The Five Most Key Takeaways from This Blog
- A federal judge has ruled that Google is a “monopolist” in online search. Many analysts consider this ruling to be the most significant for the tech world since Microsoft’s anticompetitive wrist-slap in the 1990’s.
- The smoking gun, if there is one, would be the extremely lucrative contracts that Google signed with other tech companies (Apple is one of them) to make Google search the default on the companies’ devices.
- Google’s argument, which failed in the eyes of the court, is that Google’s search engine is simply superior. But as the counterargument went, if the search engine is so superior then why did the company feel the need to offer multibillion-dollar incentives to make its search engine the default on other companies’ devices?
- This ruling may lead to the wider use of different search engines by users. However, those other search engines will still have to compete with the Google brand’s dominance as “the” search engine in the public consciousness.
- Since there are economic downsides to loosening its dominance in search, Google now runs a risk of falling behind in the A.I. race as well.
The Impact on Search
The fourth bullet point in the Key Takeaways section above makes a salient point (and not the list-itemizing kind). Since the Google brand is so dominant and well-known in search, will loosening its grip on defaulting devices to Google for search be big enough to knock it from the throne?
That depends on whether users are really that brand loyal, or just go along with whatever the default is. Probably best to bet on the latter–how many iPhone users even know about their option to go into their settings and change the default search engine for the browser?
Even if Google remains the biggest search engine, it may suffer a significant downturn in users. If less searchers are using the product, that not only means less interest from advertisers, but less available data that can be used to make the Google search experience more effective–that, in turn, leads to even less interest from advertisers.
For business owners, this could mean that it will pay off to pay attention to more than just Google search for attracting users.
Read on to learn about the precedence for this case in Microsoft’s historic antitrust ruling in 1998, and what parallels there are between the two cases.
History Lesson, pt. 2
We saw history repeat itself with Google’s recent ruling.
The first bullet point of the Key Takeaways section above makes mention of a certain ruling from the nineteen-hundred and nineties: Microsoft’s anti-competitive ruling from a federal judge.
According to the feds who brought and won that case against Microsoft, which lost its appeal after the unfavorable ruling, Microsoft made it pretty darned difficult for consumers to break from Internet Explorer (remember that browser? it had the logo that was a lower-case “e” with a halo-like ring almost like a shooting star going around the world, the lower-e earth?) on Microsoft operating systems.
The result, according to the Department of Justice, was that Microsoft’s contracts with original equipment manufacturers (OEMs; in this context, the manufacturers of the computers), internet access providers, as well as online content creators, led to the downfall of Netscape Navigator.
To the contemporary reader, Netscape Navigator may sound like some obscure fossil of an Internet browser, but in its heyday it was actually quite popular. That is, until Microsoft engaged in business practices that many argued unfairly disincentivized using anything but Microsoft’s Internet Explorer browser on the Microsoft O.S. (the most popular operating system by a wide margin, at the time).
To hand down this ruling, the government dusted off the Sherman Act, a relic of the 1890’s that was originally meant to challenge the monopolistic practices of Standard oil. Certain analysts believe that this old Act is indeed a relic and is unfit to address the high-tech world’s free-market practices.
For some tech analysts, that antitrust ruling on Microsoft prevented the company from becoming the dominant force in Internet search, keeping the free market free enough for a little company called Google to come along.
Then, Google became the dominant tech company in search. Will this tech company fall behind in search or other areas?
Google’s A.I. Efforts May See a Hit
So let us consider a comparison between Google and Microsoft’s respective cases.
Microsoft was not a company that was built on Internet browsers, but rather operating systems and personal computers.
So, when the antitrust ruling challenged Microsoft’s dominance in Internet browsers, what really went down is that Microsoft could not use its existing power to seize a growing part of the tech world.
Google, on the other hand, is dealing with an antitrust ruling that directly affects its main source of income and dominance in tech: search, which pulls in money from advertising.
With less money from advertising, that means that Google will have less capital to expend on its A.I. efforts. A.I. is shaping up to be this decade’s version of the Internet, i.e., a world-changing technology.
Just as Microsoft failed to retain a lead in the Internet race on competing companies after its antitrust ruling, so Google may lag behind in the A.I. race and fail to seize this growing part of the tech world.
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