What the future of search could look like as DOJ seeks to end Google’s monopoly.
After US District Judge Amit Mehta ruled that Google has a monopoly in two markets—general search services and general text advertising—everybody is wondering how Google might be forced to change its search business.
Specifically, the judge ruled that Google’s exclusive deals with browser and device developers secured Google’s monopoly. These so-called default agreements funneled the majority of online searches to Google search engine result pages (SERPs), where results could be found among text ads that have long generated the bulk of Google’s revenue.
At trial, Mehta’s ruling noted, it was estimated that if Google lost its most important default deal with Apple, Google “would lose around 65 percent of its revenue, even assuming that it could retain some users without the Safari default.”
Experts told Ars that disrupting these default deals is the most obvious remedy that the US Department of Justice will seek to restore competition in online search. Other remedies that may be sought range from least painful for Google (mandating choice screens in browsers and devices) to most painful (requiring Google to divest from either Chrome or Android, where it was found to be self-preferencing).
But the remedies phase of litigation may have to wait until after Google’s appeal, which experts said could take years to litigate before any remedies are ever proposed in court. Whether Google could be successful in appealing the ruling is currently being debated, with anti-monopoly advocates backing Mehta’s ruling as “rock solid” and critics suggesting that the ruling’s fresh takes on antitrust law are open to attack.
Google declined Ars’ request to comment on appropriate remedies or its plan to appeal.
Previously, Google’s president of global affairs, Kent Walker, confirmed in a statement that the tech giant would be appealing the ruling because the court found that “Google is ‘the industry’s highest quality search engine, which has earned Google the trust of hundreds of millions of daily users,’ that Google ‘has long been the best search engine, particularly on mobile devices,’ ‘has continued to innovate in search,’ and that ‘Apple and Mozilla occasionally assess Google’s search quality relative to its rivals and find Google’s to be superior.'”
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“Given this, and that people are increasingly looking for information in more and more ways, we plan to appeal,” Walker said. “As this process continues, we will remain focused on making products that people find helpful and easy to use.”
But Mehta found that Google was wielding its outsize influence in the search industry to block rivals from competing by locking browsers and devices into agreements ensuring that all searches went to Google SERPs. None of the pro-competitive benefits that Google claimed justified the exclusive deals persuaded Mehta, who ruled that “importantly,” Google “exercised its monopoly power by charging supra-competitive prices for general search text ads”—and thus earned “monopoly profits.”
While experts think the appeal process will delay litigation on remedies, Google seems to think that Mehta may rule on potential remedies before Google can proceed with its appeal. Walker told Google employees that a ruling on remedies may arrive in the next few months, The Wall Street Journal reported. Ars will continue monitoring for updates on this timeline.
As the DOJ’s case against Google’s search business has dragged on, reports have long suggested that a loss for Google could change the way that nearly the entire world searches the Internet.
Adam Epstein—the president and co-CEO of adMarketplace, which bills itself as “the largest consumer search technology company outside of Google and Bing”—told Ars that innovations in search could result in a broader landscape of more dynamic search experiences that draw from sources beyond Google and allow searchers to skip Google’s SERPs entirely. If that happens, the coming years could make Google’s ubiquitous search experience today a distant memory.
“By the end of this decade, going to a search engine results page will seem quaint,” Epstein predicted. “The court’s decision sets the stage for a remedy that will dramatically improve the search experience for everyone connected to the web. The era of innovation in search is just around the corner.”
The DOJ has not meaningfully discussed potential remedies it will seek, but Jonathan Kanter, assistant attorney general of the Justice Department’s antitrust division, celebrated the ruling.
“This landmark decision holds Google accountable,” Kanter said. “It paves the path for innovation for generations to come and protects access to information for all Americans.”
What penalties could Google face?
Epstein says you can put the likely remedies the DOJ will seek to restore competition in search in three categories: “hot, medium, and cold.”
