Speaker 1: Bloomberg Audio Studios, podcasts, radio news. At the start of
Speaker 1: the year, things were not looking great for Google. Last August,
Speaker 1: a federal judge had made a big ruling.
Speaker 2: A federal judge in Washington rule that Google's search engine
Speaker 2: has been illegally exploiting its dominance to squash competition and
Speaker 2: stifle innovation.
Speaker 1: The question remaining was what to do about it. The
Speaker 1: judge is going to decide what kind of changes must
Speaker 1: be imposed to make a more competitive landscape. The Justice Department,
Speaker 1: which brought that lawsuit in the first place, propose some
Speaker 1: remedies for the judge to consider. Google could break up
Speaker 1: its search business and sell off Chrome. It could stop
Speaker 1: paying companies like Apple for preferential treatment. On Tuesday, the
Speaker 1: judge reached his decision, but instead of the big sweeping
Speaker 1: rebuke of Google's business that some were expecting.
Speaker 2: Google gets to kind of just continue with business as usual.
Speaker 1: Sarah fryar at its technology coverage for Bloomberg and has
Speaker 1: been covering Google's antitrust trial, and she says the outcome
Speaker 1: in this case speaks to the new challenges that come
Speaker 1: with regulating big tech in the age of AI.
Speaker 2: We should be reading this as a huge win for
Speaker 2: Google and a huge loss for the DOJ.
Speaker 1: I'm Sarah Holder, and this is the big take from
Speaker 1: Bloomberg News Today on the show, what this week's landmark
Speaker 1: Google ruling means for the company, its competitors, and for
Speaker 1: future attempts to break up big tech. The Department of
Speaker 1: Justice first launched its case against Google back in twenty twenty,
Speaker 1: arguing that through exclusive contracts with device makers like Apple
Speaker 1: and Samsung, the company held a monopoly in the online
Speaker 1: search space, and Bloomberg Big Tech editor Sarah Fryer says
Speaker 1: their case was widely agreed to be a strong one. Well,
Speaker 1: they were.
Speaker 2: Making the case that Google has so much power over
Speaker 2: how we consume information online, and that they've built that
Speaker 2: power through anti competitive means. In Google's case, Google catted
Speaker 2: that by saying we are the best. We have the
Speaker 2: best search engine. That's why people want to use it. It's
Speaker 2: not that we're a monopoly.
Speaker 1: The US district judge hearing the case, judge on a Meta,
Speaker 1: didn't buy Google's argument. Last year, he ruled in the
Speaker 1: government's favor, saying Google was indeed a monopolist. The judge
Speaker 1: then had to rule on the best way to address
Speaker 1: Google's anti competitive behavior. The trial was set for the spring,
Speaker 1: and on Tuesday, the judge announced his decision.
Speaker 2: Judge on Meta ruled that Google will have to give
Speaker 2: some of its data from search to quote unquote qualified competitors,
Speaker 2: and that's kind of the only thing that Google has
Speaker 2: to do. Metta was guy who really came out and
Speaker 2: called Google a monopoly first, and people were expecting him
Speaker 2: to come down hard. It just completely blew us away.
Speaker 2: How this ruling was very gentle. It was very very
Speaker 2: much a bullet dodge by Google.
Speaker 1: The DOJ had suggested that the judge break up the
Speaker 1: company forced Google to spin off its Chrome browser. The
Speaker 1: judge didn't ultimately go that far. The DOJ also wanted
Speaker 1: Google to end its partnership with Apple. Google's been paying
Speaker 1: the company roughly twenty billion dollars a year to keep
Speaker 1: Google Search is the default on iPhones. The judge decided
Speaker 1: to let them keep that contract. So what made Judge Meta,
Speaker 1: the same judge that just last year ruled Google was
Speaker 1: a monopoly, stopped short of breaking Google up. Well, he
Speaker 1: says it has to do with the rise of another
Speaker 1: technology that can compete with the company on search.
