Not All Google Trial Remedies Would Restore Search Competition

If the US and the plaintiff states prevail in the Google search monopolization case, there are multiple remedies available they could request. They could ask for drastic structural measures, such as a breakup of Google from its Android or its Chrome browser. They could ask that the court simply enjoin Google from its alleged anticompetitive practices.

There are other options as well in the remedy phase of the trial. The court could require Google to offer choice screens, where users select which search engine they want to use. Or Google could be required to share its search and click-stream data with rival search engines—that is, the data collected from a user while they browse.

To understand the benefits and drawbacks of these remedies, we need to understand how the alleged anticompetitive practices impact competition in the three relevant markets: “general search,” “search advertising,” and “search text advertising.”

Google does not charge users to search. Instead, it receives revenues from ads generated by keywords users entered. Because the ads are triggered by consumers’ queries, if Google monopolizes the general search markets, it monopolizes the other two markets. On the other hand, when competition is restored in the general search market, competition in the other two markets will follow.

Search engines are distributed mainly through two types of devices, mobile devices and computers. In the US, mobile devices provide the largest search distribution channel, with two dominating operating systems: Google’s Android and Apple’s iOS.

According to the government, Google adopts two different strategies to foreclose distribution to its rivals. To gain search exclusivity on Android phones, Google “bundles” its proprietary software (e.g., Chrome, Google Maps, Google Pay, and YouTube) with its search. Phonemakers who wish to license the software are required to use its search as default. To gain exclusivity to Apple’s distribution channel, Google allegedly pays Apple billions of dollars per year.

Foreclosing distribution erects an entry barrier to competing search engines. Lacking effective distribution, rivals are also denied the scale necessary to compete. Because the complex algorithms involved in search are constantly learning, an adequate scale is necessary for high-quality search results.

Over time as Google gains dominance, consumers also become attached to its search. Although switching is easy, consumers’ reluctance to switch away from Google is a formidable barrier. Without the ability to turn back the clock, what is the best that the court can do?

In 2018, the European Commission ordered Google to offer choice screens. The process of implementation is still evolving. Google originally adopted an auction-based model. In September 2021 as a response to criticism, it switched to a new model, where a greater number of eligible search engines can participate for free. There is evidence that its effect on competition was minimal. Search Engine Land reported that Google’s market share decreased by less than 1% as of June 2021.

Some suggest that Google’s sharing its search query and click-stream data would give competitors the scale necessary to improve their algorithms and to analyze consumer preferences. Although the advantage to competitors is apparent, it’s not clear whether consumers would benefit.

Consumers value their privacy. Google’s data sharing increases their search cost in terms of privacy. Consequently, a consumer would respond by reducing her search activities. With lower quantity and higher price, consumers are worse off. It’s possible that Google anonymizes data before sharing. However, the technical and logistical sides of the sharing may be complicated or costly. There’s an additional issue of monitoring Google’s compliance.

In terms of structural remedies, some argue that if Google’s ownership of Android allows it to deny competing search engines distribution, a break-up of Android may be considered. This is a dangerous approach that likely would cause consumers more harm than good.

Google provides many products and services based on its Android platform and they are complementary to one another. This combined with network effects makes this approach impossibly complicated, and a full, multi-market analysis is beyond the scope of this litigation.

Another possible structural remedy is a forced sale of Google’s Chrome browser. In the US, Chrome is the leading browser in the computer segment and has a large market share in the mobile device segment of the browser market.

Presumably, a divestiture of Chrome would free up a substantial portion of search access points. Similar to the divestiture of Android, this approach is an unnecessary overkill and it does not address search access points other than browsers.

Enjoining Google from the alleged bundling and revenue sharing practices is probably the best remedy. Android phone makers will no longer be required to use Google Search as default on their devices in order to license its intellectual property. Nor will they or Apple be induced by financial gains when Google’s revenue sharing stops. This approach will open up distribution to rival search engines.

The device manufacturers would be free to design their own products. They would balance the competition in the mobile device market with the potential stream of search and revenue they are now in a position to generate. If consumers desire choice screens they would provide them. However, they are more likely to offer their own search engines as default.

Large manufacturers, such as Apple and Samsung, have access to capital. They either possess the technical capability to develop their own search engines or can acquire and adapt existing ones from the market. Distribution is not an issue, of course, since they own the distribution. Furthermore, they would have the scale to deliver quality search results due to their large customer bases. Lastly, there is no consumer attachment problem to overcome, if they make their own search engines as defaults.

Alternatively, device manufacturers may allow search engines to bid for visibility on various search access points of their devices, similar to retailers offering shelf space to multiple manufacturers. They can even auction off the default status of their devices.

Google would be careful not to win every auction, given its current legal challenges.

Overall, with the different business models available to distributors, the market would become more fragmented. Search engines would compete in every dimension: innovation, product differentiation, quality, etc. Subscription based services would lower their prices when they have larger consumer bases. Advertisers would be able to buy ad space from more than one single provider.

Finally, Microsoft has already launched its ChatGPT. If AI-powered search gains traction, it may replace or at least compete against traditional search. We may see the search market differentiated with companies dominating each type of search. More drastically, if AI revolutionizes the way consumers search, Google’s dominance in traditional search may no longer be a concern.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Tessie LiJu Su is an antitrust economist who works as an independent contractor for FTI Consulting in San Francisco.

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