Most penalties on the cold end of the spectrum would put an end to default deals by requiring that users see a choice screen to select their preferred search engine as the default on devices and in browsers. This “will definitely annoy users,” Epstein predicted, and seems “unlikely to create meaningful competition”; as Google successfully demonstrated at trial, many users prefer Google.
According to Bloomberg Law, the DOJ appears least likely to pursue this remedy, having argued at trial that “efforts by European regulators to require Google to offer users a choice of search engines led few to switch.”
Falling in Epstein’s “medium” category is the most obvious solution: an injunctive remedy prohibiting Google’s default deals. If that happened, Google would “have to compete on a search-by-search basis for distribution of its results and ads,” Epstein said.
Because searchers prefer Google, it’s hard to say if this remedy would shift Google’s dominance, even though it is anti-monopoly advocates’ preferred remedy. Analysts told The Wall Street Journal that the analysis finding that Google could lose 60 percent of its revenue without the default deals neglected to consider what would happen if the majority of online searchers chose to keep using Google as the default search engine anyway. In that case, Google “might save more money in payments to Apple, Samsung, and others than it loses in search advertising.”
However, as someone helming a Google rival that “has been limited by the terms of Google’s” default deals, Epstein predicted that this remedy, “in and of itself, should allow 1,000 flowers to bloom when for so many years, it’s been either you take Google and nothing but Google, or you get no Google at all.”
Likely putting Google in the hottest water would be an order to “spin out” parts of its search business, like the Chrome browser or the Android operating system, Epstein said. A penalty like that “would mark the biggest forced breakup of a US company since AT&T was dismantled in 1984,” Bloomberg Law noted, effectively ending Google’s self-preferencing when integrating its search engine into its own products.
But Epstein warned that while “this inflicts maximum pain on Google,” spinning out Google’s products could “also cause pain to users and publishers and might not be the best way to create competition in search results and advertising.”
How will this impact Google’s rivals, allies?
While many believe that Apple will likely be most harmed by an injunction prohibiting default deals, other Google partners like Samsung and Mozilla could also suffer as the search industry is reshaped, the WSJ reported.
Mozilla, which received more than $400 million from Google in 2021 for the default placement in Firefox, could lose an income source that in 2021 was estimated to comprise as much as 80 percent of its operating budget. A Mozilla spokesperson told Ars that Mozilla is “closely reviewing the court’s decision, considering its potential impact on Mozilla and how we can positively influence the next steps.”
“Mozilla has always championed competition and choice online, particularly in search,” Mozilla’s spokesperson said, while noting that the remedies “process could take years to conclude and may include appeals,” potentially even reaching the Supreme Court.
In the meantime, Mozilla declined to comment on what remedies may be appropriate, saying only that “Firefox continues to offer a range of search options, and we remain committed to serving our users’ preferences while fostering a competitive market.”
Microsoft’s Bing is expected to benefit most from Mehta’s ruling, with the WSJ noting that Microsoft forecast last year that the company “would get about $2 billion in ad revenue for every percentage point Bing gains in market share.”
But other Google rivals could easily snag default positions or benefit from other remedies that may be sought, such as an order requiring Google to license its search index. DuckDuckGo’s SVP of public affairs, Kamyl Bazbaz, said in a press release that “there is no silver bullet here.
“Truly fixing the entrenched competitive imbalance that Google’s default advantage has afforded them will require a mixture of interventions,” Bazbaz said. But any solution should also include “a monitoring body with technical experts that are truly independent and possess the requisite user experience and technical expertise,” which is “needed to ensure Google doesn’t find new ways to give itself preferential treatment.”
Tara Pincock—a former assistant attorney general for Utah who helped lead the state’s attorney generals’ suit against Google and currently serves as policy counsel monitoring this case for the Open Markets Institute—told Ars that she expects “there’s going to be a multi-pronged approach, but one of them has to be breaking their default stranglehold on general search.
“This was one of my primary cases that I worked on, and I was always concerned with the fact that it always came back to the defaults, that Google had locked in pretty much everything, from your cell phones to computers to websites,” Pincock said. “Everything defaults to Google.”
