The new risk Google faces from AI rivals could play a role in the final outcome of a landmark antitrust trial where a judge must decide whether the tech giant has illegally monopolized online search.
The lawsuit, brought by the Justice Department and a group of U.S. states, centers on the government’s argument that Google ( GOOG , GOOGL ) illegally blocked rivals from competing. Google claims it dominated search because its service was better.
But even as the company awaits U.S. District Court Judge Amit Mehta’s ruling, new threats to its preeminence are emerging through new ways to search the web.
Those threats could improve Google’s chances of mitigating any consequences if Judge Mehta finds it liable for violating competition law, according to antitrust experts.
“If a violation is found, Google will say that the market is already solving itself,” said William Kovacic, a professor of antitrust law at George Washington University.
Just last week, Microsoft-backed OpenAI ( MSFT ) debuted a new prototype search engine called SearchGPT and positioned it as a new way to search the web — a potential threat to Google’s longtime search dominance.
Microsoft’s Bing also has generative AI features powered by OpenAI’s ChatGPT, as well as its Copilot and Prometheus software.
Google, for its part, offers generative AI capabilities in its AI Reviews – the latest search product powered by its Gemini model. The company also offers its LaMDA, T5, PaLM and GLaM models.
Other new ways to search the web are offered by AI-based large-scale language models (LLMs), such as OpenAI’s ChatGPT, introduced in November 2022, and Perplexity, an AI-based search engine designed using multiple LLMs that has attracted large funding from Amazon ( AMZN ) founder Jeff Bezos and Nvidia ( NVDA ) CEO Jensen Huang.
“Market development already solves the problems”
The new search options won’t necessarily help Google defend its past behavior, but they could significantly soften the penalty if the US government and states prevail in their antitrust lawsuit.
This is because Google will have the opportunity to argue during a separate phase of the trial that any anti-competitive issues identified in the complaint no longer exist or have diminished.
The argument that Google can make to the judge is: “You don’t have to do much here because the development of new products, new technologies, the emergence of competitive alternatives means that the development of the market already solves the identified problems,” Kovacic said .
BakerHostetler’s head of antitrust and competition practice, Carl Hittinger, agreed that market changes that open up more options for consumers could work in Google’s favor.
“If consumers switch to another product, if they have that option and can, then there’s no anticompetitive harm,” Hittinger said.
On the other hand, the judge may not view SearchGPT and emerging search platforms as direct competitors to Google Search, as these products are not yet pre-installed as standard on various devices.
One of the key factors a judge must consider in crafting a remedy, Hittinger said, is what is in the public interest.
“It’s a great responsibility”
The government has not yet said exactly what remedy it wants if it prevails.
Remedies can include an injunction, such as controlling the company’s future conduct, or structural relief, such as requiring a sale.
Federal rules also allow Google to ask Judge Mehta to reopen the case, before his ruling, to consider new material evidence. And even if an order is issued, new and material evidence can be brought to court to ask for it to be varied.
If found liable, Google is expected to appeal the case. That could come with a request from Google to table the compensation phase while the case moves through the appeals system.
Kovacic predicted the government would prevail on at least some of its claims and said that no matter the outcome, Judge Mehta’s ruling was consistent.
“You can imagine how difficult this is for the court,” Kovacic said. “To hold the fate of the entire search industry is a great responsibility.”
Google’s antitrust lawsuit is the most famous since another high-profile case in the 1990s that eventually forced Microsoft ( MSFT ) into a settlement that opened up its computer operating system to competitors in the early 2000s.
“The landscape is changing”
It remains to be seen what the antitrust lawsuit and new rivals in the search engine business will mean for Google and its parent, Alphabet.
Of course, a lot is at stake. In 2023, Google’s search advertising business will generate more than $175 billion in revenue.
Combined with Google’s YouTube ads and Google Network revenue, advertising accounts for a staggering $237 billion of the company’s $307 billion in total revenue.
But new market threats to Google’s search empire still have a ways to go to unseat the leader.
So far, LLMs and competing search platforms have not radically changed the way most Internet users search the web. Bing has gained about 1% of the search market share since the launch of Copilot, but Google still holds more than 90% of it.
Hittinger, who represented AT&T in another landmark antitrust case that ended with the telecom giant’s collapse in the 1980s, said changes in technology typically affect difficult antitrust cases.
“While you’re solving the case, the world is moving forward and the landscape is changing,” he said.
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