The US’s government’s rising interest to google into the affairs of Google
Summary:
The share price graph of Alphabet is facing an unsteady movement due to a United States judge’s ruling that Google’s search business was an illegal monopoly. It also raises concerns about unexpected competition due to generative artificial intelligence like ChatGPT and other AI. It is assumed that the Department of Justice (DOJ) may file proposed remedies to redress historical market distortions and stop the potential exploitation of AI. The agency’s trustbuster-in-chief, Mr. Jonathan Kanter has suggested the court to separate Google’s search engine from its Chrome browser and Android OS. On the other hand, the judge who is hearing this case, Amit Mehta, is most probably taking another thing into consideration and that is blocking Google’s payments for its default search engine on numerous devices and carries, in 2021 which amounts to $26 billion. In addition to this Google might be forced to keep paying without any exclusion, which might enhance the competition, especially in the era of generative AI. However, Alphabet has vowed to appeal the verdict which may take a long time.
Context:
Alphabet, which is the parent company of Google, is facing an unsteady movement in share price even though they are raising profits. The reasons seem quite shocking. Google generates 90% of its income through the search business. In August an American Judge declared that this search business was an illegal monopoly. Now investors are frightened that this could face unprecedented competition, especially in the age of generative artificial intelligence. It is assumed that the Department of Justice (DOJ) may file proposed remedies to redress historical market distortions and stop the potential exploitation of AI.
Additionally, the DoJ is getting ready to set an example of Google as the agency’s trustbuster-in-chief, Jonathan Kanter has said that the verdict was a part of “Mount Rushmore” of antitrust cases. He might even urge the court to break up Google’s search engine from its Chrome browser and Android OS. If this happens this would be the largest anti-monopolistic move in American history after a failed effort to split up Microsoft almost 25 years ago.
On the other hand, the presiding judge, Amit Mehtha probably thought it in another way. It seems like a breakup might be too harsh for him. The main thrust of his verdict is that Google’s size alone was not the issue; rather Google used “exclusionary” distribution deals with companies like Apple to expand its monopoly on search and text-based ads. The verdict was based on precedents set in the Microsoft trial, where the decision to separate Microsoft was overturned on appeal, since then, wide-ranging “structural” remedies have been discouraged.
Like Mr. Kanter, Mr. Mehta seems eager to address Google’s past market manipulations as well as to consider how they could manifest themselves in the generative AI era. For that, targeted remedies may be more likely. The most probable solution is to ban Google’s payment for its default search engine on devices and carriers, which would penalize recipients more than Google itself, despite not being involved in the lawsuit. In addition to this Google might be forced to keep paying without any exclusion, which might enhance the competition, especially in the era of generative AI.
Due to the illicit use of default payment methods and unlawful use of its monopoly power, Google is convicted for raising the price of text ads potentially leading to costly lawsuits. This occurs as the power of clicking links is diminished and search business models shift towards generating AI. However, Alphabet has vowed to appeal the verdict which may take a long time.
Picture and Article Source: The Economist
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