Editorial
The Gist
- Google faces antitrust challenges. Google is under scrutiny from the US Department of Justice for monopolizing the search market and controlling digital ad spaces.
- Historical parallels with Microsoft. The Google antitrust case mirrors the 2001 Microsoft trial, highlighting the issue of monopolistic practices in tech.
- Impact on customer experience strategies. Antitrust decisions could reshape how firms innovate and deliver software-based features to improve customer experience.
Google has had an interesting year in its marketplaces. It had to roll back a cookie deprecation strategy, manage the changeover from Universal Analytics to GA4, and has faced heavy competition against OpenAI, Anthropic, and others in the genAI marketplace.
While its size has made its challenges manageable, Google has realized that its very size has brought antitrust claims against it.
A federal judge sided with the US Department of Justice that Google illegally monopolized the internet search market. A separate antitrust case, also launched by the Justice Department in partnership with several state attorney generals, is underway against Google’s ad tech business.
The judgment from the search case — that Google is a monopoly and should be split — profoundly affects how firms build a competitive advantage for software-based features, ones ultimately used to bolster customer experience.
How the Google Search Antitrust Case Came to Be
The search antitrust case started a year ago, reaching a verdict in August against Google. The Department of Justice claimed that Google used its agreements to make its online search engine the default choice on mobile carriers as a way to limit competition. In its defense, Google highlighted that the DOJ misperceived facts regarding which customers are being harmed. Google asserted that its marketplace success stems from consumers selecting the Google search engine as the best provider of an online search experience.
Key Points from the Ruling
In the extensive 286-page ruling, U.S. District Judge Amit Mehta noted many aspects of Google’s strategy to maintain a dominant market share as a reason behind his decision.
Google’s operations mentioned in the case, such as Google having “an 89.2% share of the market for general search services” and Google’s annual payments to make its search engine the default on smartphones and browsers, were deemed sufficient evidence of monopolistic behavior.
Related Article: US Judge Deems Google a 'Monopolist' in Landmark Antitrust Decision
Ad Tech Antitrust Trial
The ad tech antitrust trial features some similarities to the search antitrust suit, but with claims for a different marketplace dynamic. The Justice Department claims that Google has conflicting access to different sides of its ad exchange for the ad tech industry, in which advertisers buy and sell digital ad space on platforms and networks.
Google asserts that the DOJ, again, misperceived the market and that the DOJ has a limited understanding of the competitors that operate ads and ad exchanges. Google claims they misidentified what options advertisers have.
Key Differences Between the Trials
While both cases address monopolistic behavior, the ad tech case brings new complexities related to how Google manages ad exchanges and its control over both supply and demand sides of the market.
The History of Today’s Tech Antitrust Began With Yesterday’s Microsoft Suit
Antitrust suits are meant to challenge the legality of mergers, especially if the merger involves a business acquiring the ownership of suppliers, distributors, or retail locations. The business structure that results from such a merger is called vertical integration. A vertical integration is an acquisition of resources used to deliver an end product or service to a customer.
Not all vertical integrations are illegal or arise from a merger, but they are often scrutinized as an antitrust court case due to their potential to reduce competition that gives customers reasonable purchase options and to harm consumers through a lack of incentive to lower prices. The lack of alternatives leaves consumers with higher prices than what would be in a competitive marketplace.
The Microsoft Parallels
While notable antitrust cases have had significant outcomes for the US marketplaces being considered in those cases, the 2001 Microsoft antitrust trial is the most influential to Google’s search and advertising antitrust cases because of the similarities in the arguing points. The United States vs. Microsoft case was a landmark suit for its reasoning behind the potential breakup of the largest office software producer in the world. The court decision set the stage for how tech companies would have to consider defending their products and services.
Microsoft’s Antitrust Defense and Its Influence on Google
Microsoft faced a potential breakup of its business stemming from a Department of Justice investigation of how its software or services were bundled with Microsoft Windows. The Department of Justice felt Microsoft breached a 1994 settlement, leaving consumers with fewer marketplace choices because of the dominance of the Windows operating system. In its defense, Microsoft claimed that innovation to fight competition led to blending Windows and IE so that consumers benefited from the value of both products.
Related Article: The Big Tech Antitrust Movement Is Finally Showing Results
Impact of the Microsoft Case on Tech Industry
The suit schedule lasted two years before a district court reached a judgment. The court determined that Microsoft had to be split into two separate units, one to produce the operating system and one to produce its software components.
An appeal of that judgment — due to the preceding judge’s comments to the news media — led to a conclusive DOJ agreement to seek a lesser antitrust penalty instead of the recommended separation of business units.
How Antitrust Suits in Tech Could Influence Customer Experience Strategies
For Google, defending innovation as a business model is a familiar refrain.
Google has faced fines before regarding its search engine, most notably in Europe. This is different. The search case was the first time since the Microsoft suit that the Justice Department has pursued the separation of a corporation. It comes at a critical time in which software is an essential delivery process of a business model and its elements, including customer experience.
The Role of Software in Business Models
In the history of antitrust cases, businesses and governments address the details of a company acquiring physical assets to form a vertical integration. The computer age, buoyed by a robust internet and reimagined usage cases for data, created digital assets that blur the role of business operations.
Complexity of Digital Assets and Business Models
While integrations based on digital assets raise value, they also raise more nuanced efforts to keep operational processes separate. Data is an innocuous, insignificant digital asset by itself, but when information from various data sources are combined, the data can turn into a link to how a business model operates. Sometimes this alters the direction a business model can take.
The Justice Department’s Case Against Google: What Happens Now?
The Justice Department claimed that Google’s operations and dominance in the search and ads marketplaces limit the end customers’ options. Moreover, just like how Microsoft argued for its core product Windows, Google notes that its improvements and arrangements are a result of innovations meant to meet evolving marketplace demands.
Google will no doubt challenge the search antitrust ruling as it did against the European Union when it was charged a $1.66 billion antitrust fine. In fact Google won its counterchallenge last month, with the fine annulled because the court ignored other factors when the fine was awarded, according to CNN.
Implications for the Industry
In the meantime, the business world awaits the details of a remedy from the Google search antitrust case. The remedy can imply what businesses can and cannot do with bundled software features and partner agreements based on the software features. This is no small feat in a world where customer experiences usually start with online search and extend further with digital ad experiences on almost every online platform.
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Lessons for Marketers and Strategists
Influential court cases like Google or Microsoft hold a lesson for corporate strategists or historians, but the lessons hold value for marketers planning digital experiences as well.
Marketers should pay attention to any antitrust case where bundled services and software features are essential for delivering an end value to customers. The arrangement impacts how a customer experience is planned, from content messaging through an online search or ad to how features are added.
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