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A decision in early September allowed Google to avoid a breakup of some of its most important components, one being its
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Chrome browser. It will though have to start sharing search data with its rivals and do away with the exclusivity
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agreements it has netted billions of dollars through. to discuss the ruling. We are joined uh right now by Herbert
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Hovindamp who is professor of legal studies and business ethics here at the Wharton School. Herb, great to catch up
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with you again. How are you, sir? >> Thank you. And good to see you, too. >> Good to see you as well. Um, so the
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ruling itself, what was your reaction? >> It was very much in line with what I
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expected. Uh, contrary to public belief, breakups in antitrust cases are really not all that common. Only a minority of
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monopolization cases result in breakups even when the defendant is condemned. They're you the typical relief is some
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kind of injunction which either uh prohibits the defendant from doing certain things or else mandates that it
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does certain things. So, this was entirely in line with that. >> What should the consumer take from this
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ruling? >> Um, I think the most important part of the ruling is the one you suggested a
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minute ago. Judge Ma required uh Google to share its search index data. Now, that's an enormous enormous database,
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very likely the biggest database in the world of web pages. uh anything that's
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ever been crawled by the Google search bot goes into that uh index data. And uh basically Google's going to have to give
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a group of qualified rivals, we don't exactly know how many that is, but I'm
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guessing it could be as many as a half dozen, uh a copy of that data. And that would kind of in the judges eyes level
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the playing field give them a chance to improve their search quality. And uh one of the hopes would be that some of
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these other search engines would be able to increase their market shares. For example, Bing, which is owned by
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Microsoft, a firm of, you know, roughly equal size to Google, has only about a 4% market share as against Google's 90
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plus percent. Duck.go is now less than 1%. Yahoo is down in the same area. So, so the so the belief is that by sharing
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the index data, the market shares of these rivals will come up and we'll get
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a more even competitive field. So it's an interesting question you you you bring up right now is the fact that for
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the most part the consumer is used to using Google and I guess the question becomes is how much might consumers
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switch away from Google and go to some of those other platforms that you mentioned or does the convenience of
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what people have used despite the you know the component of a potential monopoly
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you know does it not have as much impact? It's a good question. Um, two things about
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uh consumer behavior. Number one, yes, they get habituated to certain things. Number two, however, switching costs and
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search are incredibly low. I mean, you don't have to register. You don't have
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to give them your life history. You don't have to give them your credit card. You can go on any search engine
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you want. The sticky thing which has been the subject of this litigation has been default search engines where Google
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paid boatloads of money to firms to make Google search their default search engine. Even on those devices like
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iPhones for example, you can switch defaults but very few people do. So, uh, the judge in this case really did not
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give, uh, did not give the rivals any major, uh, thing to pressure consumers to switch other than improvements in the
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quality of competitors. They will be free to switch if they want to. Uh, but, you know, there's no real stick that
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fortes forces consumers to switch. So, we're in a time where artificial intelligence is starting to have a
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greater impact. Uh, and one of the suggestions brought up in some of the articles is just how technological
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advancements like AI and what we may see uh in the future could potentially impact this idea, this whole world of
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search. This whole case was tried with very little reference to AI and that trial
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was you know about a year and a half ago now. Uh so these AI developments have been very recent. The judge is clearly
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uh blown away by them. Half of this opinion is about the impact of AI. But the problem is there were no findings
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about AI in the trial record. And right now you know the market is up for grabs.
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I don't think anybody can say categorically uh who's going to win or whether there
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will be a winner in AI. One of the things AI permits is very much more product differentiation and search. That
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has always been a problem with search is it's not sufficiently differentiated. So
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you know in social network sites where you've got lots of different platforms,
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we've got fairly robust compet competition. Uh but search has not been able to achieve that. So the you know
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the real uh the real loose cannon in this uh in this situation is what's going to happen to AI and will AI permit
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firms to differentiate their offerings and establish themselves a little more strongly so that you know maybe four or
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five years from now we see a market that looks a little bit more like say the social networking market where you've
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got several substantial firms and viable choic faces among them. >> But realistically, we're still a ways
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down the road from a time, and you kind of just alluded to this, where Google loses its dominant position because the
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others positions were so small that they are going to need to have time to build
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up. >> We're certainly talking about years rather than months, but it could happen.
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Uh, one thing about digital content is consumers can switch quickly if they want to. Uh it's not like a house or
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something where you have to go through a major event in order to get rid of it. They can switch quickly and then the
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only question is whether they will. >> Herb, great to catch up with you and get
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your thoughts. Thank you very much. >> Thank you. Herbert Hovamp who is a professor of legal studies and business
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ethics here at the Wharton School.