Google solution is distribution, tech and time

Slow grind. Unwinding a $2 trillion monopoly is no easy task. U.S. judge Amit Mehta decided earlier this month that Alphabet-owned Google illegally fortified its spot as the number-one search engine. The problem is the firm’s utter market domination, built on self-reinforcing troves of data and access to users.Google handles so many queries - over 90% in the United States - that the resulting data can minutely fine-tune its answers in a way also-ran competitors can’t. As go users, so goes advertising: marketers want a big audience, and Google has it. An executive at travel site Booking.com said they would “gladly spend more with” Microsoft’s rival search engine, Bing - but “the demand is clearly not there.”From this flows negative effects like Google’s ability to hike prices for advertisers. Thing is, Alphabet enforces this big-get-bigger dynamic by signing exclusive agreements, like a $20 billion deal for the default search spot on Apple’s iPhone. The court deemed this illegal, since it shuts out competitors.A second trial will determine what to do about it. Antitrust enforcers are weighing a push to separate out the company’s text advertising business, Bloomberg reported. But this goes after the symptom, not the disease, which is that no competitor can garner enough traffic.Google’s ability to funnel users from Android, which powers 2.5 billion mobile devices, and Chrome, the most popular web browser, make them obvious divestiture targets. Yet history suggests they would struggle: Independent operating systems like once-dominant Symbian, or browsers like Firefox, struggled to compete against tech giants’ bundled services. Mozilla, Firefox’s developer, earned 80% of its operating budget in 2021 from an agreement with Google.A durable solution requires three factors: distribution, technology, and time. First, stop Google from blocking rivals’ access to users with exclusive distribution agreements. Of course, users might stick with the incumbent out of habit - in Europe, where Android prompts users to select defaults, Google’s market share has not budged.That’s where technology comes in. Mehta points out that, despite breakthroughs like ChatGPT, artificial intelligence is not yet displacing search. But if Google can’t trap users, AI can begin snagging share as it improves – as OpenAI is doing with a deal to integrate with Apple’s voice assistant.What that takes, ultimately, is time. Google will appeal, and resolution may take years. Technology moves faster than courts, but IBM and Microsoft were distracted by past antitrust trials, missing out on new markets like smartphones. If Google is at least restrained from sewing up these novel areas, rivals will have a fighting chance.Context NewsA U.S. judge ruled on Aug. 5 that Alphabet’s Google had violated antitrust law through exclusive agreements which made Google the default search engine for users of browsers and handsets. Judge Amit Mehta said the company had monopoly power in two markets, general search services and general search text advertising. A second trial will determine potential remedies, possibly including breaking up the $2 trillion company. Alphabet has said it will appeal.

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Google solution is distribution, tech and time

Google had violated antitrust law through exclusive agreements which made Google the default search engine for users of browsers and handsets.

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