The opinion in the Google search antitrust case, published Monday, is extremely long. Because this was a bench trial, Judge Amit Mehta was on the hook to make factual findings as well as legal findings. So, there are over a hundred pages of findings of fact and even more of conclusions of law, adding up to a 286-page document replete with footnotes, redactions, and even an illustrative graphic of a search result for “golf-shorts” (which, apparently, came up a lot at trial).
The ruling in United States v. Google is a lot to take in. Some of it was previously reported in the press over the course of the weekslong trial; but here, the judge has inadvertently compiled the trial’s greatest hits: catty quotes from executives, embarrassing internal studies, and a bunch of surprising deets about that multibillion-dollar contract that keeps Google the default search engine in Safari.
Apple thinks Bing is pretty bad
Google pays Apple billions of dollars a year to be the default search engine in Safari. But according to Eddy Cue, Apple’s senior vice president of services, there’s no other meaningful alternative. During the trial, he said that “there’s no price that Microsoft could ever offer” to Apple to get the company to preload Bing in Safari.
“I don’t believe there’s a price in the world that Microsoft could offer us,” Cue said at another point. “They offered to give us Bing for free. They could give us the whole company.”
For Google, this is a sign that they’ve earned their default status (which, incidentally, they pay Apple gobs of money to maintain). Judge Mehta says that this is an indication that the “market reality is that Google is the only real choice as the default GSE [general search engine].”
(Of course, Cue’s opinion doesn’t mean Bing is objectively bad. Elsewhere, the opinion notes that Bing’s search quality is comparable to Google’s on desktop, though it falls behind on mobile.)
“These are Fortune 500 companies, and they have nowhere else to turn other than Google.”
In addition to Apple, Google also has contracts with cell carriers and device manufacturers to be the default search engine on Android devices (these contracts operate a little differently since they hinge on Google’s control of the Google Play Store).
It’s not just Eddy Cue refusing to give Bing the time of day - all of these companies recognize Google as the only game in town. None of these “Fortune 500 companies” have a real choice in the matter.
“Google understands there is no genuine competition for the defaults because it knows that its partners cannot afford to go elsewhere,” the judge writes. “Time and again, Google’s partners have concluded that it is financially infeasible to switch default GSEs or seek greater flexibility in search offerings because it would mean sacrificing the hundreds of millions, if not billions, of dollars that Google pays them as revenue share.”
What are the terms of the Google-Apple contract anyway?
According to the opinion, “[i]n return for exclusive and non-exclusive default placements (i.e., user-downloaded Chrome and Safari default bookmarks), Google pays Apple a [redacted] percentage of its net ad revenue, which amounted to $20 billion in 2022.”
This is apparently “almost double the payment Google made in 2020, which was at that time 17.5% of Apple’s operating profit.”
Google and Apple entered into their present contract in 2016. Their dealings date way further back, but around then, Apple rolled out Suggestions. (Think, for example, when you type something out into Spotlight and Apple suggests a website to you - that’s not the same as Google Search.)
This was significant. One Google analysis estimated “a query loss of 10–15% of Safari traffic and a revenue loss of 4–10% of iOS Safari revenue based on Apple Suggestions.” The new 2016 contract includes a specification that “Apple’s implementation of the Safari default must ‘remain substantially similar’ to prior implementations” so that Apple “could not expand farther than what they were doing,” lest Apple “bleed off traffic.”
These days, when it comes to iPhones specifically, “Google receives almost 95% of all general search queries.”
The terms of the 2016 contract seem to have worked out for both companies. Google and Apple extended the agreement in 2021: the contract will expire in 2026. Apple “can unilaterally extend the agreement by two years,” and if both parties agree, they can extend the contract even further, all the way out to 2031. Part of the contract obligates both Google and Apple to defend this agreement “in response to regulatory actions” (e.g., DOJ antitrust lawsuits, like this one).
What it would take for Apple to challenge Google
According to the judge, it’s not just that Google pays Apple not to challenge its search supremacy - it would be unbelievably difficult for Apple to get in on the action at all. Unsurprisingly, both Google and Apple have looked into this, and their own internal estimates came out at trial.
Apparently, Apple has calculated that “it would cost $6 billion annually (on top of what it already spends developing search capabilities) to run a GSE.” Meanwhile, in “late 2020, Google estimated how much it would cost Apple to create and maintain a GSE that could compete with Google.” Apple would have to spend something “in the rough order of” $20 billion in order “to reproduce [Google’s technical] infrastructure dedicated to search.”
