How Google’s search dominance has made life difficult for smaller search engines

The antitrust trial that started in Washington on 12 September is definitive for Google’s crown jewel: the search business

The early days of the antitrust lawsuit went over the steep deals that Google made with Apple and Samsung to remain as the default search engine [File] | Photo Credit: REUTERS

The time is never right for a tech company to be in the dock for an antitrust trial. But now may be an especially vulnerable time for Google, given the stiff competition it is facing in the AI and cloud business.

But the antitrust trial that started in Washington on 12 September is definitive for its crown jewel: the search business. The lawsuit is seminal for antitrust cases of the future and in many ways, the future of the internet. Federal prosecutors with the U.S. Justice Department have alleged that Alphabet abused its dominance to deter rivals from entering the search engine market.

The early days of the lawsuit went over the steep deals that Google made with Apple and Samsung to remain as the default search engine. An estimate from financial analyst Bernstein estimated that Google could be paying Apple between $18 billion and $20 billion a year under this deal.

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Why is the Apple deal key?

It is evident that the Apple contract was a potent one. According to Statista, in 2022, there were more than 120 million iPhone users in the U.S., which accounts for nearly 49% of all smartphone users.

In his testimony earlier this month, Microsoft CEO Satya Nadella said about the Apple contract: “They basically king-make.” (Remember Internet Explorer?)

The CEO of DuckDuckGo, Gabriel Weinberg, noted in his testimony that switching just Apple’s private-browsing default to their engine would have pushed DuckDuckGo’s market share “multiple times over.”

Days into the trial, Eddy Cue, Apple’s senior vice president of Services, stood as a witness on the stand. Cue said that to Apple, the deal with Google made the most sense because of the size of the cheque involved. Cue simply stated that there wasn’t a valid alternative to Google at that time and there still isn’t.

But the trouble with how a search engine works is that it only becomes better, the more it is used.

Anshu Kandhari, a former Meta engineer, explained, “It’s really like the chicken-egg situation—the more you use a search engine, the more it learns about you and the better it becomes. It builds a contextual search via user-specific information. When it comes to consumers, nothing beats personal. This is why around 90% users tend to return to Google.

Also, they have a bundle of products like YouTube and Maps together so it gives you personalised insights and creates a profile for you. So, its easier for a consumer to stay within this range of horizontal products because these personalised insights are shared inside the ecosystem.”

Is Google killing competition?

Having worked with Belzabar, the engineering team behind the Dutch search engine, Kandhari is aware of just how heavy Google weighs in the search engine industry.

“It was very difficult for us to penetrate through Google’s dominance and it’s been years and there is little that has changed. There is very little incentive to enter the market for young companies. Besides promoting their own product bias, they partner with e-commerce companies to kill competitors. The market is divided by Google on one end and everybody else in the other bucket,” he explained.

There have been other cautionary tales along the way of startups that tried to go up against Google and failed miserably. A prominent one was a search engine founded in 2019 called Neeva that used AI to help users filter their search results and get a written summary to answer specific questions.

The upstart search engine was co-founded by Sridhar Ramaswamy, a former Google exec who ran their advertising section until 2018. Tired of Google’s ad-filled search, Ramaswamy wanted to start something that offered better privacy.

Neeva had a subscription-based model and was ad-free as well as technically sound. Ramaswamy said that users had “genuinely loved it” and praised it as a “better, easier, sleeker experience” than Google’s but failed to expand their userbase because of the default option. The firm eventually shut down in June this year.

Of course it is possible for users to switch to a different search engine, but consumer inertia is a tough obstacle to scale. Once a default setting is made, very few consumers actually switch and it is even possible that many aren’t aware that a switch can be made in the first place.

Interestingly, there’s a search engine startup called AlphaSense that has been able to escape Google’s looming figure and ride the high tide that AI-focused startups are seeing. Started in 2011, the AI-powered market intelligence search engine touched a valuation of $2.5 billion on 28 September after a fresh round of funding amounting to $150 million.

“Aside from being technically efficient, we have been able to solve a very specific business problem which is answering very pointed questions about financial services. So, there’s no question of an overlap with Google. In fact, they are a top customer of ours and use us extensively,” Raj Neervannan, co-founder and CTO of the company, stated.

What is Google’s defence?

Google’s defence is built around the argument that it has been innovative of its own accord, which made the search business into what it is. Its competitive advantage has been the intelligence of the people who worked in their company and not the deals they made.

On 30 October, CEO Sundar Pichai took the stand to testify. Pichai insisted that Google had done nothing illegal by self-prioritising; it was all just business.