Tech's Winners & Losers from the Google Antitrust Ruling

In a landmark decision yesterday, U.S. District Judge Amit Mehta ruled that 谷歌 has been illegally maintaining its monopoly over internet #search through anti-competitive practices. This ruling stems from a lawsuit filed by the Justice Department, accusing Google of using exclusive contracts to stifle competition. Noting that Google has an "89.2% share of the market for general search services," the judge's ruling assessed Google's tactics and concluded:

“After having carefully considered and weighed the witness testimony and evidence, the court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly.”

If enforced, the decision could force Google to revise its agreements with device manufacturers and carriers, potentially opening the door for other #searchengines to gain market share. But enforcement of any remedy is still a big if, as the appeals process is likely to take years.

The prospect of looming appeals makes it tempting to dismiss the ruling's significance and go back to market watching (a.k.a. doom scrolling). But I think there's a case that the ruling could impact the tech industry regardless of whether it's ultimately upheld. If that's the case, like any type of potential market shift, there would be winners and losers.

Winners

• 微软 : The ruling calls out how other search engines can succeed if not hindered by default settings favoring Google, noting that Bing holds 80% of the search market share on Microsoft Edge. If Google's default search agreements are ultimately limited or banned, it obviously would help Bing. But I think the ruling is positive for Microsoft right out of the gate. It creates daylight for industry players to second-guess their "let's just go with Google" for default search, and it might put more pressure on Alphabet to allocate more resources toward defending/revamping their cash-cow business line at the expense of enterprise-focused products that compete with Microsoft.
• OpenAI : My understanding is the launch of ChatGPT was viewed inside Google as an existential threat to search, and that Google hastened the launch of its consumer chatbot (originally called Bard) as a result. There's already plenty of chatter about #generativeAI replacing search. OpenAI clearly believes there's something to that, given their SearchGPT announcement a couple of weeks ago. Whether or not the ruling is ever enforced almost seems beside the point given how OpenAI is racing ahead, but changing consumer behavior coupled with Google's potential loss of universal default status could turn OpenAI into a powerhouse.
• #Startups: The general sentiment is the ruling could create a more level playing field for search-engine startups, and that's not wrong. But I think that's too narrow of a perspective. There already are some compelling new entrants (e.g. Perplexity ) in the search market, and I think we'll see yet more activity here as a sense that the ground is shifting under Google's feet continues to grow. Not only with the market opportunity entice #entrepreneurs and #VCs, if there's a belief that Google will become even more acquisitive in adding new technologies to diversify its business model, then that alone could justify the deployment of billions in additional venture funding to the broader space.

Losers

• Alphabet Inc. : Obviously this ruling isn't ideal for Google's parent company. Although the market seems to have priced it in already (or is too focused on what the Fed will do with interest rates), it feels like another crack in the armor to their core business line. And when technology shifts a market paradigm, a business line can deteriorate pretty quickly. For example, take Apple in the 1990s, Microsoft in the 2000s, or Intel today. But it also doesn't mean doom--Apple and Microsoft prove as much. And if anyone understands disruption theory, it's Google, so don't count them out.
• 苹果 : Speaking of Apple, you might be thinking, "Wait, what?! Wouldn't Apple benefit from Alphabet taking a hit since they make Android?" Maybe. But Google reportedly paid Apple $20 billion in 2022 to remain the default search engine on iOS devices. And the AP reported that Apple decided not to build its own search "after a 2018 analysis estimated the company would lose more than $12 billion in revenue during the first five years after a break-up with Google." So this could be a money loser for Apple. Plus a decline in search hegemony could also force Alphabet to change their mobile strategy, which might ultimately put more pressure on Apple's largest business line.
• #SEO Industry: Google's recent move to emphasize AI-generated answers to searches was already pretty disruptive for the legions of marketing SaaS makers and agencies. But even a hint of the collapse of Google's monopoly would upend the legions of tea-leaf readers who attempt to manipulate The Algorithm for their clients.

Time will tell how all of this plays out. But I suspect that we won't have to wait until the appeals process is concluded to see ripple effects across the tech industry.

Eric M. Jackson is the executive director of Jackson Advisory Group, a strategy consultancy that helps technology companies navigate challenges to create competitive advantage and strategically position themselves for success. As part of Peter Thiel's early-PayPal team, he oversaw the implementation of PayPal's revenue model, and in the years since has created and advised multiple technology businesses. A sought-after speaker and award-winning author of The PayPal Wars, Jackson lives in Los Angeles with his wife and two daughters.