Speaker 2: AI Meta was trying to come up with a solution
Speaker 2: for Google's monopoly status that took into account the AI era,
Speaker 2: Because the government when they bring these cases and they
Speaker 2: want to solve these problems, it take so long to
Speaker 2: build this case. They're basically dealing with the Google of
Speaker 2: a few years ago in their initial argument, and then
Speaker 2: technology changes in the world moves ahead, and it has
Speaker 2: been in the past couple of years the most transformative
Speaker 2: time for Google since the mobile boom, since the mobile
Speaker 2: phone era, this AI era, but for Google itself, like
Speaker 2: this is I think even more transformative because it really
Speaker 2: the AI era really gets at the core of what
Speaker 2: Google does, which is providing answers to people who have
Speaker 2: questions on the Internet.
Speaker 1: How exactly did the changing AI race factor into Judge
Speaker 1: Meta's decision to reject the government's push to break up Google.
Speaker 1: What did he write in his judgment?
Speaker 2: He wrote that he was swayed by the arguments that
Speaker 2: Google is in this transition right now, that the mounting
Speaker 2: competition for wanting answers on the intranet, the market could
Speaker 2: kind of correct this monopoly given time to correct it,
Speaker 2: just through sheer better options than classic Google search, and
Speaker 2: you're already seeing that somewhat in consumer behavior. One of
Speaker 2: the things that Apple said during the trial, Atiq said
Speaker 2: was that there has been some reduction in Google searches
Speaker 2: on Apple in favor of some AI related searches. So
Speaker 2: when you're looking at the biggest antitrust ruling in decades,
Speaker 2: this is like really a landmark case. You can break
Speaker 2: a lot if you decide to come down too hard.
Speaker 2: And it really seems that Meta was trying to take
Speaker 2: an approach where he didn't want to shape the new
Speaker 2: market that was budding and growing and building itself too much.
Speaker 1: Because I'm curious also if you can put this into
Speaker 1: context of how fast this AI fueled search transition happened, Like,
Speaker 1: do you think the judge could have come to a
Speaker 1: different conclusion a year ago, six months ago, two years ago.
Speaker 2: I think if the same trial was happening even a
Speaker 2: few months ago, the outcome would be different. Google might
Speaker 2: have had to spin off Chrome, they might have had
Speaker 2: to adjust it's data sharing more more severely. We all
Speaker 2: sort of expected that they would have to stop paying
Speaker 2: Apple for preference. It has become so clear that there
Speaker 2: are now other ways that people want to search on
Speaker 2: the Internet, and that the market is maybe a more
Speaker 2: influential force in Google's future than the government or the
Speaker 2: courts will be.
Speaker 1: Google avoided the harshest outcome and its anti trust ruling,
Speaker 1: but the company was ordered to make some concessions. After
Speaker 1: the break, we dig into what that ruling could mean
Speaker 1: for users, companies, and the future of government regulation on
Speaker 1: big tech. Google dodged a bullet this week when Judge
Speaker 1: am At Meta ruled that it didn't have to sell
Speaker 1: off its browser Chrome as part of the government's antitrust
Speaker 1: suit against the company, But the judge did say Google
Speaker 1: needs to make a few key changes to its business.
Speaker 1: While Google was able to keep its existing twenty billion
Speaker 1: dollar plus contract with Apple, it can no longer make
Speaker 1: exclusive deals with companies like it. Google will also have
Speaker 1: to share online search data with its competitors. Here's Bloomberg
Speaker 1: Tech editor Sarah Fryer.
Speaker 2: This was a subject that came up a lot during
Speaker 2: the trial that Google one of the reasons that it
Speaker 2: this monopoly is so powerful and so entrenched in the
Speaker 2: way we use the internet is because they're the place
Speaker 2: where everyone lists their websites. If you're not on Google,
Speaker 2: you're essentially not on the searchable Internet and the websites
Speaker 2: you know, they all give their data to Google. Google
Speaker 2: has this repository of information their index, and that that
Speaker 2: has helped them into the AI era because they have
Speaker 2: all this information that they can train on. They can
Speaker 2: make their models better given this omnission view they have
Speaker 2: of the Internet. And so one thing that the government
Speaker 2: proposed is that Google could share some of that data
Speaker 2: with qualified competitors. Now he didn't stay specifically who those
Speaker 2: competitors would be, but you can imagine like open AI, Perplexity,
Speaker 2: duc dot Go, some of those other browser companies and
Speaker 2: other AI search companies, so that there would be more
Speaker 2: of a level playing field going forward.
