A federal judge has ruled that Google monopolized search and the ad dollars it generates through illegal commercial deals. So, what’s the next step?
First up, the jury’s still out on what consequences Google could face. These could range from forcing Google to overhaul its business practices to possibly breaking up the company entirely. Not surprisingly, Google plans to appeal, which means any real fallout might be months or even years away.
In the meantime, expect a deluge of speculation about what could happen if the appeal falls flat. The potential shake-up could rattle not just Google but the entire ad media industry. Curious about what might come next? Keep reading for a rundown of the possible twists ahead.
Google’s search revenue takes a big hit
This lawsuit is a big deal because it targets the very heart of Google’s search empire, alleging that its dominance is built on monopolistic practices rather than fair play. The crux of the issue is Google’s use of lucrative contracts and exclusivity deals to maintain its lead. For example, Google shelled out billions to companies like Apple to ensure Google Search remained the default on iPhones and iPads. In 2021 alone, it spent a staggering $26 billion on such deals, which stifles competition and keeps other search engines at bay.
If the lawsuit leads to new restrictions or even a breakup of Google’s search business, a surge in competition could build. This could drive down advertising costs and chip away at the massive $237.86 billion in ad revenue Google rakes in annually.
Google’s losses could be someone else’s gain
Count on a slew of companies hoping that’s the case.
If legal actions force Google to scale back its market presence or default search position, competitors like Microsoft’s Bing could scoop up a big chunk of that traffic. With Google’s grip loosened, these rivals might lure in more users and subsequently advertisers, giving their market position a hefty boost. And if this happens, they’re likely to see a surge in ad revenue — more users and higher search volume mean more clicks and impressions. This financial windfall could fuel their ability to innovate, leading to shiny new features, smarter algorithms and an all-around better user experience.
Of course, this is a bit speculative, as Google’s entrenched habits and market power might temper the impact. But this isn’t set in stone. If the judge’s decision stands, Google could be barred from paying to maintain its default status on most devices and browsers, which could open the door to significant changes.
Wait, what changes?
To understand those changes, it’s best to turn to Evelyn Mitchell-Wolf, a senior analyst of digital advertising and media at eMarketer, who has been keeping a close eye on the case. She explained that any restrictions on Google’s ability to secure those lucrative default agreements could hit the core strength of its search business: its sheer ubiquity.
Currently, Google pays eye bulging sums to companies like Samsung, LG and Mozilla to be the default search engine on their platforms. While Apple bags the biggest slice of this pie, those other partners will also see a revenue drop. Mitchell-Wolf notes that any organization or platform relying heavily on Google for traffic might be affected, but mainly if they’ve struck an exclusive deal to appear solely in Google searches. However, it’s unlikely that any remedy will slash the overall volume of search queries — just shift where they’re directed.
If Google is the biggest loser then Apple is not far behind
Remember those exclusivity deals? The one Google made with Apple in 2022, which kept Google as the default search engine on iPhones, was worth a whopping $20 billion. That’s a huge chunk of Google’s services revenue, so much so that it nearly covered the $23.12 billion Apple earned in the last quarter of 2023.
Now, with a federal judge ruling that such money-making practices may be off-limits, Apple could face some serious pressure on its high-margin services business. This sector has become increasingly crucial for Apple, especially as its core hardware sales, like iPhones, have either slowed or declined. So if Google’s revenue takes a dive, Apple’s might not be far behind.
Apple search engine FTW?
With Google’s search business taking a hit, Apple could dust off its long-pondered plans. For years, the iPhone giant has dithered on whether to replace Google with its own search engine, but billions of dollars from Google kept those thoughts at bay. If those funds suddenly dry up, it’s easy to imagine Apple giving its search ambitions another shot.
And Apple wouldn’t be starting from scratch. The company already has a head start, with its AI-driven search tech, a web crawler, Siri, and the evolving Spotlight feature that helps users find everything across their devices. In short, Apple has the tools; it just needs to assemble them into a fully-fledged search engine.
“It won’t be a near-term product because I don’t think the Google Antitrust ruling will impact any of the ways the search engine tech giant does business anytime soon,” said Eric Hoover, SEO director at Jellyfish. “Google is already appealing the decision, which will push proposed remedies further down the line. But with Apple already working on its own AI tech and search engine capabilities, including a web crawler, this decision by the courts may cause them to ramp up development and beta testing.”
Microsoft was mentioned as a potential big winner here — how so?
Every percentage point Microsoft gains in the search market could mean an extra $2 billion in ad revenue. Right now, Microsoft holds about 3.88% of the market, according to StatCounter. If Google’s grip loosens and Microsoft’s share bumps up by just five percent, that’s an extra $10 billion in ad revenue. That kind of boost would not only fatten Microsoft’s profits but also likely give its share price a nice lift.
Search revenue will be a miss for Google, but the blowback on AI could be catastrophic
It might seem like a stretch to link a dent in search revenue to a major AI crisis, but the connection becomes clearer when you consider the exclusivity deals involved. These agreements give Google a treasure trove of data essential for training and refining its AI models. If these deals crumble, Google could lose access to a substantial chunk of this data, seriously stunting its AI development. The impact on AI could be far more damaging than any drop in search revenue.
Yes, it could. This ruling sets a precedent by highlighting Google’s monopolistic behavior, which might make it easier to prove similar practices in its ad tech operations. Plus, the court’s attention to Google’s tactics — like instructing employees to keep chat histories off by default — could influence how evidence is handled in the ad tech trial. The judge’s warning about evidence preservation suggests Google might face tougher scrutiny in the upcoming case against its ad tech business.
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