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> Google’s payments to make its search engine the default option on smartphone web browsers violate US antitrust law, a federal judge ruled Monday, handing a ke

> Google’s payments to make its search engine the default option on smartphone web browsers violate US antitrust law, a federal judge ruled Monday, handing a key victory to the Justice Department. I still find it hard to understand why this makes sense. Don't companies make exclusive deals all the time, and whoever bids higher will get such deals? Why is it different for Google this time?

causal 2y ago
If it creates a monopoly then no, it's not okay, no matter how normal.
- legitster 2y ago
  Not necessarily - as it is written, the Sherman anti-trust act and all of the amendments distinguishes between "innocent" and "coercive" monopolies. But the definitions are very loose and hard to pin down. It's hard to even consistently distinguish a monopoly - is it market share? Earning power? Barriers to entry?
  - toomuchtodo 2y ago
    > It's hard to even consistently distinguish a monopoly - is it market share? Earning power? Barriers to entry? "I know it when I see it," as it is difficult at best to rely on distinctive actions or indicators considering the fluidity of business dynamics and the market landscape. https://en.wikipedia.org/wiki/I_know_it_when_I_see_it https://en.wikipedia.org/wiki/I_know_it_when_I_see_it
  - ssl-3 2y ago
    The definitions mean whatever the judge says they mean.
  - svnt 2y ago
    As soon as they formalized a metric to distinguish a monopoly, it would become something deliberately managed by entities who wished to wield monopolistic power. It would change the shape, but not the definition.
  - j_maffe 2y ago
    > But the definitions are very loose and hard to pin down. So are a lot of laws and regulations. Doesn't make them any less valid.
- moffkalast 2y ago
  Damn, someone tell the Justice Department that Nvidia exists.
  - pnt12 2y ago
    Does Nvidia negotiate deals for all gaming + crypto + AI companies to use their cards, or do they just provide good hardware + software that consumers want to use? That would be the difference of an anti-competition monopoly vs just a monopoly.
    - j_maffe 2y ago
      Exactly. Google capitalized on its monopoly status. That's what matters.
robpco 2y ago
Its different in this case because they were just declared a monopoly by the court.
ren_engineer 2y ago
I feel like the more blatant monopoly abuse by Google is how they use the Google search homepage to shill their other products. They effectively give themselves billions of dollars in free advertising
- fuzztester 2y ago
  how is that abuse, though? is it against the law? IANAL, but I would think not. I mean, many people put links to their other products or services on the web page of one of their products or services.
  - TheCleric 2y ago
    It is, if you are leveraging one monopoly to attempt to gain more. This is what happened with Microsoft and Internet Explorer (via the Windows monopoly)[1] 1: https://en.wikipedia.org/wiki/United_States_v._Microsoft_Corp https://en.wikipedia.org/wiki/United_States_v._Microsoft_Cor....
    - magicalist 2y ago
      Had Microsoft merely provided advertised IE with Windows there never would have been a suit. Even bundling alone would have been a hard case to make. They did far more than just ship IE with Windows.
      - TheCleric 2y ago
        Oh I agree. I merely meant that they were leveraging an existing monopoly to try to create another one via unfair practices.
    - fuzztester 2y ago
      linking to my answer in other parts of this thread, since the point and my reply are the same: https://news.ycombinator.com/item?id=41166997 https://news.ycombinator.com/item?id=41166997
- 2y ago
nolist_policy 2y ago
Yeah, they aren't allowed to pay billions anymore. Which begs the question: What about of money are they allowed to pay? Will there be a state-run auction?
tomohawk 2y ago
[flagged]
TheCleric 2y ago
When you are the primary player in the industry, you're creating a massive, unscalable monopolistic wall that no one else can climb. They pay Apple alone around 20 billion per year. There is no way anyone else can even think about competing with that. It's not because they happened to get the highest bid. It's because they're paying for the elimination of anyone else getting a foothold.
eli 2y ago
This is explained in quite a bit of detail in the judge's ruling: https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rZ1UlL.0yQbo/v0 https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rZ1UlL.0... Starting about page 197. > Google understands there is no genuine competition for the defaults because it knows that its partners cannot afford to go elsewhere. Time and again, Google’s partners have concluded that it is financially infeasible to switch default GSEs or seek greater flexibility in search offerings because it would mean sacrificing the hundreds of millions, if not billions, of dollars that Google pays them as revenue share. [...] > That was the key takeaway from the testimony of Neeva’s founder and former Google Senior Vice President of Ads and Commerce, Dr. Ramaswamy. The court found him to be a particularly compelling witness. He put it best. When the court asked why Google pays billions in revenue share when it already has the best search engine, he answered that the payments “provide an incredibly strong incentive for the ecosystem to not do anything”; they “effectively make the ecosystem exceptionally resist[ant] to change”; and their “net effect . . . [is to] basically freeze the ecosystem in place[.]” Tr. at 3796:8–3798:22 (Ramaswamy). No one would ever describe a competitive marketplace in those terms. When the distribution agreements have created an ecosystem that has a “strong incentive” to do “nothing,” is “resist[ant] to change,” and is “basically [frozen] in place,” there is no genuine “competition for the contract” in search. It is illusory.
