Google’s relationship with regulators and government bodies appeared to deteriorate in 2023. Such a decay is perhaps unsurprising in a year which welcomed a swathe of lawsuits against the largest online platforms.
Regulators and private entities are more confident about taking on these platforms than ever before. And so, as well as the ongoing cases against Google, Apple and Facebook, additional attempts to make these companies answerable to antitrust law in 2024 are all but inevitable.
Given the seemingly growing command that regulatory bodies such as the DOJ, the European Commission and the CMA have over how platforms operate, 2024 poses something of an opportunity: these regulators will have the chance within the next twelve months to reshape platform behaviour in the interests of consumers.
It is vital that these bodies and the industry insiders who will advise them learn the right lessons from 2023.
The choice of the DOJ’s Search case against Google as a case study for 2023’s lessons is only natural: the DOJ amassed a wealth of evidence that clarifies exactly how Google, Apple and other major forces of the tech ecosystem maintain their dominant market position – and the bleak ramifications of their behaviour for consumers. This rich source of insight offers conclusions that must underwrite the remedies-processes of 2024 if these measures are to have any real-world impact.
Harms: Beyond Markets and Definitions
The USA v. Google case hinged, in short, on whether Google monopolised the online Search market. Because Google contested the fact that Search might be a ‘market’ at all, the DOJ directed a great portion of its attention to questions of market definition. There is a danger that this endlessly debatable topic diverts public attention away from what is far more clear-cut: the harms that Google’s business practices cause.
The DOJ illuminated how Google’s anticompetitive behaviour unfairly damages all sectors of the digital economy. The example of how Google crushed Branch, an innovative potential rival of Google’s search engine, demonstrates that it is Google’s monopoly profits that give the company an edge over competitors – not the quality of its product. In Branch’s case, Google threatened to withdraw its revenue share agreements (‘RSAs’) with Samsung to prevent the company from allowing Branch’s product on Samsung devices. Google effectively denied Samsung customers the opportunity to use a superior product.
Another sector that Google damages is advertisers. Google controls such a large fraction of the search ads market that it is able to impose unfair conditions on advertisers. These include the ability to obfuscate the ad auction process and toggle prices in order to maximise Google’s revenue at the expense of advertisers. Many organisations have expressed their dissatisfaction with Google’s product, but claimed they had no choice but to use Google because of the scale of Google’s operation – a key sign of an anticompetitive market.
These examples both highlight the negative effect of Google’s dominance on consumers. Higher advertising spends refer costs to buyers; gatekeeping digital innovation starves consumers of technological developments. It is vital to stress the bald truth of these harms because they speak to the need for quick, effective regulatory intervention. These harms are currently ongoing and each month without an effective remedy is another victory for Google and its share price.
Scale is Magic
One line of defence Google took against the DOJ was to argue that there are good reasons for their search product to be so well-used – their engine is simply the best around. Their argument emphasises the importance of Google’s proprietary algorithms in search and, in doing so, relegates the significance of scale to Google’s product. To admit the importance of scale would be to agree with the DOJ that the digital market suffers from tipping and network effects – properties that signify an anticompetitive marketplace.
But the DOJ was able to exhibit a more sophisticated framing of Google’s search engine that resisted this narrow dualism and, in doing so, implicated Google in this economy of scale. The DOJ produced slides from 2020 that show that ‘the dialogue [between users and Google] is the source of magic’ of Google’s Search Engine Results Page (‘SERP’). Google’s algorithms predict what users will interact with based on previous interactions in similar scenarios. In effect, user-data was Google’s engineers’ key resource when developing its proprietary algorithms.
The basic conclusion that this point raises is that economies of scale do apply to Google’s business: the more interactions their software has with users, the more their engineers can refine its operation. But there is a significant leap to be made here: Google’s plans for the next few years rely on implementing Privacy Sandbox.
Yet, as Google’s ‘magic’ makes plain, this company’s interest in ‘privacy’ is a land-grab designed further to entrench Google’s control over online data flows; its measures will allow Google to stockpile ‘magic’ while denying it to others. As the DOJ begins to consider remedies for this case, it is vital that they understand that any remedy they design must redress Google’s proposed measures – or fail on first contact with reality.
The purpose of remedies in the Search trial, and, arguably, all the major ongoing trials against tech platforms, is an open web, free from monopoly control. Reaching this goal would require Google and Apple to unlock customers from their bundled systems – which they will only do if compelled by regulatory agencies.
In practical terms, the $19B per year payments from Google to Apple make it very difficult for regulators to reshape digital markets; the incentives are too high for these platforms to maintain the status quo. This deal secures a risk-free revenue stream for Apple and maintains Google’s dominance on both ends of the digital advertising market.
One potential way that regulators could disrupt these companies’ position is via an interoperable solution: were Apple to be released from their default agreement with Google, they could engineer an ad-free or reduced ad SERP front end to Google’s search infrastructure.
This solution would heavily reduce Google’s leverage over the digital advertising market and increase competition in the advertising and publishing sectors. Users would still be able to access the most relevant results but there would be competition for search ads.
The remedies measures following the DOJ’s Search case are an opportunity for regulators to shape how they want the digital ecosystem to operate. In this particular example, the Courts have an opportunity to redress the inequality in the digital advertising ecosystem. But more widely, continuing to combat the unfair behaviour of the largest technology companies with fines at this stage would signal to the these companies that they are free to continue business as usual.
2024 is the year for structural changes to the digital ecosystem.
 See, for instance, the suit against Meta on the grounds of child-harm, the Ad-tech case against Google and the Texas privacy fixing case.
 Google paid Apple $26.3 Billion to secure default status on Apple’s devices in 2021. This vast payment is one of Google’s revenue share agreements (‘RSAs’) with the largest tech companies.
 Google’s management holds its team to a 20% annual revenue increase, as this email exchange reveals. Another exchange between employees expresses surprise that no-one has objected to Google’s price hikes.