Google got some disappointing news at a status conference Tuesday, where US District Judge Amit Mehta suggested that Google's AI products may be restricted as an appropriate remedy following the government's win in the search monopoly trial.
According to Law360, Mehta said that "the recent emergence of AI products that are intended to mimic the functionality of search engines" is rapidly shifting the search market. Because the judge is now weighing preventive measures to combat Google's anticompetitive behavior, the judge wants to hear much more about how each side views AI's role in Google's search empire during the remedies stage of litigationΒ than he did during the search trial.
"AI and the integration of AI is only going to play a much larger role, it seems to me, in the remedy phase than it did in the liability phase," Mehta said. "Is that because of the remedies being requested? Perhaps. But is it also potentially because the market that we have all been discussing has shifted?"
Amazon Japan has said it will collaborate with Japan Fair Trade Commission (JFTC) after the watchdog conducted an on-site inspection related to suspected violations of anti-monopoly laws. The e-commerce giant is under suspicion of inappropriately urging vendors to lower their prices on its online shopping platform in return for better product placement, as first reported [β¦]
US Senator Elizabeth Warren of Massachusetts and Congressman Jerry Nadler of New York have called on government bodies to investigate what they allege is the βpredatory pricingβ of .com web addresses, the Internetβs prime real estate.
In a letter delivered today to the Department of Justice and the National Telecommunications and Information Administration, a branch of the Department of Commerce that advises the president, the two Democrats accuse VeriSign, the company that administers the .com top-level domain, of abusing its market dominance to overcharge customers.
In 2018, under the Donald Trump administration, the NTIA modified the terms on how much VeriSign could charge for .com domains. The company has since hiked prices by 30 percent, the letter claims, though its service remains identical and could allegedly be provided far more cheaply by others.
The DOJ proposed banning Google from paying for search distribution deals.
Google's search dominance relies on distribution, not just technology.
Investors worry Google's market share could drop if distribution deals end.
The online search business is not about technology. It's about distribution.
The US Department of Justice made that clear Wednesday when it proposed fixes for a judge's earth-shaking ruling that Google is an illegal monopolist.
The DOJ's remedies cut to the heart of how Google distributes its search engine and how that broad reach is key to the company's dominance of this crucial and lucrative market.
The government's suggestion that Google be forced to sell Chrome initially grabbed the headlines. But, on Thursday, the potential crackdown on all distribution deals caught investors' attention.
The US government's lawyers said Google should be banned from offering "anything of value for any form" of search distribution. That especially includes Apple, but also covers any other partner or company, with limited exceptions, according to the DOJ's executive summary.
ISI Evercore internet analyst Mark Mahaney called this distribution crackdown "draconian" and said investors were surprised by the severity of the proposals. Google shares dropped 5% on Thursday.
The reason for this concern is that the online search business is not really about the quality of the technology. The edge comes from massive distribution and the huge volume of user queries that come with such a broad reach.
When people use Google to search on the web, the company monitors what results they click on. It feeds these responses back into its search engine, and the product gets constantly better. For instance, if most people click on the third result for a particular query, Google's search engine will likely adjust and rank that result higher in the future.
This self-reinforcing system is very hard to compete against. This is how the DOJ put it on Wednesday:
"Search engines rely on user data to improve search quality β an outcome that drives more users to a search engine. Users attract advertisers, and advertising dollars fund general search engines, creating a perpetual feedback loop that further entrenches Google."
One of the few ways to compete is to get more distribution than Google and pull in the extra queries and click-behavior data.
For many years, Google has paid to lock down most major sources of distribution. The most famous deal is with Apple. Google pays the iPhone maker about $20 billion a year to be the default search engine on Apple's mobile devices.
If the search business was actually about the quality of Google's technology, why does it have to pay Apple $20 billion a year? That question is at the heart of the DOJ's case, and Google has never been able to answer it properly. Because it keeps paying Apple.
If Google search technology is so great, the company shouldn't have to pay for distribution. People would just flock to its search engine all by themselves.
We could soon see a real-world test of this.
If the judge in this case agrees with the DOJ, then these payments will end β not just with Apple, but with any other third-party source of online distribution for Google's search engine.
This may have freaked investors out on Thursday. They know that the search business is mainly about distribution, and Google may not be able to do this now.
In a worst-case scenario, Google could lose a material slice of the US search market, according to Mahaney.
"We believe Google's default search placements via contractual agreements represent 50%+ of Google's US search queries," he estimated on Thursday.
If half of Google's US search queries go away, that could threaten the self-reinforcing cycle of user click data improving its results.
Suddenly, Google Search may not be so uncatchable.
Google's top lawyer, Kent Walker, said the DOJ's proposals would "break" the company's search engine and "deliberately hobble people's ability to access" the service.
Google gets to propose its own remedies on December 20.
Late yesterday, the US Department of Justice filed its proposed final judgment, officially recommending a broad range of remedies to end Google's search monopoly.
Predictably, Google is not happy with the DOJ's plan, which requires the company to sell its Chrome browser. It also retains the option of forcing Google to divest Android if competition doesn't increase from behavioral remedies, including bans on exclusive default deals with other browsers and device makers. Additionally, Google is prohibited from building any new browsers and must fund an education campaign that shows people how to switch search engines and potentially even pays people to switch. Google may also be restricted from using its data scale advantage to benefit its AI products.
Preferred by 61 percent of Internet users, Google's Chrome browser plays too big a role in maintaining the tech giant's search monopoly, the US Department of Justice has reportedly decided.
On Monday, people familiar with the matter told Bloomberg that top antitrust officials are planning to ask the court on Wednesday to order Google to sell off Chrome. In addition to banning Google's exclusive default deals, cutting off Google's control of the world's most popular browser may be necessary, sources suggested, to level the playing field for rivals.
Additionally, the DOJ intends to ask for a range of other remedies, Bloomberg reported, all of them discussed in a court filing last month. These include imposing data licensing requirements and requiring more transparency for advertisers on where their ads appear, as well as requiring "measures related to artificial intelligence and its Android smartphone operating system," sources said. Those measures will likely stop Google from hoarding user data for both search results and AI products, with the DOJ seemingly paving the way for more users to opt their content out of AI training.
