Google Is A Monopoly, But Its Search Engine Does Not Have To Be

Amidst scrutiny following the US Department of Justice's antitrust lawsuit against Apple for alleged monopoly practices in the smartphone market, a separate lawsuit against Apple's competitor, Google, by the Justice Department is also pending.

A federal judge is expected to make a landmark decision this year that could bring about major changes to Google and thus the future of search, potentially impacting the user experience with the internet in significant ways.

Consumers are empowered when they have a marketplace where businesses large and small are able to compete on an even playing field and can provide alternative choices. Perhaps nowhere is this more important than general search engines which are the main gateway for consumers to access all that the internet has to offer. But when it comes to general search, consumers are stuck with few choices and fewer opportunities to switch among competing providers.

An uncompetitive search engine market stifles innovation and quality improvements as Google controls access to users. It allows the invasive data collection practices that drive Google’s search and digital advertising business to continue unabated as explained in the Justice Department post-trial brief. And our overwhelming dependence on just one company, Google, to navigate the internet is antithetical to the diversity and pluralism of information sources and freedom of commerce.

The problem is twofold. The first is that Google, with over 85% market share in the US and over 90% market share globally, operates at a scale that is qualitatively different from any of its competitors. Google’s ability to collect data on what users are searching for and get feedback on which results users find useful is unparalleled.

The second is that consumers seldom change defaults, and Google is uniquely placed to pay Apple and Android phone manufacturers, and browsers like Mozilla to be the default search engine. Google’s much larger user base means its advertising revenues are many multiples of its nearest competitor Bing – in 2023 Google’s US search ad revenues were $58.14 billion compared to $5.88 billion for Bing.

What is to be done? If the Justice Department succeeds in its 2020 lawsuit, remedies could be used to constrain Google’s control of search distribution and incentivize more competition among Google, Apple, and Microsoft.

The first remedy is to restrict Google from making payments to be the default on Apple and Android devices. This would provide Google’s smaller competitors more opportunities to get consumers to try their search engines – something that most consumers never do because Google is the default search engine. And if consumers are satisfied with the quality of the search results and value better designed and innovative add-on features like local business answers, curated news results, privacy protective search, fewer spam results, a subscription option, etc. then they could decide to switch to these alternatives.

Restricting the estimated $18 billion per year that Google pays Apple to set Google search as the default search engine on Apple devices could also incentivize Apple to develop its own search engine as it did for Apple maps which is today one of the main competitors of Google maps. Entry by Apple into the search engine market would increase choice for consumers, and Apple could also be a syndication partner for smaller search engines.

Second, requiring better syndication contracts for smaller search engines that buy search results from Google. These contracts should not restrict a smaller search engine’s ability to innovate or compete with Google in any way. This would benefit consumers by enabling syndication partners to experiment freely with different search and add-on features leading to more choice and innovation for consumers.

We seem to be at a technological inflection point with the development of generative AI models which are expected to transform many of the products and services we use every day. This development also introduces potential opportunities for smaller companies to develop innovative services on top of general search if they have access to the right inputs and can get consumers to try their services.

A benefit of the two remedies proposed is their ease of implementation, allowing for timely execution to take advantage of this moment of technological change. The remedies would only require restrictions on the default contracts that Google signs with Apple and Android phone manufacturers, and on Google’s syndication terms and conditions. Better distribution in combination with the ability to provide innovative and differentiated search services using better syndication terms should allow smaller search providers to grow their market share and become more effective competitors.

Google has over 90% of general search market share worldwide and is a monopoly, but general search as a service need not be. Targeted remedies that remove barriers for competing search engines to grow and gain users would help undo the competitive harms caused by Google’s search monopoly. A more competitive general search market would support a more diverse and innovative online ecosystem to the benefit of both consumers and businesses that depend on general search engines to reach consumers.