Lee Hepner, senior legal counsel at the American Economic Liberties Project, agreed, saying that “at a minimum,” the court must both order “an end to Google’s exclusive default agreements” and a breakup of the “business lines that have allowed Google to extend its monopoly into every corner of the Internet.”
Bazbaz offered a long list of remedies needed to bring “changes to the search ecosystem,” urging that among them must be “real consumer education” efforts helping people actually understand their choices “to undo the influence of Google’s control over defaults.”
Pincock confirmed that the Open Markets Institute would file an amicus brief recommending the multi-pronged approach with a laser focus on pushing remedies that would increase competition. Remedies sought should address “any area” where Google was found to be self-preferencing, Pincock said.
“There’s no question that we will be weighing in,” Pincock said. But “it could be years before we can get to the remedy phase.”
The future of online search
AdMarketplace’s Epstein told Ars that remedies could completely change the way that people search online in the next decade.
Today, online searchers are perhaps used to starting a search outside a search engine, then landing on Google’s SERPs before getting to their destination. In the future, publishers like Apple may help users skip over SERPs and better “curate search experiences for their users.” That could mean Apple innovating new search tools or possibly combining results from multiple search engines, including the latest AI search technologies. These changes could potentially allow users to jump directly to quality results rather than dumping them onto a page of results littered with ads.
“Right now,” Epstein said, “Apple’s not allowed to change a single pixel of the search experience without Google’s permission.” But “in the future,” Apple may offer “a curated search experience that is more innovative and more engaging to their users.”
Remedies restoring competition could also “order Google to compete by offering its search results and ads products to publishers so they can curate their own search experiences,” Epstein told Ars.
“This would unleash innovation for users and transparency for advertisers,” Epstein said, allowing Google’s advertisers, for the first time in years, to fully understand “how their ad spend on search is allocated.” Additionally, companies like Apple and Samsung would be “able to now understand the value of their search ad inventory.”
According to Epstein, this could lower costs to advertisers—after Mehta found that “Google makes changes to its text ads auctions without considering its rivals’ prices is something that only a firm with monopoly power is able to do.” Ultimately, advertisers collectively could save tens of billions, as they benefit from more transparency and more options, and Google’s profits wane. And those savings could be passed on to consumers, Epstein suggested.
“Getting Google to comply will be the trick,” Epstein told Ars. Bazbaz echoed this statement, noting that “Google has found it relatively easy to work around” strict digital laws requiring data privacy and competition in the European Union.
An injunction on Google’s Apple deal could also push Apple to create its own search engine after years of declining “to enter general search,” a choice Mehta said was likely because Apple “would forego significant revenues” earned through the Google deal. That could cost Apple as much as $20 billion, Mehta’s ruling said, citing a 2020 internal Google estimate. And perhaps not coincidentally, that’s just about exactly how much Google paid Apple in 2022 to maintain the default deal.
Bazbaz said that another change could be requiring devices to prompt users to switch defaults when they download new search tools. And the court could also order a prohibition on dark patterns that might prevent users from changing the defaults.
Epstein told Ars that he hopes that Mehta’s ruling stands, seeing it as “rock solid.” Rather than resist remedies, Epstein suggested that Google should “take its medicine and do some soul-searching” and “find a settlement” that would allow it to reimagine its business, as Microsoft did under Satya Nadella after its antitrust loss in the 1990s.
“Google should use this moment to think about resetting their business practices and how they want to be perceived in the future,” Epstein said.
Could Google win on appeal?
Google will likely appeal the case to the US District Court of Appeals for the DC Circuit, after which a loss could lead to another appeal, sending the case to the Supreme Court, Pincock told Ars.
Pincock explained why she joined experts contradicting Google and expecting that the appeals process will come next, before the remedies stage of litigation can proceed.
