Google’s Antitrust Lawsuit and What it Means For You

Good Monday morning. It’s October 26th. NASA will make a scientific announcement about the moon today at noon EDT. It will be either spectacular or a bit of an oversell on their part. Here’s hoping for the former.

Spotlight focuses this week almost entirely on the Google antitrust lawsuit. It’s the most important internet technology story of our time. Our regular sections will return next week.

Today’s Spotlight is 1,824 words — about a 7 minute read.

1. News to Know Now

a. Mark Zuckerberg and Twitter CEO Jack Dorsey will testify before the Senate Judiciary Committee on November 17 regarding the decision made by their companies to limit the spread of a conspiracy theory regarding the Biden family. (National Review)

b. Rep. Alexandria Ocasio-Cortez (D-NY) livestreamed her Among Us gameplay on Twitch last Tuesday night and at one point reached more than 430,000 simultaneous viewers. Twitch is owned by Amazon and is an often overlooked online media channel. Nearly 40 million Americans watch Twitch streams at least once per month. (MIT Technology Review)

c. Adobe announced a number of AI features for Photoshop, Illustrator, and Premier Pro last week. Included are a sky replacement tool and skin smoothing in Photoshop and speech-to-text in Premiere Pro. (The Next Web)

2. COVID-19 Online Resources and News

Great Trackers
Johns Hopkins Dashboard or Animations
COVID-19 Forecast Hub
Google County Level Mobility Reports
Long-Term Care COVID Tracker

COVID-19 Tech News
10 Google Search Terms Help Predict COVID-19 Hot Spot – Healthcare IT
15 Year Old MA Student Creates COVID School Database – Mass Live
Colorado Rolls out Exposure Notification Program – CBS Denver
Comments Cause MO Health Dept to Stop Posting COVID Updates – KY3
Facebook Provides New Spread Prediction Maps – Social Media Today
Opinion: We Must Treat Internet as a Utility – Government Tech
Stanford Launches COVID-19 Study with At-Home Tests – Palo Alto Online
The Internet Comes for Car Salesmen – Bloomberg
This Ace Engineer Powered Amazon Through COVID – Fortune

3. Google Antitrust Lawsuit — The Facts

On October 20, the U.S. government and eleven states filed suit in U.S. District Court in Washington, D.C. Their complaint is that Google maintains monopolies in providing internet search services and the advertising that appears on those services. All eleven states involved in the suit are represented by Republican attorneys general. A copy of the complaint is available here.

Google is due to respond in court by December 19. The company has already issued a statement calling the antitrust lawsuit “deeply flawed” and saying that it “[will] do nothing to help consumers.” Google also said that the suit will result in lower quality search alternatives, more difficulty in searching for information, and higher phone prices. The Google statement is here.

In a March 20 article about business monopolies, John Mayo and Mark Whitener wrote in The Washington Post, ” … the antitrust laws do not outlaw the possession of a monopoly” despite other sources claiming that monopolies are illegal. They also write that the way the monopoly is obtained and preserved is the issue, not market dominance.

The complaint addresses this issue by claiming that Google’s payments for exclusive and preferred advertising slots at companies like Apple are anti competitive. The government complaint also attacks Google’s Chrome browser, Android operating system, Play Store, and revenue sharing agreements.

4. Google Antitrust Lawsuit — The Government’s Side

Google was once a “scrappy startup” that became “the darling of Silicon Valley with an innovative way to search the emerging internet.” Today that company has a market value of more than $1 trillion and annual revenue of more than $160 billion. 

Google pays billions each year to companies including Apple, LG, Motorola, Samsung, AT&T, T-Mobile, Verizon, and Mozilla for preferred and exclusive search arrangements. The government says that Google and search are now synonymous and that Google behaves as Microsoft did in the 1990s by “shutting off distribution channels” and “making software undeletable.”

The government also contends that the scale of a search engine’s data is critical to its success..Increasing scale improves performance because it allows improved automated learning for algorithms to deliver more relevant results, particularly on “fresh” queries.  Advertisers also pay more to reach more people.

Whether through its own Chrome browser, through its Android operating system, or other channels, Google has positioned itself as a de facto default search standard. Google also practices vertical integration by building hardware that uses its software and accesses its service so that smaller companies can’t compete. Google is also positioning itself for future search opportunities in smart appliances and vehicles while refusing to allow its search products to be used in those services with competitors.

The government is seeking “structural relief as needed to cure any anticompetitive harm.”

5. Google Antitrust Lawsuit — The Company’s Side

The heart of Google’s defense right now boils down to this: any person using an internet connected device can use any search engine that they choose. The company says that it pays partners like Apple to be the search default on iPhones in the same way that a cereal company pays for premium end cap space in a grocery store. Microsoft and Yahoo also pay Apple for placement on iPhones.

