Google Operating as a Monopoly

From BigTechWiki
Revision as of 19:20, 11 March 2022 by Btw admin (talk | contribs)
(diff) ← Older revision | Latest revision (diff) | Newer revision → (diff)
Jump to navigationJump to search
  • U.S. and overseas regulators alleged Google was a monopoly
    • In October 2020, the Justice Department’s Antitrust Division sued Google, alleging the company was an illegal monopoly. Google maintained monopolies in search and search advertising and “deprives rivals of the quality, reach, and financial position necessary to mount any meaningful competition to Google’s longstanding monopolies,” wrote the Justice Department.[1]
    • Before the Justice Department’s lawsuit, the Federal Trade Commission’s staff concluded Google pursued anti- competitive strategies, while the House Antitrust Subcommittee’s majority staff alleged Google maintained a “durable monopoly” in general online search and used its suite of products to preserve and expand its monopoly.
    • Foreign regulators also levied antitrust penalties against Google. The European Commission found Google illegally blocked the rise of rivals to Android, its mobile operating system. Regulators in France, India, and Russia levied further anti-trust penalties against Google.
  • Google had a controlling market share across a number of products
    • Google had nine products with more than a billion users each. Google was the largest provider of digital advertising, while also owning a web browser, Chrome, a mobile operating system, Android, and was a major provider of mapping, email, cloud computing, and more.[2]
    • Google’s 2019 total revenues exceeded $160 billion, up 45 percent from 2017.
  • Google general search
    • Google captured 87 percent of the U.S. market for general search, and over 92 percent of the world’s market. On mobile devices, Google controlled 95 percent of searches in the U.S.[3]
    • Google identified itself as a leader in the search market as early as 2007. In 2009, a Google executive shared an analysis finding Google captured 71.5 percent of the general search market in the U.S.
    • As Google came under growing scrutiny from regulators over anti-trust, it said it stopped collecting data on its market share in general search.
    • Regulators, however, still concluded Google was the market leader in search. The House Antitrust Subcommittee found Google had only strengthened its market position in general search of the past decade. UK and Australian regulators, along with the European Commission all found Google had substantial market power in general search.
    • Google employed restrictive contracts, Chrome, and Android to ensure it was the default search engine across a number of platforms, cementing its dominance.
      • Users tend to stick with the default search engine offered, meaning Google’s efforts funneled users to its search engine.
      • Google signed contracts with the major phone makers and carriers to ensure Google was the default search engine across a number of products and services. For example, Google paid to be the default search engine on Apple’s Safari, Mozilla’ Firefox, and with phone makers like Verizon. Google paid Apple alone $12 billion a year to be the default search engine on its products. Politico wrote that Google’s contracts made the default search engine on 86 percent of U.S. smartphones and “locked in that exclusivity for years.” One Google executive bragged that a contract with Verizon meant Google would “own” the U.S. search market.
      • Google produced the Chrome web browser in part to ensure it controlled another entry point for users to the search and advertising markets.
      • Google effectively required the manufacturers of smartphones using Android to make Google their product’s default search engine.
    • The House Antitrust Subcommittee alleged Google lifted “content directly from third-party providers to bootstrap Google’s own vertical services.” Google demanded “that third parties permit Google to take their content, or else be removed from Google’s search results entirely.”
      • For example, Google took Yelp’s content while creating its own competing service, and threatened to de-list Yelp if it moved to protect its product from being copied.
        • Google scraped the content of third-party websites like Celebrity Net Worth and the lyric index website Genius and posted it on Google’s results pages – the effect of which was to divert organic search traffic and dollars from their websites.
    • Google competed with specialized search engines like Yelp, Expedia, and TripAdvisor. In search results, Google ranked its own inferior services above competitors’ offerings.
      • Google’s products allegedly showed higher prices and fewer choices compared to competitors, but were still ranked higher. One competitor said Google’s self-privileging led to a 20 percent decline in their organic search traffic. Another claimed a demotion led to an 85 percent decline in revenue.
      • Google employees admitted their products were inferior. One Google employee said if Google ranked its content according to the criteria it applied to competitors, “it will never rank.”
      • Competitors demoted by Google were often left with no choice but to advertise on Google to make up for the loss they experienced in organic search traffic. The House Antitrust Subcommittee wrote, “When demoting firms that Google views as actual or potential competitive threats, Google is effectively raising rivals’ costs.”