“I anticipate that the appeal will go first because that’s one of the reasons” the litigation “was bifurcated, so that they could focus on the conduct and then deal with the remedies later,” Pincock said. “Because the remedy stage is probably going to be another year or so of litigation to figure that out,” Pincock said, it makes more sense to push through the appeals process first.
Alden Abbott, a former general counsel for the Federal Trade Commission who also did a stint as assistant to the assistant attorney general in the DOJ’s antitrust division, told Ars that Google may prevail on appeal because Mehta’s ruling was “open to attack.”
Although Mehta “carefully analyzed the factual record, market definition, and competitive harm,” Abbott said, his ruling seemed to assume that Google had a duty to allow rivals to achieve a scale that was dodged through Google’s default deals. If no such duty exists, then Google was competing on its merits, Abbott suggested, rather than conducting exclusive-dealing.
To Abbott, there’s also a major question of who’s being harmed, despite Mehta’s ruling that Google had engaged in monopoly pricing.
“It’s not at all clear that consumers are being harmed or even that advertisers are by the current status quo,” Abbott argued.
Abbott also claimed that it “signaled a weakness” that Mehta’s ruling did not even attempt to craft a remedy—suggesting that no remedy may exist because Google was competing on the merits—although Pincock said that was to be expected due to how the litigation was structured.
Many economists will likely be consulted during both the future appeal and remedy stages of this litigation, but at least one group of economists agreed with Abbott that Google may have a chance at succeeding on appeal.
The president of the International Center for Law & Economics, Geoffrey Manne, said in a press release that Mehta’s ruling “relies heavily on contested theories from the field of behavioral economics about the supposed power of defaults” and “fails to demonstrate how the contractual agreements at-issue harm consumers or competition.”
“A default placement is worth very little if your product isn’t any good,” Manne said. “By the same token, Google hasn’t been ousted as the default anywhere, because it has a superior product. The opinion offers no evidence to suggest that Bing would have become a viable competitor under any other set of facts. And that is fatal to the claims in this case, for which the plaintiffs, not Google, bear the burden of proof.”
In his ruling, Mehta wrote that Google’s default deals served as a “largely unseen advantage over its rivals,” emphasizing that the “power of defaults is evident” from “the share of Bing users on Edge,” where Bing is the default search engine.
“Bing’s search share on Edge is approximately 80 percent; Google’s share is only 20 percent,” Mehta wrote, noting that “even if one assumes that some portion of those Bing searches are performed by Microsoft-brand loyalists, Bing’s uniquely high search share on Edge cannot be explained by that alone.” Evidence showed that “the default on Edge drives queries to Bing,” suggesting that Bing could win more queries if it had access to more default placements.
Mehta acknowledged the limited direct evidence in the case but seemed to find it compelling, especially “Google’s admission that it does not ‘consider whether users will go to other specific search providers (general or otherwise) if it introduces a change to its Search product.'”
“Google’s indifference is unsurprising,” Mehta wrote. “In 2020, Google conducted a quality degradation study, which showed that it would not lose search revenue if it were to significantly reduce the quality of its search product. Just as the power to raise prices ‘when it is desired to do so’ is proof of monopoly power, so too is the ability to degrade product quality without concern of losing consumers.”
But while some critics attempt to pick apart Mehta’s ruling, Epstein said that he’s seen very little discussion of flaws in Mehta’s decision—a nearly 300-page opinion that Epstein described as “extremely detailed and thoughtful on both the facts and the law.” Epstein thinks that the litigation over Google’s conduct was the tech giant’s “best chance of avoiding a remedy,” because the DOJ’s “case was so strong” and “there’s obviously public support” and “public interest in having competition in these markets.” And that has passed, Epstein said.
Epstein believes it’s “highly unlikely” that Google could win on appeal, and the DOJ certainly is unlikely to back down during Google’s attempts to appeal. In a press release, Attorney General Merrick Garland called the victory this week a “historic win for the American people.”
“No company—no matter how large or influential—is above the law,” Garland said. “The Justice Department will continue to vigorously enforce our antitrust laws.”
