The DOJ’s Google Suit Is Far from Rock Solid

Legal Fellow, Center for the Economics of the Internet
(Getty Images)
(Getty Images)

One of America’s twin antitrust regulators has taken Google to court.  The Department of Justice, in a suit years in the making, alleged that the company ran afoul of the nation’s antitrust laws.

The government’s argument is as follows.  Google has spent considerable sums of money to ensure that Google is the default search engine on the iPhone, Mac, and other devices, as well as a variety of web browsers.  Primarily as a result of this default placement, Google maintains a larger piece of the online search business than its competitors.  This results in more ad revenue going to Google than its rivals.  And these superior revenues enable Google to invest more in its product and pay more for default placement, ultimately allowing it to maintain dominance in search in perpetuity.  Or so the argument goes.

Scratch the surface, though, and it’s clear that this argument is less than rock-solid.

The government’s primary argument—that the default option nearly always wins—just isn’t true.  Longtime iPhone users know this personally.  When Apple replaced Google Maps with its own half-baked app as part of iOS 6, the results were dire.  CEO Tim Cook had to issue a rare public apology.  One of Steve Jobs’ former foot soldiers was fired for his role in the debacle.  After Apple Maps stranded Australians in the middle of a national park without access to water in 114 degree heat, their national government sent out an official warning admonishing their citizens to avoid the product.  Only recently, over a decade later, have some iPhone users began to embrace Apple Maps.  Suffice it to say, the default app did not win out.

Consider also the PC space.  When it comes to desktop PC operating systems, Microsoft’s Windows reigns supreme with nearly 70% market share—more than triple that of their competition out of Cupertino.  Yet when it comes to desktop browser market share, Microsoft Edge—the default browser app on Windows—appears to be mostly used to download other browsers.  Google’s Chrome dominates this space with nearly 64% market share—nearly six times that of Edge

Perhaps most astonishingly, Safari—the default browser on Mac computers—has more users than Edge, despite Edge being pre-installed on over triple the amount of computers.  This is a familiar tune for longtime PC users, though, as Mozilla’s Firefox, followed by Google Chrome, historically leapfrogged Internet Explorer. 

The bottom line?  Default is not destiny.

Additionally, and perhaps most importantly—today’s search business is far more dynamic and competitive than the early days of Yahoo and Ask Jeeves.  Companies like Google are less in the traditional search business as we knew it, and instead are in an ever-evolving information retrieval and question-answering business.  In this arena, Google is far from dominant. 

Competition abounds, ranging from AI—an area in which OpenAI and Microsoft appear to be leading—to mobile applications like Yelp, to social media apps like TikTok, and even personal assistants like Amazon’s Alexa and Apple’s Siri.  In this new world, users ask questions and want clear answers—whether they come from a Wikipedia search result, an AI bot dispensing answers, or a TikTok video of a twenty-something detailing the latest celebrity gossip.

According to one estimate, mobile phone users—who make up the majority of web users—spend over four hours per day online.  Only twenty-three minutes—or 12%—of that time is spent in mobile web browsers, where search engines traditionally live.  The rest is spent in apps.

One such app is TikTok. According to Cloudflare, it was the most-visited website and most-used social media app in 2021, surpassing Google.  And for Gen Z, it’s increasingly becoming their primary way to search the web.  According to Google’s own internal data, when seeking out information like where to eat lunch, nearly half of young adults turn to TikTok or Instagram, rather than traditional Google search results.

Of course, Google is not a faultless company.  Many Americans, justifiably so, are angered with the company’s apparent bias against political conservatives, both within the company itself as well as its products and services.  Many more have mixed feelings about the company’s data collection practices.

Yet ultimately, there’s a reason the majority of Internet users choose Google over its rivals.  Google isn’t a monopoly.  Instead, it’s built a better mouse trap than its contemporaries, and has continued to do so for decades.  Google has gone toe-to-toe with and out-competed Yahoo, Ask Jeeves, Bing, DuckDuckGo, and more.

Yet, far from being dominant, Google’s search engine is facing more competition than ever before—particularly from the world of AI, as well as social media apps like TikTok.

In the end, the DOJ’s case against Google is far from rock-solid.

Read in RealClearMarkets.