Google is paying billions of dollars to make its search engine the default search engine in browsers and smartphones. In doing so, Google is building a monopoly position that increases its sales and at the same time makes it more difficult for potential competitors to enter the search market. This position is being defended by the American government in the antitrust litigation that began yesterday and promises to be the largest in the technology industry in decades.
The hearing in Washington District Court will last ten weeks; On one side are representatives of the US Department of Justice and a coalition of attorneys general, and on the other side are Google. According to the indictment, Google maintains its share of the web search market by creating high barriers to entry and a feedback system. Google counters that the company’s success depends entirely on consumer choice, which is why phone makers make its search service standard as part of revenue-sharing agreements.
In their opening statements, the parties set out what positions they would take during the trial. The judge gave Justice Department officials about four weeks to make their case; then it will be carried out by a coalition of attorneys general led by the Colorado Attorney General; After that, Google’s position will be heard.
The Justice Department spokesman cited a number of internal documents from Google chief economist Hal Varian, including a 2003 memo titled “Thoughts on Google vs. Microsoft,” in which he specifically mentioned barriers to entry. However, he stressed in court that the best barrier to entry is a quality product. According to the Justice Department, Google owns 89% of the general search engine market – the company’s service is used by consumers when they “enter the Internet,” making it different from specialized search engines. And there are simply no alternatives to general search services.
Google maintains its dominant position through a closed monopoly system – it strengthens its position in the market and makes it more difficult for competitors to enter the market. The company pays to install its system as a standard option, which means it receives more searches – as the number increases, the company collects data, improving the quality of searches and making more money. And that gives Google even more resources to pay for its status as the default search engine. According to the Justice Department, the company recognizes the value of this option and is paying $10 billion annually for it. Additionally, Google has taken steps to limit Apple’s ability to develop competing products, which Apple has the resources to do.
Another lever of pressure on Google’s partner is the App Store Play Store, which manufacturers of Android smartphones consider necessary. However, the only way to access it is to enter into an exclusive revenue sharing agreement. The prosecutor’s office also said that Google had taken steps to restrict Microsoft in the online advertising market, recalling that the search giant was hiding evidence of its illegal activities, in particular by regularly deleting the history of correspondence in the company’s internal messenger, which was confirmed by became a court decision.
Google spokesman John Schmidtlein said the popularity of the company’s search service is due to continuous improvement of the product rather than attempts to hurt competitors. In his opinion, a comparison of the process with the Microsoft case in the 1990s is untenable: Microsoft forced users to pre-install its browser with Windows, and Google is fighting for the search service’s status as the default option. Microsoft has been trying to strengthen its position in search for decades, but has failed to invest or innovate in it. In the online advertising market, Google is already testing a universal ad selection tool that is compatible with the Microsoft platform. And the best indicator of advertising effectiveness is the actions of advertisers – they are motivated by the return on their investments and will definitely leave an unprofitable platform.
Setting Google as the default search in browsers and mobile devices primarily benefits developers and manufacturers themselves. Mozilla gave up Google in 2014 in favor of Yahoo! but three years later broke the five-year agreement and returned to Google. Apple also said that having Google as the default search on its devices provides a “better experience” for owners. And sharing Google’s revenue with Android smartphone manufacturers helps them improve the quality of their products and thus strengthen their position in competition with Apple, a Google representative emphasized.