Speaker 1: How would they use that data? They would do that.
Speaker 2: Data to train their models, especially if it was like
Speaker 2: data about what users were searching for, what people were
Speaker 2: interested in. I mean, that could all help people's AI
Speaker 2: models get better and smarter about how to serve their users.
Speaker 1: So how does that ruling around data affect users? Are
Speaker 1: their privacy concerns? Here? Will the average Googler kind of
Speaker 1: like feel the effects of that data being shared in
Speaker 1: more places?
Speaker 2: Well. In its initial statement about the ruling, Google said
Speaker 2: that it did have privacy concerns. But if you look
Speaker 2: at the ruling, what they actually will have to share
Speaker 2: is like a limited snapshot of basically the bones of
Speaker 2: what makes up search. I don't think that that's going
Speaker 2: to be very helpful to these competitors at all. Like
Speaker 2: it might be interesting to them, but I don't think
Speaker 2: that that's really going to serve the purpose of helping
Speaker 2: them better their models or their products in the way
Speaker 2: that they had hoped. Which is why you're seeing a
Speaker 2: lot of third parties and watchdogs come out today and say,
Speaker 2: you know, this ruling is so so mild that it
Speaker 2: doesn't change anything. It doesn't help us at all get
Speaker 2: into a place where big tech is held accountable. Right.
Speaker 1: One of Google's competitors, Gabriel Weinberg, the CEO of DOUC
Speaker 1: dot Go, called the ruling a nothing burger. Yeah.
Speaker 2: Well, a lot of the responses on the side is
Speaker 2: like what was all this for, you know, like there
Speaker 2: was a lot of excitement around, like this is a
Speaker 2: company that has become so powerful, it's become part of
Speaker 2: the infrastructure of society. We've been through years of Congress
Speaker 2: having caring for these companies and actually not making many
Speaker 2: laws or any laws to hold them accountable. We've been
Speaker 2: through years of politicians saying that something would happen. Finally
Speaker 2: the DJ takes it on, They take it seriously, they
Speaker 2: bring it to this conclusion where a judge declarism and monopoly.
Speaker 2: There's finally remedies trial. I mean, you can imagine how
Speaker 2: excited all of these these competitors and you know, entities
Speaker 2: who really want tech accountability, how excited they got. And
Speaker 2: there was a lot of hope that something would change.
Speaker 2: And so the disappointment that the anti tech power, anti
Speaker 2: monopoly crowd is feeling is very palpable. But it's also like,
Speaker 2: you know, in the context of this this AI boom,
Speaker 2: which is I think the first thing to really threaten
Speaker 2: Google's dominance since it became so powerful, Well.
Speaker 1: What kind of precedent could this set for how the
Speaker 1: government goes after other tech companies. Obviously there's the sense
Speaker 1: of disappointment, maybe a fear that it takes the wind
Speaker 1: out of its sales a little bit. But but what
Speaker 1: do you see coming down the line when it comes
Speaker 1: to future anti trust cases.
Speaker 2: Well, there's a lot of future anti trust cases coming around.
Speaker 2: You know, even for Google. There's a trial on their
Speaker 2: ad tech monopol Another remedies trial for the ad tech
Speaker 2: ruling that says that they have a knopoly and ad
Speaker 2: technology that's going to be in late September early October.
Speaker 2: It's a different judge, so it really will be up
Speaker 2: to that judge to decide whether they want to go
Speaker 2: harsher or less harsh. Meta just went through its own
Speaker 2: antitrust trial that is maybe an even wilder outcome that
Speaker 2: the government is pursuing. The government wants a breakup of Meta,
Speaker 2: so they spin off Instagram and WhatsApp undoing acquisitions that
Speaker 2: were done more than a decade ago.
Speaker 1: That's Meta, the company that owns Facebook. Not I'm at Meta,
Speaker 1: the judge overseeing the Google trial.
