We now know that a court has ruled that Google used its vast wealth and data moat to pay off rivals and grow uncontested to become one of the largest companies in history.
But that’s just chapter one of the journey that led Google to breach Section 2 of The Sherman Act, on the way to banking a $2 trillion illegally gained monopoly.
Now the real challenge begins.
Judge Amit Mehta must thread a needle that retains the wonders of the web we have, while creating new opportunities for innovators to build the web of the future.
That means sustaining the Google that four billion people love and rely on every day as the gateway to the world wide web, while spawning yet-to-be-imagined ideas.
I joined fellow entrepreneur, and host of Disrupt Radio’s Moolah show
, to talk through what this means now, and what it will mean for the future of digital and AI.In a few weeks, Act Two of Google’s antitrust case over monopolising search will begin.
It will decide the remedies, aka the changes and punishments Google will be forced to undergo.
It could go any number of ways, and the judge and the US Department of Justice, have been at pains in recent days to avoid being drawn into speculation.
Meanwhile, Google has made it clear it will appeal the judgement, which is hardly a surprise given it banks $944 million a day. On those terms, any delay is good business.
So, given what we have learned from the giant judgement, what are the options on the table, and what would they mean?
1. Goodbye to Google’s default deals
The court ruled that Google’s payments of $26.3 billion to rival companies including Apple, Samsung, and others, to lock in the search market, were unlawful.
It’s almost a given then that exclusive default deals like these will be outlawed in future.
That will lead to phones, computers and other devices, offering consumers a choice to pick their search engine and browser, rather than it being baked in.
This will give consumers a greater say in who gets their data and ensure that rival search and browser brands with less money, but better products, can compete.
This is what Europe decided to enact under its own competition laws.
However, Google is a verb for search. That means in many people’s minds, it IS search. It’s inevitable then that most people given a choice will pick Google anyway.
Then there’s Apple. It was given a $20 billion annual incentive by Google to not bother building its own search engine.
Apple was the most obvious challenger in search because of its deep pockets and data trove on three billion Apple users worldwide.
The money removed the hunger to compete. Google’s $20 billion was all cash, with no cost, meaning it was all profit for Apple.
Running a search engine, the court heard, costs upwards of $8 billion a year. Building Bing cost Microsoft $100 billion.
It might be that Apple is now forced to build its own search engine, partner with someone else, or just offer all options and lose its cash cow.
The court heard that it would cost Apple $20 billion in CAPEX, and another $11 billion in annual OPEX to build a meaningful competitor.
Any which way, big changes are coming.
2. Sharing Google’s data with the world
The court heard that Google keeps 13 months of data on all of us, and its scale is so great that it would take its main rival Microsoft 17 years to collect the same volume.
That data groomed Google search to be the best, with a 90 per cent share on global searches, while Microsoft’s $100 billion bet on Bing barely reached double figures.
Regulators argued during the case that sharing Google’s data would spark innovation, and break Google’s stranglehold.
Giving everyone the same source data would foster the survival of the fittest, not the fattest.
The judge has the power to require Google to share the data it’s collected on half the world’s population over 25 years with rivals, which would have the effect of levelling the playing field.
3. A splinternet, and masses of niches
If Google’s data was released and made open source, we would see an explosion of new innovation.
First among them, would be specialist browsers and search engines targeting niches.
It would become obvious for Disney to build a splinternet that’s safe for kids.
Publishers would coalesce in a premium web behind a subscription paywall.
There would be more for gardening, marathon running, and a galaxy of interests.
This is the arrival of the so-called splinternet, building on a prediction that I made in my first newsletter more than a year ago now.
…and which has only grown in prominence since.
The world wide web is Google, and Google is the world wide web. That was Microsoft CEO Satya Nadella’s testimony in court. He’s right. They’re inseparable today.
Search is the doorway to the entire web, and Google is the doorman that charges what it wants for entry.
4. Getting humanity to trusted AI faster
The next explosion of innovation would be in AI. Fuelled by Google’s global knowledge graph, AI innovation would rapidly accelerate.
Instead of sucking up the www, and sifting through the churnalism to find premium content, AI start-ups and giants would now gain access to pristine training data.
The welcome side-effect would be a valuable new market for AI training, with a model that becomes the de facto replacement for copyright. See my Airgap prediction.
It’s this kind of structural shift towards new competition and markets that the DoJ is seeking.
It’s 30 years since the last major tech antitrust case, which went after Microsoft.
Fighting that battle led Microsoft to miss the mobile era, and not to compete in search.
That opened the window for Google to emerge, and for Apple to innovate the iPhone.
These are undoubtedly huge advances in technology, human experience, and have poured trillions into the global economy.
Antitrust didn’t kill Microsoft either. The company thrived and remains one of the world’s most valuable companies. Remember this?
Regulators are seeking the same outcome with Google.
5. Spin off YouTube, Android and/or Chrome
Google recognised that mobile would become a dominant platform to access the web in the future, and video would grow to be a $50 billion annual ad market.
So, it bought a start-up called Android and scaled it to be the operating system of 70 per cent of the world’s phones. It then paid $20 billion to Apple for the rest.
It bought YouTube and used its search volumes to make it 2.5x as valuable as Disney, and worth more than Disney and Comcast combined.
It then built a browser, Chrome, and pre-loaded it with Google search and data harvesting tools to fuel its growing ad business. Chrome has a 65 per cent global share.
A remedy would be to force Google to sell, or spin off, YouTube, Android, and/or Chrome, so new mobiles and browser ideas can have a chance to flourish.
This would also end a process called intermingling, where Google merges data from its multiple platforms to build an insurmountable moat of data for advertising.
Friend of Future Media and Digital Content Next CEO
told The Verge: “The underlying data that interlocks all that is the critical asset that needs to be constrained.”6. Google might have to go no ads
This feels inconceivable to many, but believe it or not, there was a world for marketing before Google. I think this guy now gets this…
Back at the inception of Google, founders Larry Page and Sergey Brin were firmly against ads.
They told their Stanford lecturers that any ad-funded search engine “would become inherently biased towards the advertisers and away from the needs of the consumers”.
But as pressure for revenue intensified, they relented.
The BBC podcast Good Bad Billionaire unearthed this fantastic quote from soon-to-be-billionaire Brin in 2003 where he explains the compromise, and the ads they’d take.
But over time, Google allowed advertisers to pay to fiddle the system to hike their results, and that became the engine room of the $2 trillion monopoly now ruled unjust.
One remedy under consideration then is to remove the ability for Google to sell its own ads on search and open it up to competition. Or have no ads at all on search.
The running costs of Google search were $8.4 billion-a-year in 2020, according to the court papers, and the search ad business added a further $11.1 billion to OPEX.
The costs were covered (and then some) by Google’s $162 billion in search ad revenue.
If others could sell into the inventory, and use Google data to segment, and innovate around ads, an entirely new market would open up.
If YouTube was spun off, it would add even more competition.
This still has some distance to run. Hope you enjoy the radio segment.
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