A Judge Ruled Google Monopolized Search. Then Came AI

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2:01Bloomberg Audio Studios. Podcasts, radio, news. At the start of the year, things were not looking great for Google. Last August, a federal judge had made a big ruling. A federal judge in Washington ruled that Google's search engine has been illegally exploiting its dominance to squash competition and stifle innovation. The question remaining was what to do about it. The judge is going to decide what kind of changes must be imposed to make a more competitive landscape. The Justice Department, which brought that lawsuit in the first place, proposed some remedies for the judge to consider. Google could break up its search business and sell off Chrome.

2:45It could stop paying companies like Apple for preferential treatment. On Tuesday, the judge reached his decision. But instead of the big, sweeping rebuke of Google's business that some were expecting, Google gets to kind of just continue with business as usual. Sarah Fryer edits technology coverage for Bloomberg and has been covering Google's antitrust trial. And she says the outcome in this case speaks to the new challenges that come with regulating big tech in the age of AI. We should be reading this as a huge win for Google and a huge loss for the DOJ.

3:24I'm Sarah Holder, and this is The Big Take from Bloomberg News. Today on the show, what this week's landmark Google ruling means for the company, its competitors, and for future attempts to break up big tech.

3:42The Department of Justice first launched its case against Google back in 2020, arguing that through exclusive contracts with device makers like Apple and Samsung, the company held a monopoly in the online search space. And Bloomberg Big Tech editor Sarah Fryer says their case was widely agreed to be a strong one. Well, they were making the case that Google has so much power over how we consume information online and that they've built that power through anti-competitive means. In Google's case, Google, you know, captured that by saying we are the best. We have the best search engine. That's why people want to use it.

4:20It's not that we're a monopoly. The U.S. district judge hearing the case, Judge Ahmet Mehta, didn't buy Google's argument. Last year, he ruled in the government's favor, saying Google was indeed a monopolist. The judge then had to rule on the best way to address Google's anti-competitive behavior. The trial was set for this spring. And on Tuesday, the judge announced his decision. Judge Amit Mehta ruled that Google will have to give some of its data from search to quote-unquote qualified competitors. And that's kind of the only thing that Google has to do. Meta was the guy who really came out and called Google a monopoly first.

5:04And people were expecting him to come down hard. It just completely blew us away how this ruling was very gentle. It was very, very much a bullet dodged by Google. The DOJ had suggested that the judge break up the company, force Google to spin off its Chrome browser. The judge didn't ultimately go that far. The DOJ also wanted Google to end its partnership with Apple. Google's been paying the company roughly$20 billion a year to keep Google Search as the default on iPhones. The judge decided to let them keep that contract. So what made Judge Meta, the same judge that just last year ruled Google was a monopoly, stop short of breaking Google up?

5:50Well, he says it has to do with the rise of another technology that can compete with the company on search, AI. Meta was trying to come up with a solution for Google's monopoly status that took into account the AI era. Because the government, when they bring these cases and they want to solve these problems, it takes so long to build this case. They're basically dealing with the Google of a few years ago in their initial argument. And then technology changes and the world moves ahead. And it has been, in the past couple of years, the most transformative time for Google since the mobile boom, since the mobile phone era, this AI era.

6:32But for Google itself, like, this is, I think, even more transformative because it really, the AI era really gets at the core of what Google does, which is providing answers to people who have questions on the internet. How exactly did the changing AI race factor into Judge Mehta's decision to reject the government's push to break up Google? What did he write in his judgment? He wrote that he was swayed by the arguments that Google is in this transition right now. That the mounting competition for wanting answers on the intranet, the market could kind of correct this monopoly, given time to correct it, just through sheer better options than classic Google search.

7:20And you're already seeing that somewhat in consumer behavior. One of the things that Apple said during the trial, Eddie Q said, was that there has been some reduction in Google searches on Apple in favor of some AI related searches. So when you're looking at the biggest antitrust ruling in decades, this is like really a landmark case. You can break a lot if you decide to come down too hard. and it really seems that Meta was trying to take an approach where he didn't want to shape the new market that was budding and growing and building itself too much. Because I'm curious also if you can put this into context of how fast this AI-fueled search transition happened.

