Can Google Search Be Broken? Microsoft Hopes DOJ Thinks So.

On August 5th, Judge Amit Mehta delivered the verdict that Google violated antitrust laws spending billions of dollars to create a monopoly and become the world’s default search engine on devices and browsers like Samsung, Apple and Mozilla’s Firefox. By doing so, Google denied its competitors the opportunity to build the scale required to compete with its search engine. 

That’s an historical verdict that comes after years of increased scrutiny from the DOJ and EU regulators towards big tech companies for allegedly monopolistic practices and it has the potential to influence other government antitrust lawsuits against Google, Amazon, Apple, Microsoft and Meta. 

Let’s start with stating what I think should be obvious to everyone. Users choose to search on Google because they find it way better than other search engines and the agreements with Apple, Samsung and Mozilla only prove that those companies surrendered to Google a long time ago. Having said that one must wonder: why does Google need to pay tens of billions of dollars to maintain its default status, if it would be the top choice anyway? 

1. Because if Google didn’t, Microsoft would. Microsoft would be very happy to strike the same deals with Samsung, Apple, Mozilla and they do have the financial resources to do that. The issue is that unlike Google, Microsoft doesn’t have the advertising muscle to make a $20bn a year investment ROI positive. 
2. Because Google can afford it. I know, that’s not an argument that resonates with antitrust regulators but it is the equivalent of Facebook buying every single social media product that comes to the scene (e.g. Instagram and Whatsapp) or Microsoft investing $10bn in OpenAI. This is just how big tech operates.
3. Because on the receiving end, Apple, Samsung and Mozilla love those deals. Think about how sweet the deal is for Apple. Users are happy because they get the best search engine on their favorite phone and at the same time, Apple gets a $20bn-$25bn check a year from Google to do absolutely nothing Vs spending billions of dollars trying to reinvent the wheel in a space they know nothing about. 

The argument I am making is that what is happening with Google search is just another example of US tech giants investing ludicrous amounts of money to secure their dominant position in their respective domain. Think about this for a second, outside the US there is not a single company that comes close to competing with Amazon, Google, Netflix, Disney, Apple, Microsoft, Meta, Tesla (yes, Tesla is a tech company).

So as non-Americans, the question we need to ask ourselves is broader than search and it has more to do with western politics than business. What role do we want to play in the future of technology?

Besides the US and China, there is not a single country (let alone the European Union) that is acting collectively to nurture a decent tech ecosystem that would have any chance to compete with American corporations. In my mind, this is the real challenge we need to face and I am sorry to say this but it is a challenge that cannot be solved by some regulatory authority. 

This observation is important to understand what the ruling against Google is really about. What is really at stake here is not whether all companies in the world will have equal opportunities to compete with Google Search because that’s simply not possible. We are discussing whether the DOJ will allow another US giant, specifically Microsoft, to regain competitive hope in the search business, something they failed at doing for the longest time. The most we can get from the verdict is the formation of a duopoly Microsoft/Google vs a monopoly. 

I am not discounting the importance of Google spending billions to secure their position as default search engine. It is an issue as much as it is an issue when any other tech giants spend billions of dollars to secure theirs. If we take a long term perspective, in the case of Google search, being the default search engine matters for two reasons: it raises even further the entry barriers to search making it virtually impossible for both incumbent and newcomers to gain momentum and, it opens up access to an enormous volume of queries that help Google get an extra competitive advantage in training its artificial intelligence models better and faster than anyone else. At this particular moment in time, the DOJ decision is timely because tech giants are fighting the battle that matters the most: search dominance powered by Artificial Intelligence. This means that the decision has the potential to influence the future of technology for the years to come. So what’s the decision going to be?

1. The DOJ breaks up Google. One option is that the DOJ splits up the giant that’s been ruling 90%+ of the market since 2009, forcing Google to say goodbye to Chrome and Android OS. But let’s be real, a decision like that would be unprecedented and would set a bar for government intervention into corporate affairs that America has ever seen before (and I think will never see). So my opinion is that the chances that the DOJ decides to break up Google are close to zero. 
2. The DOJ will make Google get rid of its exclusive search agreements (plus the usual fine that doesn’t move any needle). From an antitrust perspective, the decision that makes the most sense is to ensure that on a theoretical level, all companies share equal opportunities to succeed. Ruling for the end of exclusive agreements would help everyone saving face without fixing the issue. It would be the victory of form over substance, with the advantage that it can still be perceived as a political win. That’s precisely why it will happen. 

Now, I don’t like to waste people's time and even less so, my own time. So I’ll assume that the DOJ will opt for the end of exclusive search agreements as they did in 2000, when they accused Microsoft of abusing its Windows monopoly and ordered the company to be split up. The breakup was later overturned but the core of the ruling remained. Microsoft was banned from forcing restrictive contracts on its partners and had to share some of its technology with others, preventing it from completely dominating the internet.

Seems like history is going to repeat here. From a big tech perspective, the end of exclusive agreements in search represents a lose-lose scenario for all companies involved in those deals (Google, Apple, Samsung, Mozilla) and a significant win for one company only: Microsoft. Google’s market share in search is approximately 90%, which generated revenues for $162bn in 2023. Microsoft Bing, with a 6% market share and “only” $12.2bn in revenues will definitely try to scoop up a default search agreement with the likes of Apple and Samsung and might get it at a much better price.

Gaining a few extra points of market share is not going to solve Microsoft problems with search, but will definitely help them progress with their AI goals and make the battle with Google on generative AI a little more exciting. 

Something I can tell you with absolute certainty is that the outcome of the Google case, along with any remedies that Judge Mehta might impose, will have a significant influence on other antitrust cases. U.S. regulators are also targeting Google on their ads business, Apple, Amazon, and Meta, accusing them of breaking antitrust laws by favoring their own products on their platforms and swallowing up smaller competitors. So the battle of the giants has just begun, we can only hope that it doesn't end up being a simple reshuffle of power among the same companies: "Everything must change for everything to remain the same”.

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