Speaker 2: I don't imagine a future where Instagram, at WhatsApp or
Speaker 2: are forced to break off from Meta. It just it
Speaker 2: seems like that it would have a chilling effect on
Speaker 2: all of m and a activity in tech, which could
Speaker 2: be bad for younger companies. If companies knew that their
Speaker 2: acquisitions could just be undone, ten or thirteen years later,
Speaker 2: we may not get breakups of big tech companies. Like
Speaker 2: if this is how this judge is ruling, it's really
Speaker 2: kind of a tricky time because AI is changing so
Speaker 2: much so even the kinds of things that the government
Speaker 2: was arguing about, like what makes these products so sticky
Speaker 2: and so entrenched and therefore part of a monopoly. The
Speaker 2: reality today is that the industry has moved in a
Speaker 2: direction where these products are not as the government described
Speaker 2: them anymore, like twenty eighteen meta, right, right, twenty eighteen
Speaker 2: META is not twenty twenty five META. And that's when
Speaker 2: the case started, right. The companies have to evolve or
Speaker 2: they die. And so to come out and say like
Speaker 2: this is the way the industry works and this is
Speaker 2: how it's going to continue to work, that is just wrong.
Speaker 1: Well, I want to talk about the political calculus here,
Speaker 1: because we've spoken before about how antitrust enforcement has been
Speaker 1: one of the few things both Republicans and Democrats in
Speaker 1: recent years have seen as a priority. Why exactly is
Speaker 1: that And do you think that bipartisan energy around breaking
Speaker 1: up big tech will continue as Trump's term progresses.
Speaker 2: I mean, I think we have seen a massive change
Speaker 2: from Trump's first administration to his second. Now, we cannot
Speaker 2: forget that the tech lash, the big tech blowback, the
Speaker 2: push to hold these companies accountable, really started during the
Speaker 2: Trump administration. Everyone agreed that these companies needed to be
Speaker 2: held accountable, but they didn't agree on why and what
Speaker 2: to do about it. And so we went through these
Speaker 2: years of extreme enthusiasm for getting CEOs to give Congressional
Speaker 2: testimony building the beginnings of these anti trust cases. These
Speaker 2: probes started during the first Trump administration and nothing really happened.
Speaker 2: But it is one of the rare components of Trump's
Speaker 2: administration that carried over throughout the entire Biden administration, and
Speaker 2: the Biden DOJ and FTC were very enthusiastic about these
Speaker 2: anti trust cases, and Congress continued to be enthusiastic about
Speaker 2: holding tech companies accountable. Still nothing changed. So here we
Speaker 2: are in the second Trump administration and the mood is different.
Speaker 2: The mood is different for two reasons. One reason is
Speaker 2: the companies now understand what it takes to get on
Speaker 2: Trump's good side, and what it takes again on Trump's
Speaker 2: good side is playing by his rules, going and meeting
Speaker 2: with him face to FaceTime. For instance, Tim Cook, the
Speaker 2: CEO of Apple, making an announcement with Trump on investments. Whereas,
Speaker 2: like in the first Trump administration, executives didn't really want
Speaker 2: to be so cozy with the Trump administration because they
Speaker 2: knew their employees for the most part, who were protesting
Speaker 2: a lot of the policy. So that's factor one. Factor
Speaker 2: two is AI. I think that the executives all have
Speaker 2: an incentive to show Trump that it's the US versus
Speaker 2: China for the future of this new technology, and if
Speaker 2: the US is going to win, they need a lot
Speaker 2: of government help, data center build outs and import export rules.
Speaker 2: So I think that's that's the other factors, like regulation
Speaker 2: on AI. They're trying to say, we can't do that
Speaker 2: right now. The industry is booming. We need to see
Speaker 2: how this shakes out, and we need to do as
Speaker 2: much as we can to win it before somebody else does.
Speaker 2: As for next steps, Google said it will appeal the
Speaker 2: initial ruling that said that they're monopoly. They're going to
Speaker 2: get together with the government side and the judge and
Speaker 2: they're all going to talk about the outcomes that the
Speaker 2: judges asked for, and then there's going to be a
Speaker 2: final ruling where we get like much more more granular
Speaker 2: clarity on what from the judge's memo turns into the
Speaker 2: ultimate ruling.
Speaker 1: This is the big take from Bloomberg News. I'm Sarah Holder.
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