8:10Like, do you think the judge could have come to a different conclusion a year ago, six months ago, two years ago? I think if this same trial was happening even a few months ago, the outcome would be different. Google might have had to spin off Chrome. They might have had to adjust its data sharing more severely. We all sort of expected that they would have to stop paying Apple for preference. It has become so clear that there are now other ways that people want to search on the internet. and that the market is maybe a more influential force in Google's future than the government or the courts will be.

8:57Google avoided the harshest outcome in its antitrust ruling, but the company was ordered to make some concessions. After the break, we dig into what that ruling could mean for users, companies, and the future of government regulation on big tech. Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers.

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11:21Google dodged a bullet this week when Judge Amit Mehta ruled that it didn't have to sell off its browser, Chrome, as part of the government's antitrust suit against the company. But the judge did say Google needs to make a few key changes to its business. While Google was able to keep its existing$20 billion-plus contract with Apple, it can no longer make exclusive deals with companies like it. Google will also have to share online search data with its competitors. Here's Bloomberg Tech editor Sarah Fryer. This was a subject that came up a lot during the trial, that Google, one of the reasons that its monopoly is so powerful and so entrenched in the way we use the Internet is because they're the place where everyone lists their websites.

12:08If you're not on Google, you're essentially not on the searchable Internet. And the websites, you know, they all give their data to Google. Google has this repository of information, their index, and that has helped them into the AI era because they have all this information that they can train on. They can make their models better given this omniscient view they have of the Internet. And so one thing that the government proposed is that Google could share some of that data with qualified competitors. Now, he didn't say specifically who those competitors would be, but you can imagine like OpenAI, Perplexity, DuckDuckGo, some of those other browser companies and other AI search companies so that there would be more of a level playing field going forward.

12:57How would they use that data? They would use that data to train their models, especially if it was like data about what users were searching for, what people were interested in. I mean, that could all help people's AI models get better and smarter about how to serve their users. So how does that ruling around data affect users? Are there privacy concerns here? Will the average Googler kind of like feel the effects of that data being shared in more places? Well, in its initial statement about the ruling, Google said that it did have privacy concerns. But if you look at the ruling, what they actually will have to share is like a limited snapshot of basically the bones of what makes up search.

13:43I don't think that that's going to be very helpful to these competitors at all. Like, it might be interesting to them, but I don't think that that's really going to serve the purpose of helping them better their models or their products in the way that they had hoped. Which is why you're seeing a lot of third parties and watchdogs come out today and say, you know, this ruling is so, so mild that it doesn't change anything. It doesn't help us at all get into a place where big tech is held accountable. Right. One of Google's competitors, Gabriel Weinberg, the CEO of DuckDuckGo, called the ruling a nothing burger.

14:26Yeah. A lot of the response to the side is like, what was all this for? You know, like there was a lot of excitement around like this is a company that has become so powerful. It's become part of the infrastructure of society. We've been through years of Congress having hearing for these companies and actually not making many laws or any laws to hold them accountable. We've been through years of politicians saying that something would happen. Finally, the DOJ takes it on. They take it seriously. They bring it to this conclusion where a judge declares them a monopoly. There's finally a remedies trial.

15:01I mean, you can imagine how excited all of these competitors and, you know, entities who really want tech accountability, how excited they got. And there was a lot of hope that something would change. And so the disappointment that the anti-tech power, anti-monopoly crowd is feeling is very palpable. But it's also like, you know, in the context of this, this AI boom, which is, I think, the first thing to really threaten Google's dominance since it became so powerful. Well, what kind of precedent could this set for how the government goes after other tech companies? Obviously, there's the sense of disappointment, maybe a fear that it takes the wind out of its sails a little bit.

15:45But what do you see coming down the line when it comes to future antitrust cases? Well, there's a lot of future antitrust cases coming around. You know, even for Google, there's a trial on their ad tech monopoly, another remedies trial for the ad tech ruling that says that they have a monopoly in ad technology. That's going to be in late September, early October. It's a different judge. So it really will be up to that judge to decide whether they want to go harsher or less harsh. Meta just went through its own antitrust trial. That is maybe an even wilder outcome that the government is pursuing.

