Google may soon be forced to share its algorithms. Photo / Getty Images
For all the tech industry’s fondness for “disruption”, game-changing new innovations that can turn markets on their heads, the largest tech companies have spent the past 20 years trying to avoid being disrupted themselves.
Google’s efforts to remain the world’s No.1 search engine involved paying US$26.3 billion (NZ$43.83b) in 2021 to device and internet browser makers like Apple, Samsung and Mozilla to ensure that its search engine is the default option for new users.
The lucrative payments have served two useful purposes: ensuring the likes of Apple never try to build a rival search engine and increasing the likelihood that billions of people never even come across Google rivals like Bing and Yahoo!.
On August 5, US District Court judge Amit Mehta found Google had maintained an illegal monopoly in the internet-search market, violating the Sherman Antitrust Act of 1890, which was used to break up America’s big monopolies in the oil industry and telecommunications.
The ruling came as a pleasant surprise to me after years of watching Big Tech antitrust cases crawl through the US courts. It is the first major ruling against a tech company since 2000, when Microsoft was found by a federal court to have used anti-competitive means to monopolise the web browser market.
A small band of companies, including Apple, Amazon, Google, Microsoft and Meta, have become the most valuable and powerful in the world with the 19th-century antitrust legislation appearing hopelessly unable to deal with their sprawling digital empires. But the Google ruling proves otherwise.
For years, US regulators and politicians weren’t much interested in meddling with Big Tech. That started to change during the presidency of Donald Trump, when antitrust lawsuits were filed against these companies for monopolistic practices. Everyone knew all along that a company that consistently controls 90% of a market for a product, be it oil, search queries or app downloads, is a monopoly.
Finally, the frustration of users facing limited choices, higher prices and Big Tech’s hamstrung rivals, spurred US regulators to act, just as they did in 1911 to break up Standard Oil.
In the 1870s, American industrialist John D Rockefeller had begun to buy out as many oil refineries as possible to ensure his company remained the largest player in the oil industry. By the late 1890s, Standard Oil controlled 90% of American refineries.
What drove his buying spree was the fear of disruption. Competition meant volatility in oil prices as rivals undercut Standard’s prices. Rockefeller wanted a stable, profitable market for oil, and the best way to achieve that was to control the lion’s share of oil supply in America himself.
Google is really no different to Standard Oil. Its search engine is free, but by maintaining a 90% share of the search market, it has been able to charge advertisers a premium to feature in the paid text ads displayed at the top of search results. Search ads account for most of Google’s US$237b in advertising revenue.
A US court will now decide how to dismantle Google’s search monopoly, but with the company vowing to appeal the ruling, it could take years to play out.
Requiring Google to stop making those multibillion dollar payments to keep its search engine the default option probably won’t work, given the brand recognition it has.
Something more invasive, like forcing Google to share the precious algorithms that made it so dominant in the first place, may soon be on the table.
Don’t expect search engines to change overnight, but with lawsuits against Meta, Apple and Amazon progressing, the antitrust momentum is building and the impacts will eventually reverberate around the world.
Tyler Fields is your internet guru, delving into the latest trends, developments, and issues shaping the online world. With a focus on internet culture, cybersecurity, and emerging technologies, Tyler keeps readers informed about the dynamic landscape of the internet and its impact on our digital lives.
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