The US v. Google trial: vertical search, pre-installs, and Firefox/Yahoo

One of the biggest tech antitrust cases since the U.S. tried Microsoft in the 1990s, the Justice Department’s landmark case against Google, is nearly two months old, and the revelations keep getting deeper.

In our last roundup, we learned how Google spent $26.3 billion in 2021 to become the default search engine across platforms and tried to preinstall Chrome on iPhones. In recent weeks, more of Google’s inner workings have emerged, including its most profitable search queries, its revenue-share agreements with Android OEMs, and why Expedia has a beef with Google.

Before discussing these details…

Why Google vs. U.S. antitrust matters
Google’s platforms and partnerships block search and advertising competition, preventing competitors from accessing the data they need to improve their products, according to the government.

Google may have to share its APIs with third-party developers if Judge Amit Mehta rules against it. Its anticompetitive and exclusive deals with smartphones, computers, and wireless carriers may also be banned.

Google may have to share its data with other search engines to improve their products and attract more users. The DOJ says Google gets 16 times more data than Bing daily.

Enforcement wants to show that antitrust law is still relevant and that Google, the internet’s god, cannot outperform U.S. law.

Other big tech cases may be affected by Google’s decision. Amazon was sued by the FTC in September for illegally maintaining its monopoly power. For years, the DOJ has investigated Apple’s policy on third-party apps on its devices and whether it unfairly favors its own products. Ongoing case between FTC and Facebook: FTC wants Facebook to sell Instagram and WhatsApp.

Google has another antitrust trial underway. Google settled a separate antitrust lawsuit with Match Group last week. Fortnite maker Epic Games and Google tested on November 6. The latter wants to show that Google Play and its commission structure are anticompetitive.

On to the roundup!

Google’s top searches
Judge Amit Mehta ordered Google to reveal its most profitable search terms. There were 20 profitable search terms for the week of September 22, 2018. Redacted data included revenue per search term, how many queries each term received, and a list of popular search terms ordered by queries (not revenue). We see the list below:

• iPhone 8
• iPhone 8 plus
• Auto insurance
• Car insurance
• Cheap flights
• Car insurance quotes
• DirecTV
• Online colleges
• AT&T
• Hulu
• iPhone
• Uber
• Spectrum
• Comcast
• Xfinity
• Insurance quotes
• Free credit report
• Cheap car insurance
• AARP
• LifeLock

This is unsurprising. Google and Apple have a long and mutually beneficial relationship, even while competing, so it’s not surprising that three Apple search queries are making big bucks, especially since September 22, 2017 was the iPhone 8’s official release date.

The perennial favorites “car insurance,” “cheap flights,” and “credit report” show how much Google dominates vertical search, or search in specific market categories. Regarding LifeLock… In September 2017, LifeLock was aggressively courting identity theft protection buyers after the Equifax data breach.

Revenue-shares for Android pre-installing Google apps
Google’s Android and Google Play expert Jamie Rosenberg testified in its defense on November 8. He called Google-Apple rivalry “as intense as it gets,” Bloomberg reported.

Rosenberg explained how Google gets Android smartphone makers like Samsung and Oppo to sign a mobile app distribution agreement (MADA) that requires them to pre-load 11 Google apps, including Search, Chrome, and Play. They need not be defaults, he said.

Google has revenue share agreements (RSAs) with smartphone makers and wireless carriers like Verizon that require them to default to Google search and Chrome. Rosenberg claimed that Google apps like Search are “best in class.” RSAs encourage other companies to make or sell more Android devices, he said.

Expedia laments too many search ads and high ad costs.
Barry Diller, chair of Expedia and IAC, testified on November 1 about how more ads in search results are hurting organic listings.

“I must say I’m on the edge of revolt now that Google’s actions are so punitive, not just for Expedia but also for IAC and all the players that depend upon something of a level playing field,” Diller wrote to Google in 2019, Bloomberg reported.

Google CEO Sundar Pichai responded that travel listings were one of the company’s most popular experiences.

Expedia executives also testified that ad cost increases did not affect search results. Expedia’s former COO, Jeff Hurst, told the court on October 19 that ad fees increased tenfold from $21 million in 2015 to $290 million in 2019. However, Expedia’s Google traffic didn’t rise. Google was implied to be the direct competitor. Hurst noted that Google began sharing flight and hotel data in search results at that time, according to The Seattle Times.

A European antitrust fine prompts Google to improve search results.
Bloomberg reported that the government argued on November 10 that Google only improved its EU search engine after receiving a €5 billion antitrust fine in 2018.

The DOJ reported that the EU’s antitrust order required Google to give Android users five search engine options. In response, Google executives launched “Go Big in Europe,” a plan to improve search results in France and Germany in 2019 and 2020 with local content like news, post-game soccer video highlights, streaming options, and language-specific pronunciation practice. To encourage users to click on Google’s home screen instead of the competition’s.

That supports the Justice Department’s claim that Google has little incentive to improve its products without competition, a typical monopoly effect.

Mozilla targets Google’s search dominance.
On November 1, Mozilla CEO Mitchell Baker defended Google’s search engine quality in “competitive” environments. Baker explained how Mozilla “failed” when it switched Firefox’s default search engine from Google to Yahoo.

In 2014, Yahoo agreed to pay Mozilla $375 million annually to be Firefox’s default search engine. Baker reported Google’s $276 million offer. That deal was bad.

“I felt strongly that Yahoo was not delivering the search experience we needed and had contracted for,” she told Bloomberg. The executive said Yahoo promised to reduce ads and user tracking but ended up serving more ads.

Baker said, “The number of users who stayed with Firefox declined noticeably during the years when Yahoo was the default.”

In a recorded deposition for Google’s defense, Baker said Mozilla users wanted and expected Google.

But that’s not all. Yahoo was already behind Google in search technology. Firefox trailed Chrome, which had nearly 50% market share in 2014 and nearly 65% in 2017 (when Google took over Firefox’s default search position). Mobile usage is even more skewed to Chrome. Thus, Firefox users may have declined for other reasons, but blaming Yahoo helps Google!

The trial continues.