September 28 2023
What Your Business Needs to Know About the Google Antitrust Trial
Why is Google in hot water?
In October 2020, the U.S. Department of Justice (DOJ) filed a case against tech juggernaut Google, claiming the company made agreements and other anti-competitive business decisions, creating a monopoly in the search engine and search advertising space. As Google celebrates its 25th anniversary, it does so under government scrutiny. The trial is underway, having started on September 12th, and is scheduled to last ten weeks. The case, U.S. et al. v. Google, is being called the federal government’s first monopoly trial of the Internet era.
Google is a 1.7 trillion-dollar business with 91% of the search engine market globally according to Similarweb, a data analysis firm. With so many users, concerns over what this means for your business and its digital marketing strategy are valid. This blog breaks down what an antitrust trial is, the case against Google, and what the potential outcomes could be.
This is an ongoing story, with new revelations coming out daily which TopSpot is keeping a pulse on. We will provide updates as decisions are made.
What is an antitrust trial?
Antitrust laws are a type of class-action lawsuit filed by individuals or organizations when they feel specific state and federal laws meant to ensure businesses can and do compete fairly have been ignored. The “trust” in antitrust refers to a group of companies involved in mergers, acquisitions, and other business agreements that create a monopoly, dictating pricing and halting competition in a particular market.
The DOJ says Google violated the Sherman Antitrust Act of 1890, meaning they are accusing the company of using its power to limit free competition in the marketplace. The search company faces allegations that starting in 2010, it forced partners into deals that cemented its dominance. The federal government argues it is still using anti-competitive tactics to maintain this dominance.
Google denies these allegations, noting it stays on top thanks to user choice and that its dealings aren’t any different than those conducted by other large companies. As a result of the charges, Google has rallied its internal employees, some well-known law firms, and several lobbyists to fight back. The case has called for over a hundred people to testify and has produced millions of pages of documents so far. Judge Amit P. Mehta of the District Court for the District of Columbia is presiding over the trial and will issue the final ruling.
The power of the default settings you use daily
Most of the deals in question involve default settings. According to the Justice Department, Google used the “power of defaults” to strike deals with web browsers, operating systems, and apps that secured search engine dominance, including agreements with Apple and Mozilla. The case will need to determine if these deals impact consumers, especially given that using the search engine is free.
Google is the default search engine for the web browsers Firefox and Safari, meaning unless a user goes out of their way to change defaults, users of Firefox as well as devices like iPhones, iPads, and Mac computers, get the search engine automatically. The DOJ’s thinking here is that these defaults push out competitors and provide Google with more users, thereby more data, than anyone else. In the search industry, more data means better results.
The DOJ claims these default deals have allowed Google to improve search to benefit its business, not its users, with the biggest point contention being privacy standards. On the point of privacy, Google and many partners involved have argued for the trial to be largely closed off to the public, with testimony being done partially behind closed doors out of concern for sensitive company information.
Where you might have been affected—ad auctions
60% of Google’s total revenue comes from search ads and brought in over $100 billion in 2020. When an ad is eligible to appear in a search, it goes through the ad auction to determine if it shows, and in which position it will show. These auctions have come under fire during the trial.
Here’s where the average business may have been affected—if you are a consumer of Google’s advertising and marketing services, you may not have been informed of price changes. Google’s Vice President for advertising products testified that Google adjusts its advertising auctions to meet revenue targets, including price increases of 5% to 10%. The company is concerned about competition from Amazon and its advertising services, which are growing at twice the rate of retail advertising. One specific change altered the ad auction process so that the second-highest bidder would win the top advertising slot, with the actual winner taking the second spot. Users were not notified of this practice or the price increases.
When it comes to paid search, the TopSpot Team recommends starting with manual bidding and keyword testing based on historical data pulled from various tools. When manual bidding is in place for our Clients, the Team checks in regularly to catch upticks and suspicious activity and can make updates as needed. This also helps ensure that budgets are spent on quality clicks that lead to conversions, versus spending on broad keywords. While TopSpot was not notified of changes in pricing and cannot dictate them, the Teams can catch when budget thresholds are threatened and act before they are exceeded.
What does this mean for your business?
For Google, the verdict could mean changes in business practices, paying damages to users and other companies, and an organizational restructuring. It will drastically slow down growth in the internet market. For the average consumer, it may not feel like much at first. It may be a few more clicks on any setup screen to solve the default problem. There will be new logos and revised platforms, but the concerns for privacy may bring about additional rulings that limit the data marketers can receive. Regardless of this ruling, privacy laws will continue advancing in other arenas.
Should Google win, there’s concern that this proves the antitrust laws in place are far too dated to be of use in today’s market. The fact that search is free puts a wrench in much of the century-old Sherman Antitrust Act. For Silicon Valley, the law fails to capture potential ways that consumers can be affected by data collection, result quality, and choice. Again, while data collection is getting covered under evolving privacy laws, the other two concerns would need new legislation.
No matter the result, internet marketing isn’t going anywhere. Search Engine Optimization and Pay-Per-Click advertising may have new platforms and revised strategies but will still be crucial to a pipeline of quality leads for businesses large or small. Having a Team versed in the ever-changing space of digital marketing will help keep this pipeline operational.google, ppc, SEO