Since Google’s $175 billion search business was declared a “monopolist” by a US court in August, the potential consequences have been widely debated and pose major threats to its profits. These range from breaking up Google’s search business from its other divisions, including selling off the Chrome browser and Android operating system.
Both of those are necessary if the US government is going to follow through with its new-found muscle to tackle the digital behemoths of Silicon Valley.
This is the first antitrust and most significant trial in the past 20 years and the first of several major legal efforts to break up the unconstrained power that Google, Facebook, Amazon and Apple have built up over the years. After a 10-week trial that began last October, United States District Judge Amit Mehta found that “Google is a monopolist, and it has acted as one to maintain its monopoly”.
This was a common cause for concern to any rational person, but the US government has now proved it in a court of law. “The trial evidence firmly established that Google’s monopoly power, maintained by the exclusive distribution agreements, has enabled Google to increase text ads prices without any meaningful competitive constraint,” wrote the aptly named Judge Mehta.
But Google’s search business is facing a much more existential threat from artificial intelligence (AI). It makes its money from our current habit of typing a string of words into a search field. From that, Google spits up a set of links (underlined in blue) that are most appropriate to that search.
Except the era of that being an organic – and more truthful – result is long gone. Google has been repeatedly shown to manipulate those results, charge for text links to be higher up, and always prefer its own offerings in those search results.
Forget that long-eclipsed era of trying to appear “above the fold” as it were, or even on the first page of Google results, the results from Google searches are heavily manipulated now. Meanwhile, they aren’t very good – and the quality of Google search has been noticeably declining over the years.
Generative AI and the thousands of chatbots it has launched since ChatGPT4 took the world by storm in November 2022, do what Google search doesn’t do: it gives you an answer, not a bunch of links. This is much more useful.
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Named generative because it generates something, Gen AI (for short) presents an existential threat to Google’s eye-wateringly profitable $175 billion annual search business.
As respected tech commentator Om Malik succinctly put it, “AI-based competitors pose a different, more existential threat to Google because they offer what most users have wanted all along: an answer machine, not a search engine.”
In the almost two years since OpenAI launched ChatGPT, we are using this kind of service more and more, as evidenced by the innumerable use cases emerging. Right now, what Gen AI does well are summaries… of emails, documents, and search results. That is not a good thing for Google, which promised to search the web’s information for us but has long since given over to extracting profit for its own purposes – as Judge Mehta concluded.
“Unconstrained price increases have fuelled Google’s dramatic revenue growth and allowed it to maintain high and remarkably stable operating profits,” he wrote.
As Rebecca Haw Allensworth, a professor at Vanderbilt University’s law school who studies antitrust, told the New York Times: “This is the most important antitrust case of the century, and it’s the first of a big slate of cases to come down against Big Tech”.
She added: “It’s a huge turning point”.
It certainly is, but so is the new epoch of generative AI and increased regulatory scrutiny. These are the end of Google’s monopoly and its runaway profits.
- This column was written for Business Day, for whom Toby Shapshak is a columnist.
