Google Monopoly Ruling to Carry Influence in Emerging AI Field

A decisive court ruling branding Alphabet Inc.'s Google an illegal monopolist in the search market is set to carry consequences for the development of the artificial intelligence space and the tech giant’s position in it.

Google, through exclusive deals with Apple Inc. and others to be the default search engine on smartphones and web browsers, stifled competition for search services, Judge Amit Mehta of the US District Court for the District of Columbia wrote in an Aug. 5 ruling.

Through those practices, the company gained an enormous advantage in terms of scale, which serves as a “critical input” for producing quality search results, he said. While generative AI technology has the potential to transform search products, Mehta concluded it has “not (or at least not yet) eliminated or materially reduced the need for user data.”

Such a finding opens the door to remedies that could ultimately cut into Google’s scale. That’s important because of the key part user data can play in training machine-learning models, said Jason Kint, CEO of media trade group Digital Content Next.

“What became evident in the trial is that Google has an advantage no else has, beyond the computing power and the capital, that would further entrench them because of their daily scale and queries,” Kint said. “The remedy stage will have implications for the AI market going forward.”

Mehta has set a hearing for Sept. 6 to begin discussing potential remedies. It is unclear what the Justice Department will ask for, but possibilities include blocking Google’s exclusivity contracts and separating Alphabet’s Google search business from other products.

Google has also said it plans to appeal the ruling. “This decision recognizes that Google offers the best search engine, but concludes that we shouldn’t be allowed to make it easily available,” Kent Walker, president of Google Global Affairs, said in a statement.

Microsoft Testimony

DOJ’s action against Google marked its largest tech antitrust case since it took on Microsoft Corp. in the 1990s.

This time, the DOJ called as a witness Microsoft’s CEO, who raised concerns at trial about how Google’s power in online search could advantage it in the development of generative AI.

Satya Nadella, who was instrumental in developing the Bing search engine, cited the possibility of Google paying publishers for exclusive rights to content that it could use to make its search AI better than rivals.

Google today receives nine times more web queries each day than all of its rivals combined, as well as 19 times more searches than rivals on mobile, according to Mehta’s decision. More than 90% of unique search phrases on the web are also only seen by Google.

Mehta noted that Google has used this advantage to improve the quality of its search product. In May, Alphabet integrated its AI model Gemini into Google search.

But the judge also batted down Google’s claims that the role of scale is overstated and that the emergence of AI, with such upstarts as Microsoft-backed OpenAI, showcased healthy competition in search.

“True, developments in search technology, including greater reliance on large-language models, or LLMs, for ranking, has reduced the need for user data,” Mehta said. “Google, however, continues to rely on large volumes of user data.”

He also cited Neeva, a California firm that built a search engine enhanced by AI technology and shut down in 2023 because the company “could not ride it to market success.”

Mehta appears to have various options on remedies that could affect competition in the AI space, which is already a source of focus among antitrust authorities across the globe.

“If he believes that access to Google’s search data gives Google an unfair advantage in the development of AI technologies, Mehta may issue an order that requires Google to make these datasets available to other competitors that require the information for developing their own competing AI technologies,” said Bradley Weber, an antitrust practice chair at Locke Lord LLP.

‘Mass of Data’

Mehta noted that both costs and user data can serve as a barrier to entry in the market for search services.

“Some of these AI companies do need a critical mass of data, so to the extent that Google did violate the antitrust laws, getting more data flow, getting rid of these distribution agreements, there’s no doubt that’s a net benefit,” said John Yun, George Mason University law professor.

But that leaves questions about where users will go when faced with a choice, Yun said.

In 2018, the European Union fined Google $5 billion and ordered it to change the way it puts search and web-browser apps onto Android mobile devices. But that had little effect, with Google’s share of the mobile search market in the region actually growing two years later, Bloomberg News reported.

Is user data the source of Google’s “enduring market advantage?” asked Yun, a former Federal Trade Commission economist. “I think those arguments are pretty weak.”

Still, Google critics, such as Kint, cite Nadella’s testimony for how Google’s business practices have given it a leg up that even giants like Microsoft can’t compete with.

“Google’s 98% of mobile queries give it a scale that no one else can come remotely close to,” Kint said. “It takes a certain amount of scale to” train AI models.

The case is United States v. Google LLC, D.D.C., No. 1:20-cv-03010, 8/5/24