NYT: "Google is the Gatekeeper of Internet Monopoly"... Competitor Apple Also Comes with 'Google' Pre-installed

Apple to Pay Up to 12.5 Trillion Won for Browser Default Settings
Continues to Exert Massive Influence on Phone Manufacturers and Carriers
US DOJ Files 57-Page Lawsuit After 1 Year 4 Months Investigation
"Signal of a New Era in Technology Sector"

[Asia Economy Reporter Kwon Jae-hee] The U.S. Department of Justice conducted a meticulous investigation for over a year and four months to file an antitrust lawsuit against Google. The 57-page complaint details Google's monopolistic practices. Foreign media have also suggested that the antitrust lawsuit against Google could be the beginning of a crackdown on major IT companies. The litigation led by Google is expected to have significant repercussions across the IT industry, as it could potentially expand to other IT companies such as Amazon, Apple, and Facebook depending on the outcome.

According to the complaint submitted by the Department of Justice to the U.S. District Court in Washington, D.C., Google controls 88% of the search engine market in the United States. The Department of Justice pointed out that Google's market share is excessively high, blocking the emergence of other competitors and reducing consumer choice.

The core issue of the antitrust lawsuit against Google is expected to be whether there is collusion with hardware companies such as Apple. Until now, Apple and Google have competed in the mobile market using different operating systems. However, contrary to this competitive structure, the Department of Justice views the two companies as having a close cooperative relationship.

The Department of Justice revealed that in 2018, Apple CEO Tim Cook and Google CEO Sundar Pichai met to discuss cooperation plans for revenue growth in the search market, and that Google paid up to $11 billion (approximately 12.5 trillion KRW) to have its search engine set as the default on Apple's Safari browser. This amount is equivalent to one-third of Alphabet's annual revenue, Google's parent company. In addition to Apple, Google has exerted influence to have its search engine set as the default by paying billions of dollars earned from its own platform advertising to browser manufacturers such as phone makers and mobile carriers.

The New York Times (NYT) pointed out, "The Department of Justice will clarify whether Google dominates the search market and whether its deals with Apple and other companies hinder competition in the search market."

If the collusion between Google and Apple is revealed, Google risks losing the 'pipeline' that guarantees high profits from its search engine. If the allegations are proven, Google will have to cede part of the search market to competitors. Internally, Google refers to this worst-case scenario as 'Code Red.'

It has long been known that Google relies on Apple's iPhone search traffic. The search traffic generated from Apple accounts for half of Google's total search volume. Google profits by automatically providing related advertisements using the search records of iPhone users.

The prevailing view is that the lawsuit against Google will spread to the entire IT industry, including Apple, Amazon, and Facebook. Bloomberg News has suggested that "the renewed focus on antitrust will not stop with Google" and will spread throughout the IT industry. The NYT evaluated, "Twenty years ago, Google was a humble startup in Silicon Valley; now it has become the gatekeeper of internet monopoly," adding, "The Department of Justice's lawsuit signals a new era in the technology sector."

Concerns about monopolies in IT companies have long been an issue in the U.S. industry and political circles. The House of Representatives held an antitrust hearing in August, summoning the CEOs of Google, Apple, Amazon, and Facebook, which is interpreted as a reflection of these concerns. When the Department of Justice launched its antitrust investigation into Google in June 2019, it simultaneously began investigations into Amazon, Apple, and Facebook, making lawsuits against these companies increasingly inevitable. Earlier this month, the House Judiciary Committee's Antitrust Subcommittee released a 449-page report demanding the breakup of IT giant companies based on their service functions. The subcommittee compared these companies to past U.S. oil and railroad tycoons, stating, "The Big Four tech companies hold too much power, endangering our economy and democracy," and argued that "these companies should be broken up according to their service functions."

However, some predict that it will be difficult to prove that Google's actions harmed consumer interests. Compared to the 1990s Microsoft antitrust lawsuit, there is an optimistic view that the damage Google will suffer may not be as severe. The Department of Justice sued Microsoft for antitrust violations, but after a two-year lawsuit, it was settled in 2002 without changes to business practices or corporate breakup.

The federal government's lawsuit is expected to continue regardless of next month's presidential election. In this lawsuit, 11 states controlled by the Republican Party joined the Department of Justice's suit, but the call for regulating big tech companies is actually stronger within the Democratic Party. However, Democratic presidential candidate Joe Biden has expressed a cautious stance on corporate breakups.