The details of Google's antitrust ruling are exposed: Microsoft doesn't need Bing to pay Apple?

Tencent Technology

2024-08-07 13:57Posted on the official account of Beijing Tencent News Technology Channel

Highlight the point

1. Apple thinks that Microsoft Bing is performing badly, and even if it is willing to provide it for free or even with money, Apple is unwilling to set it as the default search engine for Safari.

2. In order to become the default search engine for Safari, Google pays Apple a huge share of advertising revenue every year, which is about $20 billion in 2022.

3. Apple is not reluctant to develop its own search engine, but it may cost at least $20 billion to replicate Google's current technical infrastructure.

Tencent Technology News News on August 7, according to foreign media reports, the United States Department of Justice v. Google monopoly ruling has been announced. In the 286-page ruling, United States Federal District Judge Amit Mehta made detailed findings of fact and legal judgment on Google·'s monopolistic behavior in the search engine space. The ruling not only reveals Google's tactics to maintain its market dominance, but also exposes heated rhetoric, embarrassing internal research and shocking details of the tens of billions of dollars contract between Google and Apple.

1. Apple thinks Microsoft Bing is doing badly

Google pays Apple billions of dollars a year to ensure that its search engine becomes the default option on Apple's web browser, Safari.

But at trial, Eddy Cue, Apple's senior vice president ·of services, said, "No matter how much Microsoft offers, Apple will not consider making Bing the default search engine for Safari." "Even if Microsoft offered Bing for free, or even if the company gave it away, we wouldn't consider it," he explained. ”

For Google, this shows that they have earned this default status, although Google does have to pay a lot of money to maintain that status. "This highlights the indisputable fact that Google has become the only option in the field of the default universal search engine," Justice Mehta noted. ”

2. Fortune 500 companies can only choose Google

Not only has Google worked closely with Apple, but it has also signed agreements with mobile phone carriers and device manufacturers to secure its position as the default search engine on Android devices. These protocols work in slightly different ways, but they are all based on Google's dominance of the app store.

It's worth noting that not only has Kuy expressed rejection of Bing, but almost all tech companies have also seen Google search as their only option. Even the Fortune 500 companies lack a real alternative to the choice of default search engines.

In his ruling, Judge Mehta hit the nail on the head: "Google understands that it has a solid market position and little competition on the issue of the default search engine, because partners know that abandoning Google also means giving up the huge revenue share it provides, which is often in the hundreds of millions or even billions of dollars." As a result, the partners decided that it would not be wise to switch to the default search engine or seek greater autonomy in search products from a financial point of view. ”

3. It's been ten years since Google-Apple signed a win-win agreement

According to the ruling, "Google paid Apple a significant portion of its net advertising revenue, which amounted to $20 billion in 2022, in order to occupy exclusive and non-exclusive default search engine positions on Apple devices." That's almost double the amount Google paid in 2020, when it accounted for 17.5% of Apple's operating profit.

Google's current contract with Apple dates back to 2016, and the partnership is even more profound. It's worth noting that around 2016, Apple simultaneously launched a new feature, Suggestions, which had a big impact on Google. Google's analysis shows that Apple's Suggestions feature has seen a 10 to 15 percent decrease in its Safari query traffic and an about 4 to 10 percent decrease in its ad revenue on iOS Safari.

In response to this situation, Google specifically included a specification in the contract signed in 2016 that required Apple to implement the default Safari search engine "substantially similar" to the previous version, so as to limit Apple's further expansion of search functionality and prevent Google from losing more traffic due to Apple's innovation.

Today, on the iPhone, "Google receives almost 95% of universal search queries." ”

The terms of the 2016 contract seem to be beneficial for both companies. Google and Apple extended the agreement in 2021, and the contract expires in 2026. However, Apple "can unilaterally extend the agreement for two years", and if it doesn't make sense for both parties, they can extend the contract further until 2031. Under the contractual agreement, both Google and Apple are obligated to defend the agreement "in response to an antitrust regulatory action similar to that initiated by the Department of Justice."

4. How difficult is it for Apple to challenge Google searches?

Judge Mehta noted that Google's huge payments to Apple not only undermine Apple's willingness to challenge Google's search dominance, but even if it did, it actually faced insurmountable obstacles. Both Google and Apple conducted research and disclosed internal estimates at trial.

