Google is Now 0 for 2 in Antitrust Trials: A Fifth Circuit Circuit Court Judge ruled that Google is the Only Real Search Engine

Google is now 0 for 2 in antitrust trials. United States District judge Amit Mehta ruled on Monday that Google has unlawfully maintained its dominance in search by using anticompetitive deals to keep rivals from gaining traction. He said that without fear of pressure from competitors, Google has been able to charge what it wants for search ads.

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.” If the company made search shittier then the revenues from Search would be fine.

United States Attorney General Merrick Garland called the decision “an historic win.” It paves the way for innovation for generations to come according to the assistant attorney general.

Donald Trump increased oversight of the tech industry in the case before Mehta. The Justice Department sued Google in 2020 before Trump left office, and the lawsuit became the first of several against Big Tech companies to go to trial.

The lengthy opinion in the antitrust case was published Monday. Judge Mehta had to make factual and legal findings because of the bench trial. 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).

In order to be the default search engine, Google pays Apple billions of dollars a year. 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 was no price that Microsoft could ever offer to get the company to preload Bing.

“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 the whole company to us.

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.)

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. TheFortune 500 companies do not have a choice in the matter.

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 was significant. A revenue loss of 4% to 10% of the revenue from the Apple Suggestions category is estimated by one analysis. Apple had to remain similar to prior implementations in order to not expand farther than what they were doing, according to the new contract.

The terms of the 2016 contract seem to have worked out for both companies. The contract with Apple will be renewed by both companies in 2020. 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 requires both GOOGLE and Apple to defend the agreement in response to regulatory actions.

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.”

First off, United States v. Google draws a distinction between general search engines (GSEs) and specialized vertical providers (SVPs). The heavy use of technical terms can make your eyes water, but the concept is pretty straightforward. Everyone understands a search engine that is a GSE, like Bing, DuckDuckGo and so on.

There are thousands of little boxes on the internet if you think you know it. Sometimes you can use them like a search engine to find cheap flights to a specific destination or 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. Should an average person logically justify their gut reaction? No. a court of law has done for you what you probably don’t need to read.

What a waste of time 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. In the year 2021, research was done into “Younger users.” More than sixty percent of Generation Z participants who use TikTok daily report that they use it as a search engine.

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. Imagine. Who. Could. Imagine. That.) Is it possible to put out a product that looks like a GSE and capture a large amount of dissatisfied GOOGLE users? The answer does not appear to be yes. To fill that hole in the market, it would take extraordinary cost and expense by Amazon or Meta.

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. The judge wrote that the search might someday be changed, but it wouldn’t be anytime soon. He writes that artificial intelligence cannot replace the fundamental building blocks of search such as 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 quotes Neeva co-founder Sridhar Ramaswamy who said that if you know what the most relevant pages for a given query are in a given context, it will be easier to find them. 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.

According to the opinion, the Vice President of search for the company says that it is important for the company to have a traditional ranking system. There is no sense in turning over our ranking to these systems. We still exercise a modicum of control over what is happening and an understandability there.”