16:24The government wants a breakup of Meta. So they spin off Instagram and WhatsApp, undoing acquisitions that were done more than a decade ago. That's Meta, the company that owns Facebook, not Amit Meta, the judge overseeing the Google trial. I don't imagine a future where Instagram and WhatsApp are forced to break off from that. It just, it seems like that it would have a chilling effect on all of M &A activity in tech, which could be bad for younger companies. If companies knew that their acquisitions could just be undone 10 or 13 years later, we may not get breakups of big tech companies. Like, if this is how this judge is ruling, it's really kind of a tricky time because AI is changing so much.

17:16So even the kinds of things that the government was arguing about, like, what makes these products so sticky and so entrenched and therefore part of a monopoly, the reality today is that the industry has moved in a direction where these products are not as the government described them anymore. Like, 2018 meta, right? Right. 2018 meta is not 2025 meta. And that's when the case started, right? The companies have to evolve or they die. And so to come out and say, like, this is the way the industry works and this is how it's going to continue to work, that is just wrong. Well, I want to talk about the political calculus here because we've spoken before about how antitrust enforcement has been one of the few things both Republicans and Democrats in recent years have seen as a priority.

18:05Why exactly is that? And do you think that bipartisan energy around breaking up big tech will continue as Trump's term progresses? I mean, I think we have seen a massive change from Trump's first administration to his second now. We cannot forget that the tech clash, the big tech blowback, the push to hold these companies accountable really started during the Trump administration. Everyone agreed that these companies needed to be held accountable, but they didn't agree on why and what to do about it. And so we went through these years of extreme enthusiasm for getting CEOs to give congressional testimony, building the beginnings of these these antitrust cases.

18:55These probes started during the first Trump administration and nothing really happened. But it is one of the rare components of Trump's administration that carried over throughout the entire Biden administration. And the Biden DOJ and FTC were very enthusiastic about these antitrust cases, and Congress continued to be enthusiastic about holding tech companies accountable. Still nothing changed. So here we are in the second Trump administration, and the mood is different. The mood is different for two reasons. One reason is the companies now understand what it takes to get on Trump's good side.

19:35And what it takes to get on Trump's good side is playing by his rules, going and meeting with him, face-to-face time. For instance, Tim Cook, the CEO of Apple, making an announcement with Trump on investments. Whereas, like, in the first Trump administration, executives didn't really want to be so cozy with the Trump administration because they knew their employees, for the most part, who were protesting a lot of the policies. So that's factor one. Factor two is AI. I think that the executives all have an incentive to show Trump that it's the U.S. versus China for the future of this new technology.

20:14And if the U.S. is going to win, they need a lot of government help. Data center buildouts and import-export rules. So I think that that's the other factors. Like regulation on AI, they're trying to say we can't do that right now. The industry is booming. We need to see how this shakes out. And we need to do as much as we can to win it before somebody else does. As for next steps, Google said it will appeal the initial ruling that said that they're a monopoly. They're going to get together with the government side and the judge and they're all going to talk about the outcomes that the judges asked for.

20:55And then there's going to be a final ruling where we get, like, much more granular clarity on what from the judge's memo turns into the ultimate ruling. This is The Big Take from Bloomberg News. I'm Sarah Holder. The show is hosted by me, David Gura, Juan Ha, and Saleha Mosen. The show is made by Aaron Edwards, David Fox, Eleanor Harrison Dengate, Patty Hirsch, Rachel Lewis-Kriske, Naomi Un, Julia Press, Tracy Samuelson, Naomi Shaven, Alex Sugiura, Julia Weaver, and Taka Yasuzawa. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer.

21:39Thanks for listening. We'll be back on Monday.

21:50When you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, risk can affect multiple parts of the organization at once, from property and liability to cyber and regulatory challenges. At that level, managing risk becomes an ongoing discipline. At the Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. And when losses do happen, that work is paired with insurance coverage shaped by years of underwriting, risk engineering, and claims experience. Learn more at thehartford.com slash risk mitigation.

22:26Policies provided by Hartford Fire Insurance Company and its property and casualty affiliates, Hartford, Connecticut. Wise is the smart way to manage the currencies you need around the globe. When you send money abroad using your bank, you could get hit with hidden fees and exchange rate markups. There's a better way. Try Wise. Wise uses the exchange rate you'd usually find on Google with no unwelcome surprises. Plus, most transfers happen in under 20 seconds, which means your money arrives in less time than you've been listening to me. It's simple and free to sign up when you download the Wise app.

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