.<\/p>\n<\/div>\n First off, United States v. Google<\/em> draws a distinction between general search engines (GSEs) and specialized vertical providers (SVPs). The heavy use of technical acronyms may make your eyes water, but the gist is actually pretty simple. A GSE is a search engine in the sense that everyone understands it \u2014\u00a0Google, Bing, DuckDuckGo, and so on.\u00a0<\/p>\n<\/div>\n If you get really galaxy-brained about it, there are thousands of little \u201csearch\u201d boxes all over the internet. Sometimes you even use them in a similar way to Google Search \u2014\u00a0say, for example, to look for cheap flights to a specific destination or to buy a pair of black flared leggings. Nevertheless, Booking.com and Amazon.com simply are not the same as a general search engine that indexes the World Wide Web. Do you, an ordinary person, need to logically justify this gut reaction? No. A court of law has done it for you already, in an outpouring of words you probably don\u2019t need to read.\u00a0<\/p>\n<\/div>\n So much for the SVP. But the little search bar on social media platforms,\u00a0like TikTok, operates slightly differently \u2014\u00a0at least in terms of user behavior and certainly in terms of whether Google views certain companies as competitive threats. Apparently in 2021, Google conducted research into \u201cyounger users.\u201d One of their findings: \u201cAmong \u2018Generation Z\u2019 participants (defined as participants between the ages of 18\u201324 who use TikTok daily), 63% reported that they use TikTok as a search engine.\u201d\u00a0<\/p>\n<\/div>\n Nevertheless, says Judge Amit Mehta, social media platforms are distinct \u2014\u00a0they\u2019re walled gardens of content. And more importantly, \u201cthere is little evidence that they actually compete with GSEs for search queries.\u201d The TikTok study, he says, doesn\u2019t get into whether the platform\u2019s search quality results are competitive with Google\u2019s \u2014 just because kids like TikTok doesn\u2019t mean it\u2019s in the same relevant market as Google Search. And TikTok is not the only social platform. One study, he says, suggests that Facebook use corresponds with an uptick in Google Search use.\u00a0<\/p>\n<\/div>\n For Mehta, when it comes to an antitrust analysis, the internet habits of Zoomers are not relevant information. \u201cImagine if Google\u2019s search quality substantially degraded, whether purposely or through neglect,\u201d he writes. (Yes, imagine. Who<\/a>. Could<\/a>. Imagine<\/a>. That<\/a>.) \u201cWould SVPs or social media platforms be able to shift resources to put out a product that resembles a GSE and thereby capture a significant number of dissatisfied Google users? The answer obviously is no.\u201d It would take \u201cextraordinary cost and expense\u201d for even a juggernaut like Amazon or Meta to fill that hole in the market.\u00a0<\/p>\n<\/div>\n Maybe AI search is the future, but the future is not here yet \u2014 at least, not in a way that\u2019s relevant to antitrust law. \u201cAI may someday fundamentally alter search, but not anytime soon,\u201d writes the judge. Elsewhere, he writes that \u201c[c]urrently, AI cannot replace the fundamental building blocks of search, including web crawling, indexing, and ranking.\u201d\u00a0<\/p>\n<\/div>\n He also found that \u2014\u00a0factually <\/em>speaking, even \u2014\u00a0\u201cgenerative AI has not (or, at least, not yet) eliminated or materially reduced the need for user data to deliver quality search results.\u201d The opinion\u2019s findings of fact quote Neeva\u2019s cofounder Sridhar Ramaswamy, saying that \u201cthe middle problem of figuring out what are the most relevant pages for a given query in a given context still benefits enormously from query click information. And it\u2019s absolutely not the case that AI models eliminate that need or supplant that need.\u201d <\/p>\n<\/div>\n In other words, when you search for \u201cgolf-shorts,\u201d it\u2019s not just that you get served (hopefully) with the relevant results for golf-shorts \u2014 Google more or less automatically receives important information about what you think the relevant results are<\/em>, based on what pages you end up clicking on. That feedback loop isn\u2019t happening with AI chatbots.\u00a0<\/p>\n<\/div>\n The opinion also quotes Google\u2019s own VP of search, Pandu Nayak, as saying that it\u2019s vitally important for Google to continue to \u201chave an infrastructure that [it] understand[s]\u201d \u2014 that is, the traditional ranking system. According to Nayak, \u201cthere is no sense in which we have turned over our ranking to these systems. We still exercise a modicum of control over what is happening and an understandability there.\u201d\u00a0<\/p>\n<\/div>\n Apparently in 2020, Google conducted a study looking to see what would happen to its bottom line if it \u201cwere to significantly reduce the quality of its search product.\u201d The conclusion was even if the company made search shittier, the revenues from Search would be fine.<\/p>\n<\/div>\n \u201cThe fact that Google makes product changes without concern that its users might go elsewhere is something only a firm with monopoly power could do,\u201d the judge writes.\u00a0<\/p>\n<\/div>\n Foundationally, antitrust regulation is underpinned by the idea that competition is good for everyone \u2014 the market, the companies themselves, but especially the average customer. It\u2019s debatable whether \u201cconsumer harm\u201d is still the right barometer to define monopolistic behavior in the internet age. Yet, United States vs. Google<\/em> suggests that even one of the most innovative companies of the past 20 years can harm consumers the old-fashioned way \u2014 by muscling competitors out of running, it can deliver a worse and worse product and still make just as much money. <\/p>\n<\/div>\n<\/div>\nApple thinks Bing is pretty bad<\/h3>\n<\/p>\n
\u201cThese are Fortune 500 companies, and they have nowhere else to turn other than Google.\u201d<\/h3>\n<\/p>\n
What are<\/em> the terms of the Google-Apple contract anyway?\u00a0<\/h3>\n<\/p>\n
What it would take for Apple to challenge Google<\/h3>\n<\/p>\n
TikTok is not a competitor to Google Search<\/h3>\n<\/p>\n
What AI search revolution?<\/h3>\n<\/p>\n
Something only a monopoly can do<\/h3>\n<\/p>\n