Lamseen – In a court ruling this week, Google has been found guilty of monopolizing the internet through its search engine. Which is set as the default on browsers and smartphones worldwide. This antitrust case against Google echoes a similar situation faced by Microsoft in 1999.
In 1999, a federal judge ruled that Microsoft had illegally used its dominance in the Windows operating system market to undermine its rival browser, Netscape Navigator. The case was resolve in 2001, compelling the software giant to cease harming competitors through its PC agreements.
The 2020 lawsuit against Google by the government alleges that the tech giant constructed a significant ‘wall’ to block competition in the online search industry. Aiming to maintain its dominance as the internet’s leader.
“The outcome is not dissimilar to the court’s conclusion in the Microsoft browser market case.” wrote Judge Amit Mehta in a 300-page opinion on the Google case. As reported by CNBC International on Thursday (August 8, 2024).
Mehta highlighted that the similarities between Google’s and Microsoft’s monopoly cases lie in the “power of default services.”
For Google, the company has made extensive efforts to retain its position as the default search engine on Apple and Samsung devices. Spending billions of dollars annually on these agreements.
“Users can access competitors’ search engines through non-default options. But this is rarely done,” Mehta noted.
A separate trial is schedule for September 4. Which will address Google’s proposed remedies and the penalties the company may face.
At that stage, Google may appeal, a process that experts suggest could take about two years. Microsoft appealed its initial decision before eventually settling with the Department of Justice (DOJ).
“The government has implicitly and explicitly indicated that this case is modeled after the Microsoft case,” said Sam Weinstein. A law professor at Cardozo Law School and former DOJ antitrust professor.
In the Microsoft case, Judge Thomas Penfield Jackson found that Microsoft had coerced PC makers into bundling the Internet Explorer browser with Windows. Threatening to penalize them for installing or promoting Navigator.
The judge proposed that Microsoft divest its operating system or application businesses, both of which were market leaders.
Following Microsoft’s successful appeal, a U.S. court barred the software company from retaliating against device makers who shipped PCs with multiple operating systems.
Microsoft was require to provide software and hardware companies with programming interfaces. Equivalent to those used by Microsoft’s middleware to interact with Windows.
Nicholas Economides, an economics professor at NYU’s Stern School of Business, sees clear similarities in the Google case.
“My initial reaction is that Google appears to be losing overall,” Economides stated.
The ruling could compel Google to make it easier for users to access other search engines.
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If Google can no longer be the default on browsers and smartphones, it risks losing its primary revenue source. In the second quarter of 2024, Google Search and related services contributed 57% of Alphabet’s total revenue.
In its appeal, Google is likely to present new evidence suggesting that artificial intelligence (AI) now plays a more significant role in market competition. A dynamic not considered when the DOJ first filed its lawsuit.
However, this perception is something Google has downplayed since its defeat by OpenAI’s ChatGPT.
Neli Chilson, former chief technologist for the FTC and now head of AI policy at the Abundance Institute. said that increased competition from AI could help Google win its case.
“A rigid market definition means the court decided that Google unlawfully maintained a monopoly in general search,” Chilson explained.
Yet, “vertical search providers” like Amazon and AI services like ChatGPT “threaten to overturn Google’s entire general search advertising business model,” she added.
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