Apple estimates that it will need to invest up to $6 billion a year in addition to its current search development spending in order to operate a full-fledged general-purpose search engine. Google's assessment at the end of 2020 showed that Apple would need to spend at least $20 billion to replicate Google's current technology infrastructure.

5. Is TikTok a Google search competitor?

TikTok is clearly not, and neither are Amazon and Meta.

In the Google Antitrust case, the court put forward the concepts of a general search engine (GSE) and a professional vertical provider (SVP). Among them, the general search engine is the common search engine that everyone understands, including Google, Bing, DuckDuckGo, etc.

In addition to this, there are thousands of "little search boxes" on the internet that are used to find specific information or purchase goods. However, services like Booking.com and Amazon.com are not general-purpose search engines, and they are very different from the general-purpose search engines that index the World Wide Web.

There are also search boxes on social media platforms, such as TikTok's search function, which behaves slightly differently than a generic search engine and has never been seen as a competitive threat to Google Search. But Google's 2021 research found that 63% of Gen Z (18-24 year old) users who use TikTok daily say they use TikTok as a search engine.

However, Judge Mehta noted that social media platforms are different and that they can be seen as "walled content gardens". What's more, "there is little evidence that they actually compete with general-purpose search engines." He said that the TikTok study did not explore whether the platform's search quality competed with Google, and just because young people liked TikTok did not mean that it was competitive in the relevant market for Google Search.

In addition, TikTok is not a dominant social platform. Judge Mehta noted that studies have found a positive correlation between Facebook usage and the growth of Google searches.

When it comes to the antitrust analysis, Judge Mehta held that the online habits of Gen Z users did not constitute a key consideration. "Imagine if Google's search quality deteriorates significantly, whether intentionally or inadvertently, can we reasonably expect that Facebook's senior vice president or any other social media platform will be able to quickly deploy resources to launch a product that rivals Google's search engine and attract a large number of disgruntled Google users," he wrote. The answer goes without saying, it is extremely difficult. Even industry giants like Amazon or Meta will face huge costs and expenses if they want to fill this gap in the market. ”

When will 6.AI search revolution come?

AI search may be a harbinger of the future, but that future has not yet touched the reality, at least under the scrutiny of antitrust law. "AI may eventually fundamentally disrupt the search landscape, but the process will not happen overnight," Justice Mehta wrote. Currently, AI is not yet a comprehensive replacement for the basic components of search: web crawling, indexing, and ranking. ”

Judge Mehta added: "Generative AI has not (at least not yet) eliminated or significantly reduced its reliance on user data to maintain high-quality search results. This conclusion is supported by Sridhar Ramaswamy, co-founder of Neeva·: "The process of identifying the most relevant pages for a query in a given context is still highly dependent on the user's click behavior data. He emphasized that AI models do not eliminate this need for data, but rather reinforce it.

In other words, when you search for "golf shorts," Google not only shows relevant results, but also captures the user's preferences by the page they click, so that the search results are continuously optimized. This kind of looping mechanism based on user feedback has not yet been seen in AI chatbots.

In addition, the ruling cites Pandu Nayak, Google's vice president ·of search, Pandu Nayak, who believes that it is critical that Google continues to maintain "an infrastructure that understands and works effectively" — a traditional ranking system. "Leaving rankings entirely to the emerging system doesn't make sense at this stage," he said. We still need to maintain a certain level of control and understanding. ”

7. "What only monopolists can do"

Google conducted an internal study in 2020 to explore the potential impact of "significantly reducing search quality" on its profitability. The results of the study show that even if Google deliberately reduces the search experience, the revenue generated by its search services will not be affected much.

Judge Mehta commented: "Google is free to adapt its products without fear of the risk of user churn, which is something that only monopolists can do." ”

The core of anti-monopoly regulation is to maintain the fairness of market competition, which is the cornerstone of driving market prosperity, promoting enterprise growth and protecting consumer rights. In the age of the Internet, the applicability of "consumer damage" as a yardstick for measuring monopolistic behavior is controversial, but the Google antitrust case certainly provides a strong example of how even industry leaders who are known for their innovation can inflict invisible harm on consumers by traditional means of stifling competition—that is, Google can maintain considerable profits even if the quality of service deteriorates after eliminating competitors. (Compiler/Golden Deer)

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