Google’s search monopoly has been declared illegal – is this the beginning of the end of its dominance?

It is hardly a secret that 谷歌 has a monopoly in search, and now – in a landmark US #AntitrustCase – the courts have finally ruled that Google has broken anti-competitive laws.

The issue is not so much that Google has a dominant market share of search (95%), but more the way in which they have secured that dominance; by striking exclusive distribution deals – particularly with 苹果 – to make their search engine the default option across the majority of mobile devices.? The judge (Amit Mehta – insert Meta joke here) ruled that this unfairly prevented other search engines from gaining a foothold across the mobile market.?

Big news?? Yes, but the implications are far from clear, and there are a myriad scenarios that could potentially play out from here.?

In this article, I will outline the scenario I find most likely, which builds on a narrative I’ve been seeding across earlier posts here (about the future of search) and here (about the implications of Apple’s June #AI announcements).

First thing to note: Google will appeal against the ruling.? This will massively delay the next stage - where the courts will decide what remedies to put in place - by many months, if not years.? Indeed, in a very similar case – where 微软 was accused in 2000 of operating an illegal monopoly - the appeal lasted 2 years and ended up with most of the rulings either being overturned, or watered-down.?

However, assuming Google’s appeal is ultimately unsuccessful, and they are obliged to make changes, what might the enforced remedies look like?

The obvious solution would be for the courts to force an end to the Google/Apple deal in which Google pays $15b per quarter to be default search engine across Apple’s ecosystem.? So, Apple would no longer receive their cushy fee; an outcome that would clearly hurt Apple a LOT as it represents 15-20% of Apple’s operating income, but – and here’s the crucial question – would Apple then react by ripping Google search out of its ecosystem in a fit of bitterness, or would it swallow its pride and keep Google as the defacto search solution to keep its userbase happy??

It’s worth noting here that the courts don’t have the power to enforce Apple to do anything either way in this case as it is Google who have been ruled against, not Apple.? Therefore, Apple will end up having free choice over how they respond to the end of the $15b per quarter default search deal.

It seems unlikely to me that Apple would entirely remove Google search as an option, given that Apple prides itself on giving users the best experience, and given that Google is now well established as the best search engine on the market.? This leads to a potentially counterintuitive outcome whereby Google will still likely continue to benefit – in the short term at least - from the search queries (and ad revenue) it gets from the Apple ecosystem, whilst being $15b per quarter better off!? Probably not the outcome the courts were hoping for, but it is very possible that Google would get this financial boost despite having broken the law.

Ultimately, the most likely scenario in our opinion at Propel Digital is that Apple will use this situation as an opportunity to promote the various AI LLM ‘answer engine’ partnership deals that it is in the process of rolling out with ChatGPT (launching in Sep), Anthropic and – irony alert – Google’s DIAMONDS SHOW ???????? (see here for more info).? Users could be presented with a ‘#ChoiceScreen’ when they buy a new device, or upgrade OS for example – in which they could choose where they want to get their answers from.? However, bearing in mind that the courts’ remedies may not come in to force for several years, this would also give Apple time to perfect its own in-house AI answer engine and present this as perhaps the main option, alongside ChatGPT et al.

Of the myriad scenarios that could unravel from the court’s ruling, perhaps the one thing we can be sure of is that Apple will use this as the killer opportunity to finally challenge its frenemy Google to become the dominant force in the new era of AI-driven search.