"Knowledge itself is power," Francis Bacon wrote in the sixteenth century. But in the Internet era, sourcing and sorting knowledge is more powerful. Information is abundant and accessible. Making sense of it is the challenge.
For decades, the world had gone to one well to quench its thirst for pre-sorted knowledge. That well was Google. It has been a harsh summer for Google. What began as a routine quarterly earnings report quickly turned into a landslide of reversals that have shaken the company’s foundation and cast doubt on its future dominance in the digital world.
From underwhelming financial results to a damning antitrust ruling, Google is grappling with challenges that could fundamentally alter its business model and its future. In July, Alphabet, Google’s parent company, saw its shares dip following second-quarter earnings that failed to meet investors' expectations. While this might have been shrugged off as a minor setback, it was merely the beginning of a series of events that would place Google under intense scrutiny.
Shortly afterwards, the Financial Times reported that Google had struck a secret deal with Meta (formerly Facebook) to target advertisements at teenagers. This agreement appeared to circumvent Google's own rules regarding the treatment of minors online, raising ethical concerns and further damaging the company’s reputation. The Instagram campaign deliberately targeted a group of users labelled as "unknown" in its advertising system, which Google knew skewed towards under-18s, the report said. It further suggests that steps were taken to ensure the true intent of the campaign was disguised.
However, the most significant blow came on a Monday in August, when US District Court Judge Amit P. Mehta issued a landmark ruling that Google had violated antitrust laws. This ruling was the culmination of a four-year case brought by the U.S. Department of Justice (DOJ), which accused Google of using its market power to illegally maintain its monopoly in online search. In his 286-page decision, Judge Mehta declared Google a “monopolist,” emphasizing that the company had spent billions of dollars on exclusivity deals with wireless carriers, browser developers, and device manufacturers to ensure its search engine remained the default option on most devices.
Judge Amit P. Mehta of the US District Court for the District of Columbia said in a 277-page ruling that Google had abused a monopoly over the search business. The Justice Department and states had sued Google, accusing it of illegally cementing its dominance, in part, by paying other companies, like Apple and Samsung, billions of dollars a year to have Google automatically handle search queries on their smartphones and web browsers.
“Google is a monopolist, and it has acted as one to maintain its monopoly,” Judge Mehta said in his ruling. This fundamentally changes the way Big Tech operations may be seen going forward. One of the most striking revelations from the case was Google’s relationship with Apple. In 2022 alone, Google paid Apple USD 20 billion to keep its search engine as the default on the Safari browser, a deal that significantly contributed to Google's near-total control of the search market, particularly on mobile devices, where its share reaches 95%. These deals have allowed Google to entrench its position at the top of the search industry, limiting consumer choice and stifling innovation from potential competitors.
For years, Google has argued that its dominance is not harmful to consumers because its search services are free and superior in quality. While Judge Mehta’s ruling conceded some of these points, it also established a critical precedent: even if a service is free, a company with monopoly power can still harm consumers in broader, more insidious ways. Google’s billion-dollar deals have prevented other companies from gaining the necessary scale to compete, thereby maintaining its dominant position and curbing innovation.
A quick U-turn into history may put things in perspective. The first wholly mainstream Internet algorithm, one that almost every Internet user has encountered, was the Google Search algorithm. In 1996, while studying at Stanford University, Sergey Brin and Larry Page, the cofounders of Google, began work on what would become PageRank, a system for crawling the Internet which at that point amounted to perhaps one hundred million documents in all,and identifying which sites and pages were more useful or informative than others. PageRank worked by measuring how many times a website was linked to by other sites, similar to the way academic papers cite key pieces of past research. The more links, the more important a page was likely to be. The metric of citations corresponded well with people's subjective idea of importance.
In 1998 Brin and Page wrote a paper, "The Anatomy of a Large-Scale Hypertextual Web Search Engine." Wherein it was outlined how PageRank co-opted a form of collaborative filtering along with content filtering. By linking various pages, human users had already formed a subjective map of recommendations that the algorithm could incorporate. It also measured factors like the number of links on a page, the relative quality of the links, and even the size of the text. Pages with a higher PageRank were more likely to appear at the top of Google's list of search results.
Page and Brin's prediction that their system would remain functional and scalable as the internet grew was correct. Today PageRank has become the dominant modality on how and when websites are seen. It's vital for a business or resource to make it to that first page of Google Search results by adapting to the PageRank algorithm.
Google Search now frontloads text that it gauges will be relevant, pulling it from websites and displaying it directly to the user at the top of the search page, before the actual results. Page and Brin originally wanted their system to be neutral, evaluating each site solely in terms of its relevance.
"We expect that advertising-funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers," the entrepreneurs wrote in 1998. The self-serving reversal was about to follow. In 2000, they launched Google AdWords as the company's pilot product for advertisers.
Advertising now provides more than 80 per cent of Google’s revenue. The ads a user sees are just as informed by the algorithm as the search results are. Advertising, built on the search algorithm, turned Google into a behemoth.
So, the defences, technically robust as they may be are contrary to the historical experience. The consequences of this ruling extend well beyond Google, potentially reshaping the entire tech industry. Antitrust cases involving Big Tech companies are infamously intricate and drawn out, often taking years to resolve. Despite the seriousness of the decision, Alphabet’s stock has shown little reaction, suggesting that investors remain sceptical about the ruling’s potential to disrupt the company’s financial performance.
Google has already signalled its intent to appeal, while the DOJ is still weighing its options for corrective actions. These could include drastic steps such as forcing Google to separate its search engine from its Android operating system and Chrome browser or compelling the company to share its search data with competitors.
However, some experts argue that a more effective approach would be to curb Google’s ability to strike exclusive deals that reinforce its market dominance. This would not only affect Google but also companies like Apple, which has significantly benefited from these arrangements. Restricting such deals could encourage Apple to develop its search capabilities, introducing more competition into the market.
Another potential remedy is the implementation of a “choice screen,” allowing users to select their preferred search engine rather than having a default option imposed on them. This approach, already in place in the European Union, could be extended to include new artificial intelligence-powered search tools, further broadening consumer choice.
As Google faces these challenges, it may find that its biggest enemy has not been regulators but itself. By insulating itself from competition through exclusivity deals, Google may have stifled its innovation. Recent studies have shown a decline in the quality of Google’s search results, with more spam and low-quality content appearing at the top of searches.
Additionally, the company has been losing ground in the AI race, with new competitors like the AI-powered search app Perplexity gaining popularity. This landmark antitrust case could be the catalyst for even faster disruption in the search industry, opening the door to more competition and innovation. As the summer of challenges draws to a close, Google may be forced to confront the reality that maintaining its dominance will require more than just defending its past practices—it will require adapting to a future where competition and innovation are once again at the forefront.
Shubhranshu Singh is a stalwart marketer and business leader presently serving as CMO at Tata Motors. He is a published author and columnist writing extensively on brand building, consumer lives, economy, politics and technology. He is a speaker and jury member on the global apex marketing circuit. Views expressed are personal
