Ending Google’s search monopoly

Hi everyone, it’s Leah in DC. A federal judge ruled Monday that Google illegally monopolized the search market. Now the hard part: what to d [View in browser]( [Bloomberg]( Hi everyone, it’s Leah in DC. A federal judge ruled Monday that Google illegally monopolized the search market. Now the hard part: what to do about it. But first... Three things you need to know today: • SK Hynix wins US grants and loans for a chip packaging [plant in Indiana]( • Sony’s earnings were helped by [music streaming and online games]( • Airbnb says travel demand will “moderate,” [disappointing investors]( Finding a remedy In a methodical, [286-page opinion]( US District Judge [Amit Mehta](bbg://people/profile/18838065) found that Alphabet Inc.’s Google acted as an illegal [monopoly]( in the market for search services — what consumers use to find where they want to go on the web — and search text advertising, the ads that appear at the top of search results to draw users to websites. Google plans to appeal, noting that Mehta said many nice things about the company’s product (“the industry’s highest quality search engine;” “It has long been the best search engine, particularly on mobile devices”) — buttressing the company’s argument that people use the search engine because it’s easy and effective, not because they have to. The appeal will delay any penalties that Mehta decides to impose — called the remedy to the [antitrust behavior]( — since appeals often take between a year and 18 months to make it through court. In the meantime, the judge scheduled a hearing on Sept. 6 to begin discussing a potential remedy, and may opt to hold a second trial to decide. While the Justice Department hasn’t said yet what remedy it will ask for, there are several possibilities, according to antitrust experts who’ve followed the case: Eliminate the exclusivity: The most straightforward solution would be to get rid of the exclusivity requirement in Google’s contracts for its search engine. In his decision, Mehta focused on the absolutist nature of [the company’s deals]( with smartphone makers like Apple Inc. and web browsers that make Google search the only option on those platforms. “A non-exclusive default would still provide all the convenience and efficiency benefits that Google touts,” Mehta noted. That sentence could be a potential hint, said Vanderbilt University Law School’s [Rebecca Allensworth]( who specializes in antitrust and tech platforms. “That would make me nervous if I was the government and give me a shred of hope if I was Google,” she said. Share the gains: For more than a decade, Google’s contracts ensured it had more data on consumers than any of its rivals, thus giving it a better ability to improve its search results, Mehta said. That feedback loop, he wrote, allowed the company to draw more users and advertisers, as well as increase ad pricing. Antitrust enforcers are likely to argue that situation can’t be fixed just by eliminating the problematic contractual provisions, Allensworth said. Instead, something else needs to happen to repair the imbalance between Google and rivals. One possibility: forcing Google to share its “click and query” data, the information the company uses to build its results. Google logs a lot of data from every search — not just what a user clicks on, but how far they scroll down a page or across a carousel, whether their mouse hovers over a specific result and other details like the person’s location. That data is proprietary to Google. But if other search engines could gain access to that information, they could improve their own results. “Market entrants should have access to it and the ability to make changes for privacy, ranking” and other aspects, said Kamyl Bazbaz of rival search engine [DuckDuckGo](. Break them up: A so-called structural remedy or breakup would be the most ambitious option, but nothing in Mehta’s decision rules it out, said [William Kovacic](bbg://people/profile/1701135) of George Washington Law School. In the Microsoft Corp. antitrust case in the ’90s, the appeals court nixed a breakup because they found some defenses for the company’s conduct, said Kovacic, a former chair of the Federal Trade Commission. But Mehta's complete rejection of Google’s justifications “opens the door to a wider range of remedies,” he said. Google could be forced, for example, to sell its Android phone operating system business or its Chrome browser to effectively separate search and advertising from other parts of the company. “The judge is going to have to face and deal with arguments that a structural solution is necessary to restore the competition,” Kovacic said. “That’s all up for grabs in Phase 2.”—[Leah Nylen](mailto:lnylen2@bloomberg.net) The big story Elon Musk’s X sued an industry group for allegedly coordinating an advertising boycott that [cost the platform billions](. The suit, filed in a federal court in Texas, claims the Global Alliance for Responsible Media coordinated the boycott by advertisers in 2022 under the guise of concern about whether X, formerly known as Twitter, would adhere to certain standards for content on the platform after Musk acquired it. One to watch [David Bahnsen, CIO at the Bahnsen Group, talks on Bloomberg Television about the outlook for tech stocks after a recent three-day slump.Â]( Get fully charged Microsoft joined CrowdStrike in a spat with Delta about why the airline’s computer systems were felled for days after a [faulty software update](. The US will call for limits on Chinese car software in a widening [confrontation](. Uber posted an earnings win on strong [rideshare demand](. Amazon’s India chief will step down as company amps up [global efforts](. More from Bloomberg Bloomberg Tech: Humanity has always relied on technology to drive growth. With the emergence of artificial intelligence, tech companies will affect the economy, media and health like never before. Join executives, investors and business leaders in London on Oct. 22 to discuss the risks and rewards of this new age. [Buy tickets today](. 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