Unbox a new phone in the US and it’s almost certain to have Google as the default way to search the web. Federal judge Amit Mehta on Monday ruled in favor of the US Department of Justice that the contracts Google uses to secure that position violate fair competition laws. Now Mehta must decide what to do about it.
The jurist could order big changes to the unboxing experience, with users having to select their default search provider. He also could go as far as to force Google to sell parts of its business. Mehta scheduled a hearing for September to begin the process of deciding the penalties, but with Google appealing the verdict, it could be years—if ever—before the search giant must comply.
Though legal and economics experts say it’s difficult to guess where Mehta might land with his remedies, they have some ideas of what he might be considering. Here’s a look at five options.
Ban Revenue Sharing
US courts have generally tried to resolve antitrust violations by ordering an end to the illegal behavior, setting rules to prevent it from recurring, and taking any additional measures needed to ensure that the culprit and its competitors are moved onto an even field.
To satisfy that first prong, Mehta is widely expected to ban Google from continuing with arrangements under which it splits tens of billions of dollars in ad revenue among Apple, Samsung, Mozilla, and other companies that agree to set Google as the default search on their devices or software.
“At a minimum, the Justice Department will ask for an injunction that forbids Google from engaging in the conduct that the court deemed to be improper,” says William Kovacic, who previously served as an antitrust regulator on the US Federal Trade Commission.
An injunction might prevent Google from using its unmatched economic might to outspend smaller search companies, such as Bing, DuckDuckGo, or Ecosia, to secure exclusive default status. Positioning matters; Mehta’s ruling found that even when it’s easy for users to switch defaults, most people don’t adjust the setting. But some do prefer Google. That’s why “Google.com” is the most popular search term on Bing, which is the default on some Microsoft devices, according to Mehta’s ruling.
In the future, users who prefer Google may end up having to query “Google.com” in other search engines, too.
Require Choice Screens
Mehta could follow the lead of the European Union, which for years has required Google to offer a menu of search options on Android devices, and recently expanded the rule to the Chrome browser.
Experts don’t believe the European regulation has led to a significant increase in the popularity of Google alternatives because users recognize Google better than other options. “The horse is already out of the barn,” says Herbert Hovenkamp, an antitrust scholar at Penn Law School who has researched tech platforms. “One problem with free choice is that it won’t necessarily take down Google’s market share.”
But if Mehta pursues the approach, he should make some improvements on the EU’s rules, says Kamyl Bazbaz, senior vice president of public affairs at DuckDuckGo. Users should be prompted with the choice screen periodically, not just once, Bazbaz says. They shouldn’t have to deal with popups from Google urging them to switch the default to Google, he adds. And when users first interact with a competing search app, there should be an easy way to set it as the default app.
With these added measures, some searchers could find themselves more reliably ditching Google. Others could be frustrated by the recurring requests.
Order a Divestiture
Contract bans and choice screens are examples of conduct remedies. But the Justice Department in recent years has expressed a preference for what are known as structural remedies, or breaking off parts of a company.
Most famous is the breakup of telephone giant Bell in the 1980s, creating a variety of independent companies, including AT&T. But courts aren’t always on board. When Microsoft lost an antitrust battle in the 1990s, a federal appeals panel rejected an order to break up the company, and Microsoft eventually settled on a range of conduct changes.
A one-time sale is preferred by regulators in part because it doesn’t require them to invest in monitoring the ongoing compliance of companies in terms of conduct remedies. It’s a much cleaner break, and some antitrust experts contend that structural remedies are more effective.
The challenge is figuring out what parts of a company need to be separated. John Kwoka, an economics professor at Northeastern University who recently served as an adviser to FTC chair Lina Khan, says the key is identifying businesses in which ownership by Google are “distorting its incentives.” He says that, for instance, breaking off search could open the door to Google’s Android partnering with a different search engine.
But Hovenkamp doubts the potential of a search sell-off to increase competition because the service would remain popular. “Selling Google Search would just transfer the dominance to another firm,” he says. “I don’t know what sort of breakup would work.”
Some financial analysts who study Google parent Alphabet are also skeptical. “Alphabet’s scale, continued strong execution, and financial strength mitigate this legal risk and the possible ensuing financial and business model ramifications,” Emile El Nems, vice president for Moody’s Ratings, said in a press statement.
Other legal experts envision a future in which search results would come from Google and the ads in the experience from another company that’s spun off from Google. It’s unclear how that remedy would affect users, but it’s possible ads could end up being less relevant and more intrusive.
Force Google to Share
Mehta found in his judgment that Google provides users a superior experience because it receives billions of more queries than any other search engine, and that data fuels improvements to the algorithms that decide which results to show for a particular query.
Rebecca Haw Allensworth, a law professor at Vanderbilt University following the Google case, says one of the most aggressive remedies would be requiring Google to share data or algorithms with its search competition so they too could improve. “Courts do not like to force sharing between rivals like that, but on the other hand, the judge seemed very concerned about how Google’s conduct has deprived its rivals of what they really need to compete—scale in search data,” she says. “Forcing data sharing would directly address that concern.”
Potential shareable data could include all the queries that users are running on Google and which results they are clicking, DuckDuckGo’s Bazbaz says.
Another option would have Google hold on to its data while instead providing a service on a nondiscriminatory basis, with adequate customer support, for other apps to pull results from Google and present them to users as part of a competing experience. Rivals have called Google’s existing offering in this regard inadequate.
“Only a multipronged remedy will allow rivals to enter the market and fairly compete for consumers based on the merits of their own product,” says Lee Hepner, senior counsel at the American Economic Liberties Project, an anti-monopoly advocacy group.
Any approach that involves Google sharing data is likely to raise questions about its users’ privacy. Strengthened rivals also would have a better shot at securing defaults, meaning those who’d rather use Google would again have to take a few more steps to get back to regular old Google.
Increase Oversight
It’s up to the Justice Department to propose to Mehta potential remedies, which Google would then get a chance to rebut. Neither side has previewed what it wants.
In some other antitrust battles, Google has found ways to design product and policy changes to continue to limit competition in part by making competing unaffordable for rivals. “Google will do anything it can to get in the way of progress,” Bazbaz says. That’s why he hopes Mehta establishes a monitoring body to administer the remedies and hold Google to their spirit.
Bazbaz also wants to see Google have to invest in public education initiatives to let users know about the benefits they can get from switching search engines. With oversight and PR measures in place, users may have no choice but to hear about the Google Search antitrust case for a long time to come.
Source : Wired