- w10-1 2y ago
  The court is plain silly if it's concluding that multi-billion-dollar deals create resistance or diminishes incentives. If anything, it creates incentives by proving that another search engine could make billions from smartphone fees alone.
  - eli 2y ago
    It’s an exclusive deal that prevents anyone else from offering a similar deal. Of course it reduces competition. The only question is whether it also violates the monopoly law. I’d encourage you to read the decision, I just pulled two paragraphs from a pretty exhaustive document.
  - j_maffe 2y ago
nabla9 2y ago
> Don't companies make exclusive deals all the time, Companies with monopoly power must work with different rules. Having monopoly power is not illegal, abusing it is.
ssl-3 2y ago
If you and I, a couple of presumed nobodies, agree to have our respective companies work together exclusively on a thing and maybe trade some money and services, then that's something that can usually be legally just fine. But if you or I are operate a monopoly (whether a natural monopoly or an artificial monopoly) and we make the same kind of exclusive deal, then: That may not be fine. We have laws (like the Sherman Act) that can restrict this sort of thing only if a monopoly becomes involved. And to be clear: It's generally OK to have a monopoly (good fuckin' job, mate! you totally own your market! all the spoils for you!). But it's generally not OK to use that monopoly status in an anticompetitive way.
ankit219 2y ago
This would have been fine if Google was not a monopoly. The key part of the ruling is that judge agrees Google is a monopoly. And it's behavior is maintaining the monopoly illegally. Because it's a monopoly, and paying over the odds for these placements, it does not allow for a competitive marketplace. These payments create significant barriers to entry for other companies to even try and increase their market share given all the frictionless access points are blocked by Google not because of superior product but payments. These payments from a monopoly have a disproportionate impact on the market by limiting opportunities for everyone else in a significant manner. (Kind of, in a competitive market, a company can block 1-2 pathways. Here google pretty much blocked every entry point.)
- devrand 2y ago
  Presumably these deals with Google will be nullified, but can the various browsers just make new deals with someone else? Can Microsoft just just swoop in and make a deal with Apple/Mozilla/Samsung? Mozilla is going to be desperate to find a new partner...
  - ankit219 2y ago
    Dont think Apple would make a deal with any other engine. They basically used Microsoft to get a good deal with Google, but never had any intention to use Microsoft. The thing is the deals are a revenue sharing deal - Google gives 1/3 of the revenue to Apple. With microsoft, the number could be 100% and would still not reach a significant number for Apple. Mozilla would jump at it, and I hope Google still invests in them as part of a grant or something while not getting anything in return.
    - devrand 2y ago
      At least in the short term they probably would. Why not take the basically free money? Longer term, yeah they'll probably just make their own search engine. I highly doubt Google would give Mozilla anything. The only reason I think they would would be to appease Chrome monopoly concerns, but I don't think Chrome is even at risk of that. It's not the default browser on any platform other than ChromeOS and some Android devices.
riku_iki 2y ago
> search engine the default option on smartphone web browsers violate US antitrust law Interesting that they limit the case to mobile browsers. I guess MS share is significant enough on desktop.
dwallin 2y ago
Scale and context matters. No one else could afford to pay anywhere remotely near what Google is paying Apple. If it was truly competitive bidding Google could just offer some small reasonable percentage more than the nearest competitor could afford and Apple would take it. The reason google is paying so much over where a market price would be is because they want to discourage anyone, particularly Apple, from even thinking about competing with them. Google is paying Apple 36% of the revenue (not profit) generated by those users. A pretty good argument could be made that Apple would likely have built up and/or acquired it's own search engine by now if Google wasn't paying such obscene amounts. Apple was previously involved in talks with Microsoft to purchase Bing, and even acquired an ai search startup founded by ex-googlers (LaserLike).

