Links 06/08/2024: Google in Hot Waters, Journalists Killed by Police (2024)

The decision on Aug 5 did not mandate the ways Google could satisfy the government, but Judge Amit Mehta scheduled a hearing in September to discuss timing of a separate trial on that topic.

“For years, Google has secured default placements through distribution contracts. It has entered into such agreements with browser developers, mobile device manufacturers, and wireless carriers. These partners agree to install Google as the search engine that is delivered to the user right out of the box at key search access points,” the decision asserts. “Google pays huge sums to secure these preloaded defaults.”

“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,” writes US District Judge Amit Mehta. “It has violated Section 2 of the Sherman Act.”

Specifically, the court holds that (1) there are relevant product markets for general search services and general search text ads; (2) Google has monopoly power in those markets; (3) Google’s distribution agreements are exclusive and have anticompetitive effects; and (4) Google has not offered valid procompetitive justifications for those agreements. Importantly, the court also finds that Google has exercised its monopoly power by charging supracompetitive prices for general search text ads. That conduct has allowed Google to earn monopoly profits.

Other determinations favor Google. The court holds that (1) there is a product market for search advertising but that Google lacks monopoly power in that market; (2) there is no product market for general search advertising; and (3) Google is not liable for its actions involving its advertising platform, SA360. The court also declines to sanction Google under Federal Rule of Civil Procedure 37(e) for its failure to preserve its employees’ chat messages.

Genuinely, let’s say 2025 rolls in, Apple execs are expecting Google to write their annual mega-check like they have for years, and Google just says no. What happens? Does Apple leave Google the default since it’s what customers want? Does Apple make something else the default? If so, what? Does Apple fast track their own search engine?

Mehta ruled that the Justice Department was right in saying that Google violated antitrust law by forging restrictive contracts with Apple and other phone makers that required them to install Google as the default search engine on smartphones. He also decried other practices of the Alphabet Inc. unit that prevented its rivals from competing on an even playing field.

For more than 15 years, one general search engine has stood above the rest: Google. The brand is synonymous with search. Once a scrappy start-up founded by two Stanford University students in a rented garage, Google is now one of the world’s most valuable companies. Its parent company, Alphabet Inc., today has a market capitalization (the value of its outstanding shares of stock) of more than $2 trillion. Much of that value is due to Google’s extremely profitable advertising business.

Google’s dominance has gone unchallenged for well over a decade. In 2009, 80% of all search queries in the United States already went through Google. That number has only grown. By 2020, it was nearly 90%, and even higher on mobile devices at almost 95%. The second-place search engine, Microsoft’s Bing, sees roughly 6% of all search queries—84% fewer than Google.

Google has not achieved market dominance by happenstance. It has hired thousands of highly skilled engineers, innovated consistently, and made shrewd business decisions. The result is the industry’s highest quality search engine, which has earned Google the trust of hundreds of millions of daily users.

But Google also has a major, largely unseen advantage over its rivals: default distribution. Most users access a general search engine through a browser (like Apple’s Safari) or a search widget that comes preloaded on a mobile device. Those search access points are preset with a “default” search engine. The default is extremely valuable real estate. Because many users simply stick to searching with the default, Google receives billions of queries every day through those access points. Google derives extraordinary volumes of user data from such searches. It then uses that information to improve search quality. Google so values such data that, absent a user-initiated change, it stores 18 months-worth of a user’s search history and activity.

The company paid $26 billion in 2021 to device makers, carriers, browser makers, etc. to be the default search engine. Doing so gives Google not only a much bigger share of the advertising market but a vast treasure trove of data that is used to further improve its search performance.

This is of note because Google reportedly pays a huge chunk of that to Apple to be the default search engine for Safari on iPhone and iPad. You can change the default search engine in Settings > Safari, but most users don’t–as is often the case with defaults, most aren’t even aware there are other options.

For now, then, nothing will change. But the 277-page decision (plus appendices) clearly labels Google as an illegal monopolist in violation of Section 2 of the Sherman Antitrust Act. Google said it would appeal the decision.

His findings are arguably the most comprehensive modern examination of Google’s search business, which over the past 26 years has become a $175 billion annual revenue behemoth that accounts for much of parent company Alphabet’s profits. Google will appeal, as it risks losing its prominent placement on iPhones and other gateways to the web.

Mehta noted that Google had paid $26.3 billion in 2021 alone to ensure that its search engine is the default on smartphones and browsers, and to keep its dominant market share.

"The default is extremely valuable real estate," Mehta wrote. "Even if a new entrant were positioned from a quality standpoint to bid for the default when an agreement expires, such a firm could compete only if it were prepared to pay partners upwards of billions of dollars in revenue share and make them whole for any revenue shortfalls resulting from the change."

Google acted illegally to maintain a monopoly in online search, a federal judge ruled on Monday, a landmark decision that strikes at the power of tech giants in the modern internet era and that may fundamentally alter the way they do business.

"The court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly," U.S. District Judge Amit Mehta, Washington, D.C., wrote. Google controls about 90% of the online search market and 95% on smartphones. The "remedy" phase could be lengthy, followed by potential appeals to the U.S. Court of Appeals, District of Columbia Circuit and the U.S. Supreme Court. The legal wrangling could play out into next year, or even 2026.

The “remedy” phase could be lengthy, followed by potential appeals to the D.C. Circuit and US Supreme Court. The legal wrangling could play out into next year, or even 2026.

Shares of Alphabet fell 4.5 percent on Monday amid a broad decline in tech shares as the wider stock market cratered on recession fears. Google advertising was 77 percent of Alphabet's total sales in 2023.

Alphabet said it plans to appeal Mehta's ruling. "This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available," Google said in a statement.

Here's an open secret: the confusing jargon of finance is not the product of some inherent complexity that requires a whole new vocabulary. Rather, finance-talk is all obfuscation, because if we called finance tactics by their plain-language names, it would be obvious that the sector exists to defraud the public and loot the real economy.

Take "leveraged buyout," a polite name for stealing a whole goddamned company: [...]