Google antitrust case goes to trial, who will be the ultimate winner?

The antitrust case against Google by the US Department of Justice began its trial in Washington on Tuesday. The long-awaited case accuses Google of illegal monopoly in the internet search market.

The trial is expected to last until mid-November. The focus of the debate is whether Alphabet has consolidated its dominant position in the search market in violation of federal antitrust laws.

Google argues that its overwhelming market share in the internet search field reflects the usefulness of its products, rather than any malicious behavior.

Google's Search Charges

In a blog post last week, Kent Walker, Google and Alphabet's Global Affairs Chief, wrote, "Google helps billions of people easily access information around the world." "Our engineers are committed to providing the best search engine, making thousands of improvements each year to offer the most useful results for free."

The case was filed jointly by the US Department of Justice and several state attorneys general, with a partial focus on Google's search distribution relationships with Apple, Samsung, and other mobile phone suppliers.

Walker wrote in the blog, "People use Google not because they have to, but because they want to."

The case will be heard by Judge Amit Mehta, an Obama-appointed district court judge, rather than a jury.

On Friday, Judge Mehta denied a request from some advocacy groups to provide audio coverage of the trial, but the opening statements on Tuesday will be an exception. There will be three opening statements: 45 minutes for the Department of Justice, 45 minutes for the state attorneys general, and 60 minutes for defense attorney John Schmidtlein representing Google.

A Win-Win for "Google"?

JPMorgan analyst Doug Anmuth estimates that Google will pay nearly $30 billion to search distribution partners this year, with approximately $20 billion going to Apple, $8 billion to Android phone companies and carriers, and the rest to smaller browser companies.

His view is that Wall Street can see this as a win-win for Google: Google can win the lawsuit and maintain the status quo. Alternatively, if Google loses, it can recover billions of dollars paid to distribution partners, with minimal impact on market share or search volume.

Anmuth writes that a complete victory would be the best outcome for Alphabet shareholders, as it would solidify Alphabet's highly attractive position in the search field, although it may not be the best outcome in terms of profit growth.

On the other hand, he estimates that if Google loses the case, considering the high cost of maintaining a portion of market share, it may give up 20% of its search advertising business without negatively affecting its revenue. On the other hand, Anmuth pointed out that the risk of Google's defeat is that Microsoft's Bing may become the default search provider for certain devices currently dominated by Google, or Apple may develop its own search engine. He also noted that with the attention given to generative AI chatbots, new options may emerge.

He wrote, "Overall, while it is evident that Google may 'lose' multiple claims and gain higher profits, these situations also entail greater risks and uncertainties." "In this scenario, we believe that Google's 'victory' is actually maintaining the status quo."