causal 2y ago

If it creates a monopoly then no, it's not okay, no matter how normal.

legitster 2y ago
Not necessarily - as it is written, the Sherman anti-trust act and all of the amendments distinguishes between "innocent" and "coercive" monopolies. But the definitions are very loose and hard to pin down. It's hard to even consistently distinguish a monopoly - is it market share? Earning power? Barriers to entry?
- toomuchtodo 2y ago
  > It's hard to even consistently distinguish a monopoly - is it market share? Earning power? Barriers to entry? "I know it when I see it," as it is difficult at best to rely on distinctive actions or indicators considering the fluidity of business dynamics and the market landscape. https://en.wikipedia.org/wiki/I_know_it_when_I_see_it https://en.wikipedia.org/wiki/I_know_it_when_I_see_it
- ssl-3 2y ago
  The definitions mean whatever the judge says they mean.
- svnt 2y ago
  As soon as they formalized a metric to distinguish a monopoly, it would become something deliberately managed by entities who wished to wield monopolistic power. It would change the shape, but not the definition.
- j_maffe 2y ago
  > But the definitions are very loose and hard to pin down. So are a lot of laws and regulations. Doesn't make them any less valid.
moffkalast 2y ago
Damn, someone tell the Justice Department that Nvidia exists.
- pnt12 2y ago
  Does Nvidia negotiate deals for all gaming + crypto + AI companies to use their cards, or do they just provide good hardware + software that consumers want to use? That would be the difference of an anti-competition monopoly vs just a monopoly.
  - j_maffe 2y ago
    Exactly. Google capitalized on its monopoly status. That's what matters.

robpco 2y ago

Its different in this case because they were just declared a monopoly by the court.

ren_engineer 2y ago

I feel like the more blatant monopoly abuse by Google is how they use the Google search homepage to shill their other products. They effectively give themselves billions of dollars in free advertising

fuzztester 2y ago
how is that abuse, though? is it against the law? IANAL, but I would think not. I mean, many people put links to their other products or services on the web page of one of their products or services.
- TheCleric 2y ago
  It is, if you are leveraging one monopoly to attempt to gain more. This is what happened with Microsoft and Internet Explorer (via the Windows monopoly)[1] 1: https://en.wikipedia.org/wiki/United_States_v._Microsoft_Corp https://en.wikipedia.org/wiki/United_States_v._Microsoft_Cor....
  - magicalist 2y ago
    Had Microsoft merely provided advertised IE with Windows there never would have been a suit. Even bundling alone would have been a hard case to make. They did far more than just ship IE with Windows.
    - TheCleric 2y ago
      Oh I agree. I merely meant that they were leveraging an existing monopoly to try to create another one via unfair practices.
  - fuzztester 2y ago
    linking to my answer in other parts of this thread, since the point and my reply are the same: https://news.ycombinator.com/item?id=41166997 https://news.ycombinator.com/item?id=41166997
2y ago

nolist_policy 2y ago

Yeah, they aren't allowed to pay billions anymore. Which begs the question: What about of money are they allowed to pay? Will there be a state-run auction?

tomohawk 2y ago

[flagged]

TheCleric 2y ago

When you are the primary player in the industry, you're creating a massive, unscalable monopolistic wall that no one else can climb. They pay Apple alone around 20 billion per year. There is no way anyone else can even think about competing with that. It's not because they happened to get the highest bid. It's because they're paying for the elimination of anyone else getting a foothold.

eli 2y ago

This is explained in quite a bit of detail in the judge's ruling: https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rZ1UlL.0yQbo/v0 https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rZ1UlL.0... Starting about page 197. > Google understands there is no genuine competition for the defaults because it knows that its partners cannot afford to go elsewhere. Time and again, Google’s partners have concluded that it is financially infeasible to switch default GSEs or seek greater flexibility in search offerings because it would mean sacrificing the hundreds of millions, if not billions, of dollars that Google pays them as revenue share. [...] > That was the key takeaway from the testimony of Neeva’s founder and former Google Senior Vice President of Ads and Commerce, Dr. Ramaswamy. The court found him to be a particularly compelling witness. He put it best. When the court asked why Google pays billions in revenue share when it already has the best search engine, he answered that the payments “provide an incredibly strong incentive for the ecosystem to not do anything”; they “effectively make the ecosystem exceptionally resist[ant] to change”; and their “net effect . . . [is to] basically freeze the ecosystem in place[.]” Tr. at 3796:8–3798:22 (Ramaswamy). No one would ever describe a competitive marketplace in those terms. When the distribution agreements have created an ecosystem that has a “strong incentive” to do “nothing,” is “resist[ant] to change,” and is “basically [frozen] in place,” there is no genuine “competition for the contract” in search. It is illusory.