      • Advertising on Google, however, risked handing Google commercially-sensitive information.
      • The FTC and the European Commission both identified Google’s self-preferencing as anti-competitive
    • Google’s anti-competitive actions discouraged rivals from investing in innovation.
  • Google search advertising & digital advertising
    • Google’s captured 73 percent of the search advertising market in 2019. Google’s 2019 total revenues exceeded $160 billion, of which 83 percent came from digital ads.
    • The UK’s antitrust regulator found Google had “significant market power” in search advertising, which allowed it to charge prices 30 to 40 percent higher than Bing.
    • Google bought a number of companies to ensure its continued dominance in advertising, including DoubleClick for $3.1 billion, along with AdMob, and AdMeld.
      • Google bought DoubleClick after considering competing directly with the company instead. The FTC investigated the acquisition in 2007, where Google promised the FTC and Congress it would not combine Google’s and DoubleClick’s data. Google went back on its promise by 2016.
    • Google expanded search advertisements at the expense of users’ search results quality and third-party websites organic search traffic, pushing more companies to invest more in their search advertising expenses.
      • Google has continued to blur the distinction between organic search results and search advertisements over the years. At first Google separated paid advertisements into a vertical column to the right of organic search results, but over the years Google has merged the two columns and increased the number of paid search results that rank above the organic search results. One Google employee objected to the addition of a fourth ad above search results because the quality of the fourth ad was lower than the first organic search results, but was overruled.
      • A study found 59 percent of consumers could not tell the difference between paid and organic search results.
      • The expansion of search advertising harmed users’ experience and pushed companies to invest more in search advertising on Google and less in innovation as organic search results became less likely to result in web traffic. As Google expanded search advertising space on Google, organic search results click-through rates fell over 30 percent from 2016 through 2019, while paid click-through rates more than tripled.
      • The House Antitrust Subcommittee wrote that privileging paid advertisements over organic search results made search results “increasingly pay-for-play [...] businesses must now compete for users based on how much money they pay Google.”
  • Android
    • Android ran 75 percent of the world’s mobile devices, 47 percent in the U.S.
    • Beyond being a massive source of revenue as the mobile market expanded, Google’s ownership of Android meant that Google could in one more sector ensure Google was the entry point for users in general search and search advertising.
    • Google imposed contracts that effectively required all manufacturers of smartphones running Android to pre-install Google apps like Google Search and Chrome and to have Google as the default search engine.
    • The restrictive pre-installation requirements harmed potential competitors and users, who suffered from phones whose system memory was cluttered by the pre-installed apps.
    • Android phones were also primarily serviced by Google’s app store, called the Play Store. Google charged app developers a 30 percent commission for sales through the Play Store. These revenues accounted for 85 percent of Google’s total revenue from the Android operating system, hardware sales, and the Play Store.
    • One app developer said Google banned their products from the Play Store because it competed with Google overseas.
    • The Android platform monitored users and competing apps and used the resulting data in its own strategic decision-making. With Android, Google built user profiles detailing a person’s demographic, where they are, where they go, which apps they use, and for how long. The House Antitrust Subcommittee said these measures provided Google with “near perfect” market intelligence.
  • Chrome
    • Google Chrome captured 59 percent of desktop browser usage in the U.S. and served as another way to ensure Google search and search advertising was dominant, as Chrome’s default search engine was Google.
    • Although Google told antitrust regulators that Chrome was a defensive product for Google, internal presentations described Google as part of Google’s growth strategy.
    • Google had outsized representation at the World Wide Web Consortium, the governing body for web browsers, eight times more representatives than the next largest stakeholder, Microsoft. Google’s overrepresentation ensured Google could set standards beneficial to Google.
  • Google maps
    • Google Maps captured an estimated 80 percent of the navigation app market.
    • Although Google first offered Google Maps for free, it nows sells ads through the service. In 2018, Google raised prices for apps making calls to Google Maps by 1,400 percent. One developer said the pricing change “took our bill from $90/month in October to $20,000/month in December.”
  • Google Cloud platform
    • Google Cloud Platform had $2.8 billion in revenues in 2020 and was Alphabet’s fastest-growing line of business.