Pavlo Gonchar/SOPA Images/Sipa USA via AP Images
Luke Goldstein provided reporting.
After an extended break, the Google search monopolization trial will wrap up with closing arguments in May. If you remember the case, which was argued last fall, Google stood accused of using exclusive deals to establish itself as the default search engine in a host of web browsers and mobile devices. One number in particular stood out, because the trial was the first time we got a definitive look at it: Google shared $26.3 billion in revenues in exchange for default search engine status in 2021. Most of that went to Apple, for the Safari browser and the iPhone. One estimate from The New York Times put the amount Apple took in 2021 at $18 billion.
An inordinate amount of discussion in the trial was about this exclusive deal between two of the largest companies on Earth, one monopolist assisting the other at entrenching their monopolies. The normal response to that from any company at risk of an unfavorable ruling—especially as the trial has not yet been resolved—would be to do nothing remotely similar to that again. But Google, and Apple, clearly believe that the law does not apply to them.
Published reports indicate that Google and Apple are in talks over a second exclusive deal, this one for Google’s AI model. Bloomberg first reported that Apple would license Google’s Gemini technology so it can embed AI-enabled features, like image creation and writing assistance, in its operating system for the iPhone. This came after Apple previously initiated discussions with OpenAI about ChatGPT.
The deal is still in the discussion stages; Apple and Google could yet back out. But if it goes forward, this is not unlike a bank robber going out and robbing the same bank while awaiting trial for his previous robbery.
“If Apple has monopoly power in any of the markets where it is seeking an exclusive deal with an AI partner, that would likely mean that any such exclusive deal is illegal,” said Lee Hepner, legal counsel for the American Economic Liberties Project. “Same goes for Google, and I don’t see a meaningful distinction between Google’s search engine and the AI model that powers that search engine.”
It’s not just that Google’s monopolization trial hinged on exclusive deals, including with the very same company as this one. Google also spent much of the trial claiming that its dominance in search would not lead to a dominant position in AI. In fact, Google argued, because of AI’s emergence the idea that Google had a moat in search, due to its exclusive dealings, was ridiculous. Its market share was tenuous, it insisted, because of the innovations coming down the line.
We now know that this was a ridiculous argument, but the truth is we knew it back then, too.
“Plaintiffs’ argument that barriers to entry protect supposed monopoly power fails to account for the technological developments that have rapidly eroded the very barriers they mistakenly identify,” Google wrote in its post-trial brief, which was filed February 23. This characterization of Google’s weak market position in AI runs counter to statements made by its CEO in earnings calls, where he attempted to drum up enthusiasm among investors by pointing to the company’s AI dominance.
Google could be the latest company to bank on a Trumpian restoration next January.
Dominance in AI is predicated on having an early-mover advantage in data, which is used to train the various models. Nobody has more data available for training than Google. Gemini has not rolled out perfectly, mostly due to conservative sniping over images of Black Founding Fathers and the like from its image tool. But the fact that it has an advanced AI model at all is due to its capacity to draw on the vast storehouse of knowledge it has been accumulating and cultivating for decades.
Whether this deal is in the image of the Google search deals depends on whether money will change hands. In its post-trial brief, Google boasts of pioneering AI, but that it has “made available [these technologies] to competitors for free.” But it defies belief that Google would simply lend Apple a bunch of AI tools. Apple was itself seeking engineers to build its own AI models. Google and Apple are partners on search but competitors in a variety of other areas. Gemini AI features are already folded into Pixel phones and the latest generation of Samsung Galaxy phones. There’s no credible reason for Google to give up its AI advantage over Apple in phones without compensation.
Apple had already promised generative AI features for its products later this year, while losing ground to Microsoft, OpenAI, and Anthropic, in addition to Google. “I imagine Big Tech would have preferred to launch this after the Google Search liability decision AND remedy phase, but things are moving too fast and Apple can’t wait,” said Megan Gray, an independent lawyer and former counsel for DuckDuckGo.
That makes sense from Apple’s perspective. But why would Google move forward on this in the midst of an active monopolization case against it? Gray thinks it could be that Google is looking down the road to possible changes in the government. “Of course, the current antitrust enforcers will do everything they can to throw water on an Apple-Google AI deal, but Apple is betting they won’t move fast enough or will burn out or will be out of power soon,” Gray said. “And they might be right.”
In other words, Google could be the latest company to bank on a Trumpian restoration next January. In this sense, there’s an eerie parallel to the last major monopolization case against a tech company, the Microsoft trial of the late 1990s. The Clinton administration waged that battle but then left office, and George W. Bush’s Justice Department secured a rather weak settlement.
Even if Judge Amit Mehta rules in the Justice Department’s favor after the conclusion of the trial in May, there’s still a remedy phase, and it’s unlikely that the entire case will be completed before the November elections. So the government of whoever is sworn in on January 20, 2025, will probably have a role to play in the ultimate outcome, and there’s an even-money chance that’s Trump.
Trump isn’t exactly the friendliest face to Silicon Valley and Big Tech, but whoever he picks to run the Justice Department, based on past precedent, isn’t going to be super-interested in breaking up a U.S. company. Besides, given Trump’s responsiveness to financial support, Google is likely one well-timed campaign contribution away from getting Trump on its side.
Of course, Trump may not win the election. And then Google may have to explain why it is not a monopolist that makes exclusive deals to build its position and muscle out competition, after engaging in that precise strategy with Apple a second time, after being busted for it the first time.
