US judge rules Google is a monopoly, search deals with Apple and Mozilla in peril
That sure is a big news drop for a random Tuesday. A federal judge ruled that Google violated US antitrust law by maintaining a monopoly in the search and advertising markets. “After having carefully considered and weighed the witness testimony and evidence, the court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly,” according to the court’s ruling, which you can read in full at the bottom of this story. “It has violated Section 2 of the Sherman Act.” ↫ Lauren Feiner at The Verge Among many other things, the judge mentions Google’s own admissions that the company can do pretty much whatever it wants with Google Search and its advertisement business, without having to worry about users opting to go elsewhere or ad buyers leaving the Google platform. Studies from inside Google itself made it very clear that Google could systematically make Search worse without it affecting user and/or usage numbers in any way, shape, or form – because users have nowhere else to realistically go. While the ability to raise prices at will without fear of losing customers is a sure sign of being a monopoly, so is being able to make a product worse without fear of losing customers, the judge argues. Google plans to appeal, obviously, and this ruling has nothing yet to say about potential remedies, so what, exactly, is going to change is as of yet unknown. Potential remedies will be handled during the next phase of the proceedings, with the wildest and most aggressive remedy being a potential break-up of Google, Alphabet, or whatever it’s called today. My sights are definitely set on a break-up – hopefully followed by Apple, Amazon, Facebook, and Microsoft – to create some much-needed breathing room into the technology market, and pave the way for a massive number of newcomers to compete on much fairer terms. Of note is that the judge also put yet another nail in the coffin of Google’s various exclusivity deals, most notable with Apple and, for our interests, with Mozilla. Google pays Apple well over 20 billion dollars a year to be the default search engine on iOS, and it pays about 80% of Mozilla’s revenue to be the default search engine in Firefox. According to the judge, such deals are anticompetitive. Mehta rejected Google’s arguments that its contracts with phone and browser makers like Apple were not exclusionary and therefore shouldn’t qualify it for liability under the Sherman Act. “The prospect of losing tens of billions in guaranteed revenue from Google — which presently come at little to no cost to Apple — disincentivizes Apple from launching its own search engine when it otherwise has built the capacity to do so,” he wrote. ↫ Lauren Feiner at The Verge If the end of these deals become part of the package of remedies, it will be a massive financial blow to Apple – 20 billion dollars a year is about 15% of Apple’s total annual operating profits, and I’m also pretty sure those Google billions are counted as part of Tim Cook’s much-vaunted services revenue, so losing it would definitely impact Apple directly where it hurts. Sure, it’s not like it’ll make Apple any less of a dangerous behemoth, but it will definitely have some explaining to do to investors. Much more worrisome, however, is the similar deal Google has with Mozilla. About 80% of Mozilla’s total revenue comes from a search deal with Google, and if that deal were to be dissolved, the consequences for Mozilla, and thus for Firefox, would be absolutely immense. This is something I’ve been warning about for years now, and the end of this deal would be yet another worry that I’ve voiced repeatedly becoming reality, right after Mozilla becoming an advertising company and making Firefox worse in the name of quick profits. One by one, every single concern I’ve voiced about the future of Firefox is becoming reality. Canonical, Fedora, KDE, GNOME, and many other stakeholders – ignore these developments at your own peril.
