A Better Frame for the Google Anti-trust Case

I found the anti-trust case against Google extremely under-whelming. There have been plenty of detailed analyses done on the case and the merits, so I’m not going to do a deep dive on that here (I’m still partial to Ben Thompson’s analysis on Stratechery). However, I do want to make a comment about framing — because I see many observers using what I think is the wrong frame when discussing this issue.

One of the core complaints in the lawsuit is that Google has locked up distribution for search on mobile by paying Apple to be the default search engine (I will leave the Android question aside here, as it is more complicated). The sentiment is that this paid-for default setting closes off competition and therefore is bad. Plus, if Google’s search offering is that much better, wouldn’t users choose it anyway?

This framing makes paying to be the default sound like Google’s choice versus and consumer-choice alternative. I’m not familiar with the details of the negotiations, but I think a more accurate framing is likely that Apple decided to charge money for being the default search engine and contemplated offers from different players. In that context, the whole discussion changes.

Given the power of defaults, if Apple is going to offer up the ability to pay to be the default, it would be irresponsible for Google not to make an offer. And given Google’s superior monetization, it is also likely that Google could afford to be the highest bidder. This isn’t nefarious in some way, it’s just business — on both sides.

It’s also unclear to me what sort of remedy the DoJ might be asking for. Should Google not be allowed to bid for an opportunity like this? Should they be not allowed to bid more than competitors can afford to bid? Neither of those options really seems to make any sense as a solution. And having a non-Google default for all iOS devices doesn’t really help develop a competitive ecosystem — it’s a thumb on the scale for one competitor.

Perhaps the best option would be to have Apple ask the consumer what they wanted their default search engine to be and then have each provider give some sort of revenue share to Apple. Apple probably would not like this option as it will be both (a) a worse/more confusing consumer experience for most users and (b) less profitable given that no all options are as profitable as Google. It’s also likely that the outcome will be that 90% of people opt-in to the Google option — which means nothing really changes (though it does lower the bar for new entrants — if they an offer a better search experience).

But the key thing here is the framing. The issue that the DoJ has is with Apple dictating a default search engine to users (and charging someone to be that default). It’s not really with Google responding to Apple’s offer to have a paid-default position. So if they don’t want distribution channels to be owned by a single player (Google or otherwise), they ought to be arguing with the distributor.

Originally published at https://jeffkeltner.com on November 10, 2020.