Tag Archives: antitrust

How Google’s Antitrust Trial Could Change Internet Search

Reading Time: 4 minutes
How Google Plans to Fight the Biggest U.S. Antitrust Suit Since Microsoft -  Bloomberg

The internet is woven into the fabric of daily life, and at the heart of it lies the ever-crucial function of search. Google, with its eponymous search engine, has been a dominant player in this space for decades. Its prevalence is undisputed, but this dominance has also brought increased scrutiny from regulators worldwide. As Google faces an antitrust trial, the outcome could significantly alter the landscape of internet search. This article explores the potential implications of the trial and how it may reshape the digital experience for users and competitors alike and my personal opinion on this topic.

But what is antitrust law ?

To start with, for better understanding of what we are going to talk about in this artical, I think I should give you a definition of what antitrust law is.

Antitrust laws – are regulations that encourage competition by limiting the market power of any particular firm.


The Background of the Antitrust Trial

In January, the Department of Justice filed a lawsuit against Google, claiming that the company acted in violation of the Sherman Act, an antitrust law that outlawed monopolistic practices. The act helps ensure that no single company or firm has control of a particular market.

According to the case filing, Google has paid billions to cellular device manufacturers and browser developers to ensure that it is the default general search engine for laptops, computers, and cellphones. Google’s contract with Apple, for instance, costs the big tech company an estimated $15 to $20 billion annually. That money also ensures that those companies do not work with Google’s competitors. The contract has helped Google account for nearly 95% of all search queries on mobile devices, according to the court filing. Google is worth around $1.7 trillion and has control for some 90% of the American search engine market.

The Justice Department argues that these sort of practices prevent other search engine companies from having a real chance to compete in the industry. “Google is so dominant that ‘Google’ is not only a noun to identify the company and the Google search engine but also a verb that means to search the internet,” the filing complaint says. Google also was accused of overcharging consumers through unlawful restrictions on the distribution of apps on Android devices and unnecessary fees for in-app transactions. Regulators argue that these actions harm consumer choice and innovation. In contrast, Google maintains that its services are designed to benefit users and that competition. Google alleged that it did not monopolize the ad industry, instead arguing that it is just “getting the benefit of a bargain”.

At the end after antitrust settlement with consumers and US states Google agreed to pay $700m and to allow for greater competition in its Play app store.


How this could impact the future of search

David Olson, a professor at Boston College Law School, told NBC News that the remedy could cause an increase in the cost of devices to make up for loss of contracts with Google. He adds that Google could still have an advantage over competitors if users still choose to use it. And it could also bring many implications.

Potential Implications of the Trial

  • Opening Doors for Competitors

Should the trial conclude against Google, one of the most immediate effects could be the opening up of the search engine market to more competition. Google may be required to change its practices, giving smaller search engines a fairer chance to compete. This could lead to a more diverse range of search tools, each catering to different user preferences and needs.

  • Changing Business Models

The trial could also force Google to alter its business model. Currently, Google’s search engine is free to use because it makes money from advertising. If changes are mandated to how Google can display or prioritize ads, the company might have to explore alternative revenue streams, potentially even charging for services that are currently free.

  • Impact on User Experience

Google’s easy integration of services such as Maps, Shopping, and Images directly into its search platform is convenient for users. However, should the trial require Google to decouple or offer more visibility to competitor services, users might experience a less seamless interaction out these features or deal with a more fragmented online experience.


The final result of the Trial

Epic Games wins antitrust lawsuit against Google

Potential Advantages of the Trial

Wilson White, Google vice-president for government affairs and public policy said the settlement “builds on Android’s choice and flexibility, maintains strong security protections, and retains Google’s ability to compete with other [operating system] makers, and invest in the Android ecosystem for users and developers”.

The company said it was expanding the ability of app and game developers to provide consumers an alternative billing option for in-app purchases next to Play’s billing system. Plus as part of the settlement, Google said it would simplify users’ ability to download apps directly from developers.


Conclusion: My Personal Opinion

As the trial ended I can certainly said that I thought of much worse outcomes for Google (like limiting their abilities, allowing a risk that too much intervention could stifle the efficiency and utility that users have come to expect from Google and etc.), but everything ended pretty good for Google. Of course they los a lot of money and maybe it will has a greater influence on Google that we see right now, including simplifying users’ ability to download apps directly from developers, will not affect Google so much as to leading to a global changes in the search field, which is really good both for the company and for us users. As of the who was right, I think it is true that Google dominant position is undeniable, however I am not sure that I one hundred percent agree with the accusation that Google was overcharging consumers.

I think the insight we all should take from this is that – As the digital ecosystem evolves, we must be vigilant in ensuring that it remains both open and accessible, while also rich and innovative.

Have you herd about this lawsuit? Who in your opinion is right?

