A showdown between the DoJ and Google begins
AMERICA’S trustbusters have long had their sights set on big tech. On September 12th in Washington they at last fired their opening shots in the first courtroom battle of the modern internet era. The Department of Justice (DoJ), along with 38 state attorneys-general, accuses Google of abusing its online-search monopoly to extract bigger profits, snuff out competition and slow innovation.
The case hinges on Google’s deals with smartphone makers and other firms that, the DoJ claims, perpetuate its dominance of search. Google allegedly pays more than $10bn a year to companies like Apple to make its search engine the default on devices. Although the arrangements are not exclusive, they add friction for those who might have preferred another search provider. More users bring more data, enabling Google to improve its products and lock in more users still. This flywheel, as Silicon Valley types refer to the notion that digital scale begets more scale, “always turns to Google’s advantage”, intoned Kenneth Dintzer, the DoJ’s lead courtroom counsel in the case.
The stakes are most obviously high for Google and its $1.7trn corporate parent, Alphabet. In the first half of 2023 Google search generated $83bn in revenues, accounting for 57% of the group’s top line and virtually all its profits. Although Google’s loss would be unlikely to result in its break-up, the company may need to change its ways. No more deals with smartphone-makers, for example.
2023-09-13 13:17:14
Link from www.economist.com
