Is the Death of Google Upon Us?

Few companies have achieved a level of dominance such that their names become verbs, but Google is one of them. Recently however, Google has been facing a series of challenges that has led to increased layoffs, reduced morale, and desperation to cut costs. These challenges are likely caused by the current economic climate in the United States, which is characterized by enough uncertainty to justify significant reductions in advertisement spending. 

While the aforementioned stressors seem to be temporary problems — at least until consumer confidence rebounds — Google is facing enormous pressure from newfound competition from Microsoft’s newly announced ChatGPT-based artificial intelligence (AI). This pressure has been compounded by two antitrust lawsuits filed by the Department of Justice (DOJ), leading some to wonder if the death of Google, or at least a reduction in its market power, is in sight.

For years, Google has been the principal name of Internet search. Platforms such as Bing and Yahoo have held on along the way but have never been able to effectively compete. The details of how Google came to monopolize Internet search are laid out in a complaint filed by the DOJ in 2020, with this first of two antitrust cases set to be argued this September. Over the years, Google has entered into an array of exclusivity and tying agreements that force tech companies such as Apple to make Google the default — and sometimes only — search engine on their devices. Such conduct reduces users’ access to competing search engines and gives advertisers no incentive to buy from any company besides Google.

As a result of this anticompetitive behavior, Google has exhibited the tell-tale signs of a monopoly. Along with becoming a household name, Google has been able to charge advertisers more while forcing ads in the faces of consumers and compromising their data privacy online, making everyone involved worse off — everyone except Google, that is. The estimate of the company’s value in 2020 was an astounding US$1 trillion, as cited by the DOJ. This value comes from the inability of other platforms to capitalize on Google’s weaknesses in a meaningful way. It seems as though the DOJ has a vast amount of ammunition to use against Google come September.

With the emergence of OpenAI’s ChatGPT and their partnership with Microsoft’s Bing, however, Google’s monopoly over search is very much in question. Google announced its own AI chatbot called Bard, demonstrating that the current AI landscape has become a new sort of arms race. There is little reason to suspect that Microsoft’s chatbot is significantly better than Google’s Bard, but that is largely irrelevant at this point. ChatGPT has become extremely successful recently, as its conversational nature allows users to find and digest information much more quickly than they could with traditional search engines. By partnering with OpenAI, Microsoft has been able to cash in on its momentum, creating a serious risk for Google if they cannot match pace. 

Even if Google does match Microsoft’s pace, they will certainly face substantial losses due to the cannibalization of their search business. As more consumers use the Bard AI, less consumers will use Google Search. Less consumers, therefore, will see the ads that have made Google billions. Realistically, Google will likely find a way to monetize Bard conditional on its success. The company will, however, have to be much more conscientious about the user experience seeing as Google is no longer the only player in town. 

Microsoft’s Bing is not the last of Google’s worries. The latest antitrust suit filed by the DOJ in January has targeted a separate wing of Google’s business, specifically pertaining to digital advertising technology. The market for digital advertising is made up of three parts: the buyers (companies wanting to advertise their products), the sellers (publishers), and the auctions through which transactions are processed. Through a number of acquisitions and agreements, Google has amassed an enormous market share in each of these areas with the highest sitting at over 90%. This has allowed Google to engage in an unprecedented manipulation of auctions. As a result of its monopoly on advertising technology, Google, acting as an intermediary, keeps around 30% of the revenues generated by its advertising platforms. By comparison, intermediaries on the stock market make less than 1% of revenues generated, simply because there is more competition. Once again, the DOJ seems to have a plentiful supply of ammunition to bring up against Google when the case goes to trial.

The combination of all these factors represents a monumental challenge for Google to overcome if it wants to maintain its Internet dominance. The first antitrust case filed by the DOJ does not seek any monetary damages or relief. Instead, it aims to stop and prevent further anticompetitive practices from Google for the benefit of consumers and advertisers. Microsoft’s ChatGPT-powered AI bot may be able to assist with that goal, as Google may now actually have to compete. The second antitrust suit, on the other hand, is the first monopolization case in almost 50 years to seek damages for the American consumer and for federal agencies that incurred losses after overpaying for digital advertising. This case acts as a major distraction for Google as it tries to navigate the high-pressure AI landscape. More importantly, however, it presents a threat that Google may have to upend the most lucrative arm of its business model. The case has the potential to be even greater than the landmark United States v. Microsoft Corporation (2001), where Microsoft was found to be in violation of the Sherman Antitrust Act. 

The future of Google is quite uncertain. Bard could prove to be a better AI bot than that of Microsoft due to the wealth of data Google has amassed over the years as the top search engine. This could, perhaps, allow Google to maintain its dominance. Of course, in such a case, it would not be out of the question for another antitrust lawsuit to be brought against the company. Alternatively, Google may fail to match pace with Microsoft and the courts may rule against Google in both of the antitrust matters. As a result, Google’s influence would eventually diminish, giving way to Microsoft as the new leading Internet search platform. 

Unless Google has a trick up its sleeve, the outcome that seems most likely is a socially optimal happy medium, with Bard and ChatGPT legitimately competing against one another. Duopoly competition would be sufficient to lower prices for advertisers and allow for greater innovation and ease of consumer usage. Regardless, caution will be quite important for the courts. If they take drastic enough action against Google, they may just allow Microsoft to take Google’s place as the monopolist of Internet searching.

Nicholas Duffy is a junior at Brown University, concentrating in Business Economics. He is a staff writer for the Brown Undergraduate Law Review and can be contacted at nicholas_duffy@brown.edu.