w10-1 2y ago
The court is plain silly if it's concluding that multi-billion-dollar deals create resistance or diminishes incentives. If anything, it creates incentives by proving that another search engine could make billions from smartphone fees alone.
- eli 2y ago
  It’s an exclusive deal that prevents anyone else from offering a similar deal. Of course it reduces competition. The only question is whether it also violates the monopoly law. I’d encourage you to read the decision, I just pulled two paragraphs from a pretty exhaustive document.
- j_maffe 2y ago

nabla9 2y ago

> Don't companies make exclusive deals all the time, Companies with monopoly power must work with different rules. Having monopoly power is not illegal, abusing it is.

ssl-3 2y ago

If you and I, a couple of presumed nobodies, agree to have our respective companies work together exclusively on a thing and maybe trade some money and services, then that's something that can usually be legally just fine. But if you or I are operate a monopoly (whether a natural monopoly or an artificial monopoly) and we make the same kind of exclusive deal, then: That may not be fine. We have laws (like the Sherman Act) that can restrict this sort of thing only if a monopoly becomes involved. And to be clear: It's generally OK to have a monopoly (good fuckin' job, mate! you totally own your market! all the spoils for you!). But it's generally not OK to use that monopoly status in an anticompetitive way.

ankit219 2y ago

This would have been fine if Google was not a monopoly. The key part of the ruling is that judge agrees Google is a monopoly. And it's behavior is maintaining the monopoly illegally. Because it's a monopoly, and paying over the odds for these placements, it does not allow for a competitive marketplace. These payments create significant barriers to entry for other companies to even try and increase their market share given all the frictionless access points are blocked by Google not because of superior product but payments. These payments from a monopoly have a disproportionate impact on the market by limiting opportunities for everyone else in a significant manner. (Kind of, in a competitive market, a company can block 1-2 pathways. Here google pretty much blocked every entry point.)

devrand 2y ago
Presumably these deals with Google will be nullified, but can the various browsers just make new deals with someone else? Can Microsoft just just swoop in and make a deal with Apple/Mozilla/Samsung? Mozilla is going to be desperate to find a new partner...
- ankit219 2y ago
  Dont think Apple would make a deal with any other engine. They basically used Microsoft to get a good deal with Google, but never had any intention to use Microsoft. The thing is the deals are a revenue sharing deal - Google gives 1/3 of the revenue to Apple. With microsoft, the number could be 100% and would still not reach a significant number for Apple. Mozilla would jump at it, and I hope Google still invests in them as part of a grant or something while not getting anything in return.
  - devrand 2y ago
    At least in the short term they probably would. Why not take the basically free money? Longer term, yeah they'll probably just make their own search engine. I highly doubt Google would give Mozilla anything. The only reason I think they would would be to appease Chrome monopoly concerns, but I don't think Chrome is even at risk of that. It's not the default browser on any platform other than ChromeOS and some Android devices.

riku_iki 2y ago

> search engine the default option on smartphone web browsers violate US antitrust law Interesting that they limit the case to mobile browsers. I guess MS share is significant enough on desktop.

dwallin 2y ago

Scale and context matters. No one else could afford to pay anywhere remotely near what Google is paying Apple. If it was truly competitive bidding Google could just offer some small reasonable percentage more than the nearest competitor could afford and Apple would take it. The reason google is paying so much over where a market price would be is because they want to discourage anyone, particularly Apple, from even thinking about competing with them. Google is paying Apple 36% of the revenue (not profit) generated by those users. A pretty good argument could be made that Apple would likely have built up and/or acquired it's own search engine by now if Google wasn't paying such obscene amounts. Apple was previously involved in talks with Microsoft to purchase Bing, and even acquired an ai search startup founded by ex-googlers (LaserLike).