Microsoft CEO Satya Nadella testified in a US federal court on Monday as part of the government’s antitrust trial against Google, alleging that the search giant’s market share and dominant position meant that it was difficult for even Microsoft to compete on the internet. Nadella gave a three-and-a-half hour testimony in a federal court in Washington as he laid out how Microsoft could not overcome Google’s use of multibillion-dollar deals to become the default search engine on smartphones and web browsers, reported the New York Times. He said the internet is really the “Google web” and that Google could also use its advantage to build tools that could dominate the emerging artificial intelligence industry. The Microsoft chief added that the search giant’s dominance means that publishers and advertisers shape their content to Google’s requirements, according to CNBC. This can make it harder for competitors like Microsoft’s Bing and others to make any significant impact on the market. Google Antitrust lawsuit The US Department of Justice and a coalition of state attorneys questioned Nadella as they are suing Google for allegedly violating antitrust laws by having a monopoly in the general search market. The prosecutors argue that Google is locking up distribution channels for general search engines through exclusive deals with browser and phone makers. Notably, Google pays Apple billions of dollars to keep Google as the default search engine on Apple devices like the iPhone. “This is the most significant antitrust case brought by the DOJ since the late ’90s. Second, it’s not illegal to make money in the United States, and they’re not being sued for that reason. Sometimes you hear commentators say that, and that’s just wrong. It’s OK to be successful; it is also OK to be innovative. This is another one people sometimes say. They’re not being accused of being too innovative,” said economist Shane Greenstein to the Harvard Gazette in an interview, speaking about the Google antitrust case. According to Greenstein, antitrust law is principally interested in two things in this case—has the firm achieved a level of success that can be characterised as a monopoly? Has the company used this leading position in ways that go against the principles of competition? Earlier in the trial, Google had dismissed arguments that it is the world’s biggest search engine because of illegal practices, with a lawyer for the company saying that switching to another search engine “literally takes four taps,” according to BBC. Apple and Google: “Co-opetition” On the face of it, Apple and Google, two of the biggest technology companies in the world, are competitors. They compete on many fronts, with each having their own smartphones, laptops, digital map software, and more. But they also cooperate when it suits their collective interest. Bruce Sewell, Apple’s general counsel from 2009 to 2017, gave a word for this partnership—”co-opetition.” The two companies are ferocious rivals in many industries, but at the same time, they cooperate where they need to. Apple and its CEO, Tim Cook, have often trained their guns on Google, questioning the latter’s “surveillance” tactics that it uses to sell online advertisements. But at the same time, Apple takes between 8 and 12 billion dollars from Google to keep it as the default search engine on the iPhone and other devices, according to a 2020 New York Times report. The DOJ at the time said that nearly half of Google’s search traffic came from Apple devices. Why Google’s dominance can be bad for competitors and consumers But at the end of the day, why does it matter? Google provides an excellent service, and there are only a few customers who would complain about Google Search and other products from the company. So, even if the company’s actions are deemed anti-competitive, does it hurt anyone? Yes. It can hurt both consumers and businesses that are trying to compete in the space. For years, companies like Yelp, which hosts crowd-sourced reviews for businesses, have argued that Google harms competition by prioritising its own products like Google Reviews over that of sites like Yelp. There are many companies like Yelp and others which act as a sort of narrow-focus search engine for customers looking for particular products and services like restaurants and flight tickets. But those companies cannot compete with Google, which dominates the industry with search traffic shares above 90 per cent. If Google prioritises its own products in search, these companies will get little to no traffic. Also, there are privacy-focused search engines like DuckDuckGo, which cannot afford to foot the billion-dollar bill that Google pays to companies like Apple to keep them as default search engines. This Google dominance can also prove bad for customers. There is a reason why competition is favoured in a free-market economy. The theory is that with free and fair competition, businesses will have to compete with each other to offer the best products and services to attract customers. When one or two companies dominate the market, they also dictate its tone and set its rules. An interesting example came to light during the antitrust case against Google. Wired reported on Monday that Google is seemingly altering its organic search results by changing user queries in the back-end in order to generate more advertising revenue. Here is a hypothetical scenario to explain. If you search for “women’s t-shirts” on Google Search, it might change the search query to something like “Adidas women’s t-shirts” in the back end. Not only does this change the organic results that you get, but it also means that you will get more ads that are targeted at keywords like “Adidas” or any other brand. If this is true, Google stands to benefit from it by driving up advertising revenue by displaying ads for keywords that users never search for. This both reduces the search quality for users while also increasing advertising spending for advertisers who might get traffic from users who were not looking for their products in the first place. This “overhaul to Google’s semantic matching” was hinted at in an internal Google slide shown during the trial, according to the Wired report. The reason that this sort of thing is possible is because Google has next to no competition. With its dominant position, users are unlikely to shift to rivals with a disadvantage unless there is a level playing field to begin with. Whether the antitrust lawsuit makes any changes is yet to be seen. But it has given rise to a lot more questions being asked about Google’s dominance and what it means for the internet at large.
