Judge Mehta’s December 5th antitrust remedies ruling against Google is a missed opportunity to pry open the adjacent markets Google has dominated through its illegal conduct. What happens now in non-US jurisdictions looking at the same case? And will the federal or US states Attorney General now lodge an appeal?
Mehta was self-contradictory in his evidence requirements throughout the new remedy proposal. The US AAG or the Sates attorneys general should appeal as the case is so important for online commerce and affects all Americans.
Recapping the court’s decision on liability, Mehta held that Google’s exclusive agreements to distribute its General Search Engine had four anticompetitive effects: (1) foreclosing a substantial portion of the relevant markets, thus “impair[ing] rivals’ opportunities to compete,” (2) “denying rivals access to user queries, or scale, needed to effectively compete,” (3) “reduc[ing] the incentive to invest and innovate in search,” and (4) “enabl[ing] Google to increase text ads prices without any meaningful competitive constraint.”
The Court recognized the danger of letting a guilty defendant continue to benefit from the fruits of its illegal conduct, but the ruling stops short of creating any true structural change that will improve competition in digital markets or remedy the four effects he identified that are distorting both consumer Search and business-facing text ads markets.
Google remains free to abuse its dominance to foreclose Search and AI discovery markets
Google’s Search dominance has already bent the commercial internet around its gravitational pull. Allowing the “illegal fruits” that Google has gained from this dominance to shape the future of generative AI will cement its control over how the world discovers,navigates and interacts with rival publishers’ online content and services.
Google remains free to pay for default distribution, impairing rivals’ opportunities for distribution
Similarly, the ban on “exclusive” search deals sounds strong, but the annual renewal structure still favors Google’s financial muscle. There are some minor restrictions about the wording of its exclusive distribution agreements for its Search and GenAI solution, but it remains completely free to use revenue sharing agreements to incentivize its partners to do what they can to ensure consumers only use Google’s offerings.
Additionally, by excluding ChromeOS from this ruling, but including partners and joint ventures, the Court loosens the leash that ought to have been tightened. (None of these remedies pry open the market for fair competition or innovation in B2C search and generative AI information discovery nor B2B text ads).
Google remains free to benefit from this uniquely scaled data, while denying rivals’ business information needed to compete
Moreover, the limitations placed on data sharing and Google’s ability to restrict uses only for B2C cases effectively walls off the vast business-to-business ecosystem that defines the monetization of broader Search, Ad and AI markets.
Why appeal?
The law’s goal in imposing remedies to Google’s illegal conduct must be evaluated according to its stated aims of: 1) prying open the distribution channels that Google’s conduct monopolized and 2) depriving Google of the fruits of its illegal conduct. By striking down only the legal “exclusive” clauses without addressing the “economic” exclusivity through upfront, default payments, the Court’s proposed remedy fails to achieve its stated goals.
The Court’s remedies overly focus on the need for competition in the consumer-facing GSE market, without a proportionate focus on the needs for competition in the business-facing text ads market. To deprive Google of the fruits of its illegal conduct, Google’s buy-side search fees should be capped and rival ad buying systems should be able to access the supply-side inventory on an equivalent basis as Google’s own text ads buying systems.
Ever since the Microsoft trial, the network effects that benefit from accurate, scale and fresh data has been recognized as important criteria for competition in digital markets. Just as financial markets benefit from increased transparency, so too can digitalmarkets. By imposing true competition in distribution channels, including those across Google’s consumer-facing search access points, and ensuring the remedies pry open both consumer-facing and business-facing search markets, the entire world can benefitfrom restored competition.
The limitations of Judge Mehta’s ruling is further underlined by the EC’s new investigation into Google’s activities in AI. The EC has clearly perceived the potential risk that Google is using its monopoly position in search in an attempt to dominate the emerging AI market, a risk that Mehta seems unwilling to address.