TikTok is not a competitor to Google Search
And neither is Amazon or Meta.
First off, United States v. Google draws a distinction between general search engines (GSEs) and specialized vertical providers (SVPs). The heavy use of technical acronyms may make your eyes water, but the gist is actually pretty simple. A GSE is a search engine in the sense that everyone understands it - Google, Bing, DuckDuckGo, and so on.
If you get really galaxy-brained about it, there are thousands of little “search” boxes all over the internet. Sometimes you even use them in a similar way to Google Search - say, for example, to look for cheap flights to a specific destination or to buy a pair of black flared leggings. Nevertheless, Booking.com and Amazon.com simply are not the same as a general search engine that indexes the World Wide Web. Do you, an ordinary person, need to logically justify this gut reaction? No. A court of law has done it for you already, in an outpouring of words you probably don’t need to read.
So much for the SVP. But the little search bar on social media platforms, like TikTok, operates slightly differently - at least in terms of user behavior and certainly in terms of whether Google views certain companies as competitive threats. Apparently in 2021, Google conducted research into “younger users.” One of their findings: “Among ‘Generation Z’ participants (defined as participants between the ages of 18–24 who use TikTok daily), 63% reported that they use TikTok as a search engine.”
Nevertheless, says Judge Amit Mehta, social media platforms are distinct - they’re walled gardens of content. And more importantly, “there is little evidence that they actually compete with GSEs for search queries.” The TikTok study, he says, doesn’t get into whether the platform’s search quality results are competitive with Google’s - just because kids like TikTok doesn’t mean it’s in the same relevant market as Google Search. And TikTok is not the only social platform. One study, he says, suggests that Facebook use corresponds with an uptick in Google Search use.
For Mehta, when it comes to an antitrust analysis, the internet habits of Zoomers are not relevant information. “Imagine if Google’s search quality substantially degraded, whether purposely or through neglect,” he writes. (Yes, imagine. Who. Could. Imagine. That.) “Would SVPs or social media platforms be able to shift resources to put out a product that resembles a GSE and thereby capture a significant number of dissatisfied Google users? The answer obviously is no.” It would take “extraordinary cost and expense” for even a juggernaut like Amazon or Meta to fill that hole in the market.
What AI search revolution?
Maybe AI search is the future, but the future is not here yet - at least, not in a way that’s relevant to antitrust law. “AI may someday fundamentally alter search, but not anytime soon,” writes the judge. Elsewhere, he writes that “[c]urrently, AI cannot replace the fundamental building blocks of search, including web crawling, indexing, and ranking.”
He also found that - factually speaking, even - “generative AI has not (or, at least, not yet) eliminated or materially reduced the need for user data to deliver quality search results.” The opinion’s findings of fact quote Neeva’s cofounder Sridhar Ramaswamy, saying that “the middle problem of figuring out what are the most relevant pages for a given query in a given context still benefits enormously from query click information. And it’s absolutely not the case that AI models eliminate that need or supplant that need.”
In other words, when you search for “golf-shorts,” it’s not just that you get served (hopefully) with the relevant results for golf-shorts - Google more or less automatically receives important information about what you think the relevant results are, based on what pages you end up clicking on. That feedback loop isn’t happening with AI chatbots.
The opinion also quotes Google’s own VP of search, Pandu Nayak, as saying that it’s vitally important for Google to continue to “have an infrastructure that [it] understand[s]” - that is, the traditional ranking system. According to Nayak, “there is no sense in which we have turned over our ranking to these systems. We still exercise a modicum of control over what is happening and an understandability there.”
Something only a monopoly can do
Apparently in 2020, Google conducted a study looking to see what would happen to its bottom line if it “were to significantly reduce the quality of its search product.” The conclusion was even if the company made search shittier, the revenues from Search would be fine.
“The fact that Google makes product changes without concern that its users might go elsewhere is something only a firm with monopoly power could do,” the judge writes.
Foundationally, antitrust regulation is underpinned by the idea that competition is good for everyone - the market, the companies themselves, but especially the average customer. It’s debatable whether “consumer harm” is still the right barometer to define monopolistic behavior in the internet age. Yet, United States vs. Google suggests that even one of the most innovative companies of the past 20 years can harm consumers the old-fashioned way - by muscling competitors out of running, it can deliver a worse and worse product and still make just as much money.
