For representative purposes.
| Photo Credit: REUTERS
The story so far: Google, the leading American technology company best known for its popular search engine, has lost a Court case filed against it by the U.S. Department of Justice in 2020 accusing the company of being an illegal monopoly. A U.S. District judge ruled earlier this month that the company indeed misused its dominant position in the market to block competitors from freely offering their services in the market.
Why was Google accused?
Google comes set up as the default search engine in most new phones, laptops and other electronic devices in the market. The company even pays billions of dollars each year, as a share from its advertisement revenues, to device manufacturers such as Apple, Samsung etc. to be featured as the default search engine in their devices. In fact, Google paid as much as $20 billion in 2022 to Apple to be featured as the default search on Safari, Apple’s default browser. Google has also paid web browser providers such as Mozilla to be featured as the default search engine in their browsers. This practice is advantageous to Google and unfair towards other search engine providers as users could end up sticking to the default search engine in their new devices rather than make the effort required to try out better search engines.
Is Google really a monopoly?
The sheer size of Google, which is the leading search engine in the world with a market share of over 90%, has led many to argue that the company is a monopoly that abuses its dominant market power. Such a dominant position, it is believed, allows Google to dictate terms when it deals with people who want to do business with it or even use its services. Some also note that a big technology company like Google would have far more influence on regulators and the law in general than smaller companies.
Also read | Google ‘monopoly’ antitrust case: A timeline
Others, including interestingly the judge who ruled against Google in this case, however, have argued that a large market share alone does not make a company a harmful or illegal monopoly. They note that even though it may be very hard to compete against a behemoth like Google due to certain advantages the company naturally enjoys as the market leader, the fact remains that there are still no legal barriers against entry into the market of competitors who want to compete against Google by offering a better product. Further, there is also no guarantee that Google’s absolute dominance of the search engine market will last forever. Microsoft’s significant dominance of the search engine market came to an end with the advent of Google. The same thing could happen to Google if a competitor offers a better product, they argue. It is also believed that the threat of entry of competitors with better products will keep Google on its toes and limit the extent to which the company can abuse its market power.
Supporters of Google also note that there is nothing wrong with Google sharing ad revenues with device manufacturers such as Apple and Samsung. In their view, the practice of paying to be featured as the default search engine is no different from a company buying key real estate space to gain better visibility. Further, Google’s competitors are also free to pay for such privileges. Finally, Google itself has argued that its position as the market leader is not simply due to its ability to pay to be the default search engine but rather due to the superiority of its service.
What lies ahead?
Court proceedings on action against Google are expected to begin next month. The Court could order Google to stop sharing ad revenues with companies like Apple to be featured as the default search engine on their devices. It may also mandate that users should be given the choice to pick the default search engine in their browsers. Another possible action by the Court could be to force Google to share information that it holds about user searches, which is believed to be a major reason for Google’s superior performance, helping competitors catch up. And while the chances are remote, the Court may also order that Google be broken up into multiple companies so that there is no single dominant player in the market. Finally, Google may decide to appeal against the Court’s order.