Sources(reference):

  1. https://www.theguardian.com/technology/2023/dec/19/google-agrees-to-pay-700m-after-antitrust-settlement-with-consumers-and-us-states (more detailed information of what lawsuit is all about)
  2. https://news.harvard.edu/gazette/story/2023/09/breaking-down-google-antitrust-case/( particular accusations that were made)
  3. https://time.com/6324490/google-antitrust-trial/ ( predictions that were maid about what this lawsuit may lead to)
  4. https://www.ft.com/content/e7f7c7d6-79b4-4de4-aa4b-f656546a91ca (the final outsome of the trial)
  5. https://www.investopedia.com/terms/a/antitrust.asp (what is antitrust law)

AI generators used:

  1. ChartGPT 4.0 (key words: Google, antitrust lawsuit, internet search, outcomes)
Tagged , , ,

Apple vs Spotify. App Store antitrust violations

Reading Time: 2 minutes

Recently, the EU Commission preliminary stated that Apple with its App Store commission on mandatory in-app purchase system (IAP) and anti-steering provisions, which prevent users from being informed about alternatives, distorts the competition. Now Apple has 12 weeks for official response.

What is IAP?

IAp or in-app purchase system is the element of an App Store application with which user/customer is able to make an in-app transaction to buy a subscription or any stuff inside an app. For that kind of utility, Apple charges about 30% of the initial price.

Why is that important?

You may say that Apple has created their marketplace platform on their iOS. This marketplace is again on their Iphones or IPads. Hereby they are the ones who can charge apps such a price and, as Fortnite case showed us, you will be absolutely right. At the same time there is one but. Apple owns Apple Music. With that argument, Spotify claims that they have unfair price advantage as they can charge customer 30% less and earn the same amount of profits or they can pay more to the musicians. This actually happens as Apple pays $0.0076 per stream while Spotify pays in the range of $0.0026-0.0049.

What is anti-steering provisions?

Basically, anti-steering provisions is the tool that limits the ability of app developers to inform users about alternative purchasing possibilities outside apps.

The influence of the feature

We know that Apple cuts 30% from in-app transactions. The logical behavior of the developer is to offer a purchase outside the app, which is allowed by App Store rules. Nonetheless, it is really a burden to inform a user about such possibility as there are restrictions on that notion.

Back to the Case

In response to Commission’s allegation Apple stated that at this timeframe Spotify leads the market of music streaming and 99% of their users have no connection to IAP. Moreover, they have said that Apple charges only 15% of Spotify subscription. They have also added that Spotify wants all the benefits of Apple’s marketplace and does not want to pay a penny for that which is unfair competition.

Below you can see how Spotify’s founder, Daniel Ek reacted to Antitrust case

Aftertaste

Apple has been struggling with antitrust cases for a while now. All of the proceedings by now have been won by Apple. However, if only once in a blue moon they are punished it will lead to even more allegations towards Apple monopoly. In that case, Apple will lose tons of reputation and money earned on commission.

Sources:

https://www.businessofapps.com/data/apple-music-statistics/

Tagged , , ,

Apple may have to pay a fine which amounts to $27 billion

Reading Time: 2 minutes

EU has accused Apple of improper competition practices. The Commission accused Apple of breaching EU rules of fair competition as they believe Apple holds a dominant position – specifically in the market of music streaming.

Apple’s App Store charges a 30% commission fee on all subscriptions bought through their system. On top of that, they forbid advertising other subscription options through their app on the App Store. If you remember their dispute with Epic Games, Fortnite was kicked from the App Store exactly for breaching their latter part of the policy mentioned.

EU claims that Apple is distorting what was supposed to be a healthy competition and that ultimately the system takes toll on the customers, due to the fact that companies partnering with Apple have to up their prices in order to combat the 30% ‘Apple tax’.

If Apple is found guilty they will have to face a fine of 10% of annual revenue which accounts to $27 billion, and adjust their business model so that it works in a way that doesn’t affect healthy competing.

Apple responded to the accusations with:

“Spotify has become the largest music subscription service in the world, and we’re proud for the role we played in that. Spotify does not pay Apple any commission on over 99% of their subscribers, and only pays a 15% commission on those remaining subscribers that they acquired through the App Store. At the core of this case is Spotify’s demand they should be able to advertise alternative deals on their iOS app, a practice that no store in the world allows. Once again, they want all the benefits of the App Store but don’t think they should have to pay anything for that. The Commission’s argument on Spotify’s behalf is the opposite of fair competition.”

Spotify has its own take:

“Today is a big day. Fairness is the key to competition… we are one step closer to creating a level playing field, which is so important for the entire ecosystem of European developers.”

“Ensuring the iOS platform operates fairly is an urgent task with far-reaching implications. The European Commission’s Statement of Objections is a critical step toward holding Apple accountable for its anticompetitive behavior, ensuring meaningful choice for all consumers and a level playing field for app developers.”

Another parties also join in opposing apple in their anticompetitive practices as Apple is pressured the situation is yet to escalate, although slowly Apple is seen taking a step back – lowering the % fee, and skipping it for some services. We have yet to see what will happen as Apple is pressed with more and more antitrust complaints.

resources:

https://www.theverge.com/2021/4/30/22407376/apple-european-union-antitrust-charges-app-store-music-competition-commission-margrethe-vestager

https://techcrunch.com/2021/04/30/europe-charges-apple-with-antitrust-breach-citing-spotify-app-store-complaint/

Tagged , , , , ,