This tech giant’s search engine dominance is under siege. Here’s why…
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From the desk of Miles Everson:
Let’s apply this framework in the context of a specific company. Keep reading below to know why this company, known for dominating the search engine space, is facing legal scrutiny due to its dominant position. |
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This tech giant’s search engine dominance is under siege. Here’s why… Ever since the launch of its eponymous search engine in 1998, Google has dominated the space, leapfrogging the likes of Microsoft’s Bing and Yahoo! … and despite facing years of challenges from government regulators, the search giant was able to come out of those battles unscathed and maintain its market position. Due to this dominance, Alphabet, the parent corporation of Google, has raked in billions of dollars in revenue. Moreover, the search engine’s dominant position has enabled it to become one of the most influential companies across the globe.
Fast forward to 2024, Google is still king of the hill in the search engine wars. However, this dominance is under siege from government regulators. A Major Setback: Losing a Massive Antitrust Case On August 4, 2024, a judge ruled that Google was illegally exploiting its search engine dominance to beat competition and stifle innovation. This ruling comes nearly a year after the start of a trial that pitted the U.S. Department of Justice (DOJ) against Google. After reviewing evidence over the course of a weeks-long trial that concluded in early May, U.S. District Judge Amit Mehta, in his 277-page ruling, said: “After having carefully considered and weighed the witness testimony and Furthermore, the ruling pointed out that Google’s dominance in the search engine market is evidence of its monopoly, as it enjoys an 89.2% share of the segment for general search services and a 94.9% share on mobile devices.
The ruling also found that Google violated antitrust laws by entering into exclusive agreements with device manufacturers like Apple and Samsung, which allowed Google’s search engine to be set as the default on their products. For example: In the trial, it was revealed that Google paid Apple more than USD 26 billion in 2021 to make its search engine the default option in Safari, Apple’s proprietary web browser. Mehta argued that deals like those enabled the search giant to build a monopoly and unfairly suppress competition. In response, Google said it intends to challenge Mehta’s findings, arguing that the decision “recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available.” This decision represents a victory for the Justice Department, which has been pursuing the case for nearly four years and has committed itself to rein in Big Tech’s power during the administration of Joe Biden. Breaking Up Google’s Search Engine Monopoly In the aftermath of winning its lawsuit against Google, the DOJ indicated it was considering a possible breakup of the tech giant as an antitrust remedy, which it argued was necessary to restrict monopolistic behavior and actions. Aside from a potential breakup, the government agency said it was also considering behavioral and structural remedies that would deter Google from using products such as Chrome, Play, and Android to maintain its search engine’s dominance over its rivals. Moreover, the DOJ said it was considering placing restrictions on the contracts the search giant can enter into with phone makers and browser companies, particularly agreements that makes Google Search the default search option on devices. In the DOJ’s eyes, these remedies, along with the other ones it proposed, would be enough to curtail Google’s attempts to maintain its search engine monopoly. A Bumpy Road Ahead Investors didn’t seem to be worried about Google as the latter’s stock barely moved when news of a potential breakup came out. Despite this piece of good news, the tech giant was hit with yet another roadblock: An antitrust case where it is alleged that its advertising business has acted as a monopoly that led to higher ad prices for customers. In the face of all these regulatory challenges, it remains to be seen what will happen to Google and its parent company Alphabet. However, it’s painfully clear that the search giant faces a bumpy road ahead due to its legal battles. Google’s Legal Woes Seen Through RDS’ Lens Professor Joel Litman and Dr. Mark L. Frigo in the book, “Driven” emphasized the importance of governmental and regulatory change, and how these could impact a firm’s business activities. According to them, government moves such as antitrust acts “can mean life or death for a particular business strategy.” In the case of Google, since its search engine is the core of its business dominance, any shakeup in how it operates would deal a major blow to its market position and operations. If the search giant wants to maintain its high levels of performance, it must come up with ways to mitigate the impacts of its legal woes. Otherwise, it and its parent company Alphabet could see their empire crumble before their very eyes. — If you’re looking to gain a better understanding of Return Driven Strategy and Career Driven Strategy, we highly recommend checking out “Driven” by Professor Litman and Dr. Frigo. Click here to get your copy and learn how this framework can help you in your business strategies and ultimately, in ethically maximizing wealth for your firm. Hope you found this week’s insights interesting and helpful.
Stay tuned for next Tuesday’s Return Driven Strategy! What comes to your mind when you hear the word, “Yahoo”? Learn more about this business case study in next week’s article! |
