On October 22, TPI convened a panel of antitrust experts to discuss potential remedies following Judge Mehta’s ruling that Google’s default search agreements violated antitrust laws. Read the transcript here.
Executive Summary
- DOJ’s November filing could propose a range of remedies, from targeted interventions to broader structural changes. Panelists discussed several potential proposals:
- Prohibiting Google from paying for default search placement
- Implementing choice screens for search engines
- Sharing search data with competitors
- Structural separation of Android or Chrome
- Key challenges in crafting effective remedies:
- DOJ’s framework lacks a clear vision of the desired competitive landscape (“but-for world”)
- Non-party status of key players like Apple ($20B+ annually from Google) limits options
- Need to address potential impacts on smaller players (e.g., Mozilla depends on Google for 81% of revenue)
- Balance between promoting competition and minimizing consumer disruption
- AI considerations: Panelists emphasized the importance of both maintaining Google as an effective competitor in AI while ensuring a level playing field for new entrants
Legal Background and Context
- Judge Mehta ruled that Google violated antitrust laws by using exclusive agreements to maintain dominance in general search and search advertising
- The ruling focused on Google’s agreements with Apple, Samsung, and others to be the exclusive pre-installed search engine, which helped Google grow its user base, accumulate data, and deprive entrants of the ability to achieve sufficient scale to compete effectively
- Panelists noted that Judge Mehta’s opinion was measured and reasoned, avoiding inflammatory language while still finding clear liability
Range of Potential Remedies
- Prohibit Default Payment Agreements
- Prevent Google from paying for exclusive default placement
- Panelists noted this could play out in various ways:
- Apple and others could sell placement to competitors
- Platforms could choose Google without payment
- Could lead to choice screens with other companies paying for placement
- Require choice screens
- Users must choose which search engine they want to use
- Constraints, open questions, and trade-offs:
- Since non-parties like Apple cannot be compelled to act, Google would need to implement the choice screen
- Key questions focused on frequency (how often to show the screen to users)
- Panelists discussed trade-offs between consumer choice and search efficiency
- Make Google share data with competitors
- Panelists raised several concerns:
- Consumer consent and privacy issues
- Implementation challenges
- Potential negative impact on investment incentives
- How frequently would Google be required to share?
- Panelists raised several concerns:
- Impose structural remedies
- Proposals included divesting Android and/or Chrome
- While panelists did not dismiss the idea as “outrageous,” they were skeptical:
- Questioned whether these address the core issue of distribution contracts
- Noted practical challenges of separation
- Questioned impact on innovation and efficiency
The “But-For World” Challenge
- Panelists criticized the DOJ’s remedy framework for lacking a detailed description of the competitive landscape they aim to create
- DOJ’s proposal doesn’t fully address how key players would react to proposed remedies:
- How would platforms like Apple and Samsung adjust their business models?
- How would competitors like Microsoft respond?
- How would they affect consumers?
- How might they affect AI startups?
- This lack of consideration of the “but-for world” makes it difficult to assess potential costs and unintended consequences of the proposed remedies
Platform and Competitor Dynamics
- Apple, despite receiving over $20 billion annually from Google, is not a party to the case, potentially constraining possible remedies
- Microsoft’s varying performance across platforms illustrates the competitive importance of default placement:
- On desktop, where Microsoft controls defaults through Windows/Edge, it has achieved sufficient scale with users (though not necessarily with advertisers)
- On mobile, where Microsoft lacks default placement, it struggles to compete effectively
- Mozilla’s dependence on Google payments (81% of revenue) illustrates potential unintended consequences of remedies on smaller market participants
AI and Future Competition
- It is important to maintain Google as a competitive force in AI development, while ensuring a level playing field for other competitors. Restrictive remedies could handicap Google in AI.
- DOJ’s concerns about AI focus on whether websites should be allowed to opt out of training data for Google’s AI products. An open question is whether DOJ would extend such restrictions to other companies like Microsoft or OpenAI.
Looking Ahead
- The DOJ faces a strategic choice in its November filing between pursuing broad, precedent-setting remedies or more immediate, targeted solutions with quicker market impact.
- Panelists predicted likely remedies might include:
- Stopping distribution payments for default search placement.
- Implementing periodic choice screens.
- Requiring one-time data sharing with competitors, though the consumer consent and logistical difficulties pose significant hurdles.
- The success of any remedies will depend on balancing the desire to promote competition with the need to avoid consumer harm and preserve innovation incentives, particularly in fast-evolving areas like AI.
