U.S. v. Google: Everyone Uses a Search Engine, Not Everyone Uses Social Media. Recapping Week 4

By Charlotte Slaiman and Elise PhillipsOctober 9, 2023

Every week, Public Information competitors coverage consultants watch the Division of Justice’s landmark U.S. v. Google case dwell from the E. Barrett Prettyman United States Courthouse. On account of very strict confidentiality guidelines from the courtroom, you possibly can’t watch or take heed to the trial except you’re there within the constructing and following the courtroom’s guidelines prohibiting utilizing digital units. Be a part of Vice President Charlotte Slaiman and Coverage Counsel Elise Phillips for his or her recaps highlighting the principle discussions because the trial continues. View the week one recap.

This week, Microsoft CEO Satya Nadella grabbed headlines as the most recent witness in U.S. v. Google. If Google deliberate to argue that ChatGPT’s introduction into the search market creates substantial competitors for Google, Nadella was not the witness to validate that story. Sure, of us could keep in mind his quote from that interview, “I hope with our innovation they [Google] will certainly wish to come out and present that they’ll dance. I need folks to know that we made them dance.” However underneath oath, Nadella defined that this was the “early exuberance” of “a 3% competitor excited he may turn out to be a 3.5% competitor.” Essentially, generative AI will imply huge modifications to the search market, Nadella stated, however not in ways in which change the incumbency benefit that Google has locked in with its unique default contracts. Any potential enterprise buyer that may be to set Bing as their default search engine due to its cool new function would nonetheless have its Google unique contract to take care of. 

Actually, Nadella revealed one other actually regarding pattern. Already he’s seeing methods wherein giant language fashions (LLMs), like ChatGPT, may be topic to a strong anticompetitive moat that stops new entrants from with the ability to compete. These fashions depend upon giant quantities of content material as an enter. Nadella advised the courtroom that publishers, the copyright holders of enormous quantities of content material, are already granting unique licenses to Google as the one ones who’re allowed to make use of their content material to construct generative AI fashions. 

The courtroom additionally heard this week from Sridhar Ramaswamy, a former Google engineer and government who went on to discovered a competing search engine referred to as Neeva. Neeva had tried to compete with Google, however ultimately failed and needed to shut down their search product. Choose Mehta requested query, “Why did you assume you might compete with Google?” Ramaswamy defined, he thought he had a technique to get across the default contracts, as a substitute of creating his income from promoting, Neeva was a paid subscription service. Sadly, even this distinctive technique was not sufficient to beat the default contracts: they weren’t capable of turn out to be worthwhile shortly sufficient, and when rates of interest modified, they couldn’t proceed to function at a loss.

The federal government questioned Joshua Lowcock, the World Chief Media Officer of Common McCann (UM), a media company firm. Lowcock has been beforehand vital of Google’s promoting practices, notably calling for Google to refund advertisers for allegedly charging corporations for video adverts that had been skipped, a violation of Google’s inside advert insurance policies. No surprises right here, the main target of Lowcock’s testimony was Google’s dominance in search promoting.

Lowcock outlined the first aims for his purchasers in on-line search: advertisers could make the most of various kinds of campaigns to draw shoppers, whether or not or not it’s search, show, procuring, video, or discovery promoting. These campaigns are designed to focus on shoppers at completely different factors up and down the acquisition funnel — a advertising and marketing idea that describes numerous shopper states of thoughts main as much as the acquisition of a services or products. Lowcock precisely described how search adverts occupy a really particular place within the buy funnel — when shoppers are prepared to purchase. Show or video promoting are usually not capable of attain shoppers at that key second, when they’re prepared to purchase. That’s when shoppers flip to look, and might solely be reached by search promoting. With Google occupying nearly 90% of the search promoting market, UM’s suggestions to purchasers are topic to Google’s black field public sale pricing and sudden modifications to their public sale course of. 

The states’ questioning centered on the kind of instruments that UM advises their purchasers to make use of when bidding on search phrases or producing market analytics. Right here, Lowcock’s statements had been notably compelling, as Google’s dominance within the search promoting trade impacts the Search Engine Advertising (SEM) instruments that corporations use to bid on key search phrases and generate analytics of shopper and advertising and marketing traits. Purchasers are drawn to SEM instruments like Marin, Kenshoo (lately rebranded as Skai), and Google’s personal Search Advertisements 360, which is well-attuned to Google’s bidding framework. Whereas Google is allowed to optimize its personal merchandise to combine with different providers inside its personal ecosystem, Lowcock identified that corporations are usually not inclined to make use of a couple of SEM. This commentary added an fascinating dimension to the scope of Google’s dominance within the search promoting market, because it confirmed one other dimension of search advert market that advantages the dominant gamers to the detriment of shoppers. 

Google’s technique in gentle of Lowcock’s testimony was two-fold: First, they endeavored to deconstruct and delegitimize the framework of the acquisition funnel. Second, they aimed to show that Google’s search promoting competes with “specialised search engines like google and yahoo” equivalent to Amazon or Walmart, and social media adverts on Instagram or TikTok. Nonetheless, the idea of the acquisition funnel is broadly shared throughout the advertising and marketing world, so the federal government ought to have the ability to level to further sources to verify it. And Lowcock was clear that advertisers view normal search engines like google and yahoo like Google and Bing as enjoying a really completely different function of their advertising and marketing methods from different websites like Amazon and Walmart.