Google also makes the point that PCs using Microsoft Windows come preloaded with the Microsoft Edge browser and that browser’s default search engine is Microsoft Bing. If you use a Windows PC and use Google search or Google Chrome, the company argues, it’s because you chose to use a better product and installed it in place of or in addition to the default.

The company also says that there are plenty of competitors directly in search such as Microsoft’s Bing, Yahoo, and DuckDuckGo. Google also makes a compelling argument that searching for information no longer occurs only on search engines. In that way, companies like Amazon and industry-specific companies like Yelp provide the answers to billions of queries that people previously used search engines for. The company says that Twitter is used for news, Instagram and Pinterest are used for recommendations, and that Americans can access thousands of similar services.

Google’s position during the Microsoft antitrust hearings a generation ago was that the company was the dominant technology provider. Today, it argues that Amazon, Facebook. Apple, and Microsoft have important internet companies along with Google, but no one company is dominant.

6. Google Antitrust Lawsuit — What We Think

Our disclaimer is that we’ve been locked in a predator-and-prey relationship with Google for nearly 15 years. We also remember search before Google. In the early 1990s, that meant relying on directory structures, clumsy interfaces, and missing data. The first wave of non-directory search websites had names like Hotbot, Lycos, and Dogpile. 

The suit against Google may have merits in its nuance although no private company has ever had the resources Google has to fight the government’s action. The complaint filed this week was reportedly limited in scope to only search instead of the company’s entire operation in order to offer a better chance of success. This is also the first significant government action against Google and BigTech. 

The Federal Trade Commission has not yet made a decision regarding any potential action against Facebook. In addition to FTC’s actions, other states including New York may join in the Google action or initiate broader complaints.

Washington Post op-ed writer Meghan McCardle offered an interesting take on search that we agree with, “Yet those of us who hark back to the old days, when you had to first type ‘www.google.com’ to perform a search, will recall that that’s exactly what people did, even if another search engine was the default. That’s how Google came to control over half of all searches … we have to balance the costs of Google’s monopoly to … well, to whom?”

Wired’s Steven Levy takes a flip but possibly accurate tack in addressing Google’s options. “Google could stop paying Apple, Mozilla, and others to make its search the default choice. According to Google, most people would switch away from a rival to reinstall its search engine anyway. Meanwhile, Google could be less onerous in demanding prime placement of its apps in Android phones.”

The DOJ’s suit will not change anything about search engines or how people use the internet. It won’t even change anything soon for us, and we think about and strategize about search every day. But it also hearkens to a coming wave of anti-tech company feelings that Axios has been calling a techlash for a long time. In many ways, we think that this techlash is the bigger story than what might happen to Google or Facebook five years from now. 

The comparison we believe is most apt is AT&T instead of Microsoft or IBM. The DOJ filed suit against AT&T in 1974. Eight years later, the government and AT&T agreed to a settlement that allowed its operations to be broken into seven “Baby Bells” that would provide local phone service and be free to work with any equipment manufacturer.

Billions of dollars traded hands over the next two decades until the Baby Bells reassembled themselves and technology rendered wired telephone service obsolete throughout most of the country. There is no telling what will happen to consumer internet companies like Google, Facebook, and Apple, but they won’t operate in 2028 like they do today.

7. Google Antitrust Lawsuit — Smartlinks

The U.S. government’s complaint (PDF)
Google’s public response to the lawsuit

  1. A Stew of Technology, Law, and Politics — (Columbia Journalism Review)
  2. Five Myths about Antitrust Law — (The Washington Post)
  3. Google Calls DOJ’s Lawsuit Deeply Flawed — (TechCrunch)
  4. Google Charged with Multiple Violations of Antitrust Law — (WaPo)
  5. Google Sued by U.S. for Monopoly Abuse — (AdAge)
  6. How the states fit into DOJ’s antitrust case — (Axios)
  7. The Anticlimax of the Google Antitrust Suit — (Wired)
  8. The Argument Google Can Make that Microsoft Couldn’t — (Quartz)
  9. The Government’s Case Against Google is Good — (Slate)
  10. Why the US Government is Suing Google — (Recode)
  11. Yes, Google Has a Monopoly. What’s Wrong With That? — (WaPo)

8. Coffee Break: McBroken

The percentage of broken McDonald’s ice cream machines nationwide has ticked up this weekend from 8.4% on Saturday to 10.74% on Sunday evening. There are some really ugly spot outages, though, including nearly 18% in always-warm Phoenix.

Rashiq Zahid is a smart 24-year-old who has worked for McKinsey and Microsoft. Lately, he has reverse-engineered McDonald’s public network and is placing an order worth $18,752 every minute to learn which McDonald’s locations have functioning ice cream machines.

And you’re worried about Google having a monopoly on search? Who knows how big McBroken will grow?

Scroll through the map to see for yourself.

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