Google’s antitrust defense could benefit from the threat of SearchGPT

The new risk Google faces from AI challengers could play a role in the ultimate outcome of a landmark antitrust trial where a judge must decide whether the tech giant illegally monopolized online search.

The trial, brought by the Justice Department and a group of US states, centers on the government’s argument that Google (GOOG, GOOGL) illegally blocked rivals from competing. Google claims it came to dominate search because its service was better.

But even as the company waits for a ruling from US District Court Judge Amit Mehta, fresh threats to its preeminence are emerging via new ways of searching the web.

These threats could improve Google’s odds of lessening any consequences if Judge Mehta does find it liable for breaking competition law, according to antitrust experts.

“If a violation is found, Google will say the market is already solving itself,” George Washington University antitrust law professor William Kovacic said.

Just last week Microsoft-backed (MSFT) OpenAI debuted a new prototype search engine called SearchGPT and positioned it as a new means of searching the web — a potential threat to Google’s long-standing search dominance.

Microsoft’s Bing also has generative AI features powered by OpenAI’s ChatGPT, as do its Copilot and Prometheus software.

Google, for its part, offers generative AI capabilities in its AI Overviews — its latest search product powered by its Gemini model. The company also offers its LaMDA, T5, PaLM, and GLaM models.

Other new ways of searching the web are offered by AI-fueled large language models (LLMs), like OpenAI’s ChatGPT, introduced in November 2022, and Perplexity, an AI-powered search engine designed using multiple LLMs that attracted major funding from Amazon (AMZN) founder Jeff Bezos and Nvidia (NVDA) CEO Jensen Huang.

‘Market developments are already solving the problems’

New search options won’t necessarily help Google’s defense of its past behavior, but they could significantly soften a punishment if the US government and states prevail in their antitrust trial.

That’s because Google would have an opening to argue during a separate phase of the trial that any anticompetitive problems identified in the complaint no longer exist, or have dwindled.

The argument Google can make to the judge is, “‘You don’t have to do a lot here, because the development of new products, new technology, the emergence of competitive alternatives means that market developments are already solving the problems identified,'” Kovacic said.

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BakerHostetler’s antitrust and competition practice leader, Carl Hittinger, agreed that market changes that open up more options for consumers could work in Google’s favor.

“If consumers move over to another product, if they have that option and they can, then there’s no anticompetitive harm there,” Hittinger said.

On the other hand, the judge may not view SearchGPT and emerging search platforms as direct Google Search competitors since, for now, those products are not pre-installed as defaults across a variety of devices.

One of the key factors for the judge to consider in crafting a remedy, Hittinger said, is what’s in the public interest.

‘It’s an awesome responsibilty’

The government has yet to say what precise remedy it desires should it prevail.

Remedies can include injunctive relief, such as controls on a company’s future conduct, or structural relief, like requiring divestitures.

Federal rules also allow Google to ask Judge Mehta to reopen the case, prior to his decision, in order to consider new material evidence. And even if an injunction is issued, new and material evidence can be brought into court to request that it be amended.

If Google is found liable, it is expected to appeal the case. That could come with a request from Google to table the remedies phase until the case has made its way through the appellate system.

Kovacic predicted that the government will prevail on at least some of its claims, and said no matter what the outcome, Judge Mehta’s decision is consequential.

“You can imagine how hard of an issue this is for the court,” Kovacic said. “Holding the fate of the entire search sector — it’s an awesome responsibility.”

The Google antitrust trial is the most prominent since another landmark case in the 1990s that eventually forced Microsoft (MSFT) into a settlement that opened its computer operating system to competitors in the early 2000s.

‘The landscape changes’

It remains to be seen what the antitrust trial and new rivals in the search business will mean for Google and its parent, Alphabet.

Certainly, a lot is at stake. In 2023, Google’s search advertising business generated more than $175 billion in revenue.

Coupled with Google’s YouTube ads and Google network revenue, advertising accounted for a staggering $237 billion of the company’s $307 billion in total revenue.

But the new marketplace threats to Google’s search empire still have a ways to go to unseat the leader.

So far, LLMs and rival search platforms haven’t radically changed how most internet users search the web. Bing gained about 1% of the search market share since the launch of Copilot, but Google still holds more than 90% of it.

Hittinger, who represented AT&T in another landmark antitrust case that ended in a breakup of the telecommunications giant in the 1980s, said changes in technology tend to impact difficult antitrust cases.

“While you’re deciding the case, the world moves on and the landscape changes,” he said.

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