The Justice Department’s groundbreaking monopoly proceedings against Google are interesting. The proceedings represent yet another attempt to apply antitrust principles established in the rapidly changing dynamic technology market.
The government has a good record of monopoly cases in the high-tech sector. The proceedings against Microsoft fought fiercely and established some important principles for tech monopolies.
Google dominates about 90% of the US search engine market. Google’s only competitors include Bing, DuckDuckGo, and Yahoo. From 2009 to 2019, Google increased its market share for popular search services from 79% to 89%.
In the mobile and tablet markets, Google has a market share of approximately 94% in the United States. In the desktop and laptop markets, Google’s market share in the United States is approximately 82%.
Relevant markets do not include offline and online resources such as books, publisher websites, social media platforms, and specialized search providers that offer narrow search capabilities such as Amazon, Expedia, and Yelp.
Related product market
The government claims that search advertising and general text advertising are related product markets.
The search-linked advertising market includes all types of ads that are generated in response to online search queries, including popular search text ads and specialized search ads (Amazon, Expedia, Yelp, etc.). Search advertising allows advertisers to target marketing messages in real time in response to consumer search queries. These ads are of great value to advertisers and unlike other types of ads that cannot be targeted instantly in real time. As a result, the DOJ claims that there is no reasonable alternative to search advertising. Google’s share of the US search advertising market is over 70%
The DOJ claims that general search text advertising is a separate product market within the broader search advertising market. As explained by the Department of Justice, common search text ads are sold by common search engines and usually search the Search Engine Results Page (SERP) with the notation that the entry is an ad or sponsored list. It will be placed just above or below the result. Some of these ads include product images, prices, and star ratings. In 2018, general search advertising accounted for nearly 85% of Google’s search advertising revenue.
According to the DOJ, there is no reasonable alternative for advertisers who prefer to sell directly to consumers from their website or who want to protect their brand name on Google. Google shares in the general search text advertising market in the United States.
The DOJ complaint claims that Google is the monopoly on the general search, search advertising, and search text advertising markets. The DOJ claims that Google is eliminating potential competition to protect its monopoly on a monopoly standpoint.
The main means of expanding Google’s monopoly is through a series of exclusive distributor agreements that cover nearly 60 percent of all search queries in the United States. The other half of the search is provided through Google’s properties, leaving only a small portion of the competitor’s market.
DOJ’s theory is based on the importance of Google’s scale and its ability to prevent competitors from ensuring a significant scale in its operation.
Google first used contracts with mobile distributors to prevent competition in two important ways. Second, Google has integrated into providing free access to the Android operating system, ensuring a search engine advantage in the market for mobile phones that use the Android operating system.
To secure transactions with Apple, Google pays Apple $ 8 to $ 12 billion in advertising revenue each year. Apple’s contract covers about 36 percent of all common search queries in the United States.
For Android systems, Google prevents competition through fork prevention (that is, change prevention) contracts, pre-installation contracts, and revenue sharing contracts. Android is an open source system, but anti-fork contracts prevent the development of competing operating systems. The pre-installed agreement guarantees that Google’s entire suite of search-related products will be premiumly deployed on Android devices. For most mobile phone sellers, access to Google’s application suite is an important product offered on their mobile phones. Finally, in exchange for a significant portion of Google’s paid search revenue, Android phone sellers make Google the default popular search engine for presets.
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