The ruling in the Department of Justice’s landmark antitrust case against Google-parent Alphabet, stopped short of what could have been the government’s most severe action in decades to curb the power of a monopoly—and acknowledged that rapid innovation and investment in artificial intelligence have already altered some of the market conditions the court was seeking to address.
But, he said, the emergence of generative AI has “changed the course of this case,” which began in 2020 when the DOJ and 11 states sued Google for illegally maintaining a monopoly in the internet search market.
While Google’s dominance made the search market a “no fly zone” for venture capital investors in startups when the case was in its earlier phase, the advent of generative AI has changed the calculus, Mehta said in Tuesday’s ruling.
“The money flowing into this space, and how quickly it has arrived, is astonishing,” he wrote.
Shares of Google-parent Alphabet surged 7.5% in extended trading on Tuesday. Apple, which receives tens of billions of dollars to makes Google the default search engine on the iPhone, saw its stock increase 3.5% after the ruling.
“While in theory Google is barred from ‘exclusive deals’ for search this now lays the groundwork for Apple to continue its deal and ultimately likely double down on more AI related partnership with Google Gemini down the road,” Wedbush Securities analyst Dan Ives wrote in a note to investors on Tuesday, declaring the ruling a “monster win” for both Google and Apple.
“We now see a green light for a bigger Gemini AI partnership between Apple and Google with this DOJ case now in the rear view mirror,” Ives wrote.
Google will have to make available to certain search index and user-interaction data available “qualified competitors,” Mehta wrote in the ruling, though this does not include ads data. A special technical committee will be created to help implement and enforce the court’s remedies, which will last for six years.
Google has said it will appeal Mehta’s 2024 finding that it has violated antitrust law. That means it could take until 2026 or 2027 to reach a final resolution. The case could ultimately reach the U.S. Supreme Court.
While the court declined to break up Google, it granted the plaintiffs’ request to force Google to share its search data—thought it narrowed the amount and types of data that Google must share.
“The size of Google’s index gives it a key competitive advantage over existing small GSEs [general search engines], like DuckDuckGo, and emerging companies in the GenAI space, like ChatGPT,” Mehta wrote, noting that making the data available would “narrow the scale gap created by Google’s exclusive distribution agreements and, in turn, the quality gap that followed.”
Under Mehta’s ruling, Google will have to make available its schedule for “crawling” the web pages it indexes, the unique ID and “spam score” its assigns to each page, and how mobile-friendly the web pages are. But Google will not have to share its “knowledge graph,” a massive database that shows the interconnections between people, places, and things.
While Google has sought to integrate chatbot-like features and AI-generated “overviews” into its core Search product, doing so potentially jeopardizes its business model, which sees it compensated for the traffic it sends to other sites and for the sponsored-links that appear at the top of search results. Search accounts for 56% of Alphabet’s $350 billion in annual revenues and even more of its profits. (The company does not break out Google’s profits by segment.)
Referring to the new crop of AI contenders in Tuesday’s ruling, Mehta wrote: “These companies already are in a better position, both financially and technologically, to compete with Google than any traditional search company has been in decades (except perhaps Microsoft).”
Mehta noted that the simple fact that Google was tried in federal court for antitrust violations has already had “a prophylactic effect,” on the company, causing it to revise its distribution agreement with various other companies. But he seemed keenly aware of the inherent challenge and perils of being overly prescriptive amid the industry’s changing landscape.
“Unlike the typical case where the court’s job is to resolve a dispute based on historic facts,” Mehta wrote Tuesday, “here the court is asked to gaze into a crystal ball and look to the future. Not exactly a judge’s forte.”
