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