AI: Google 'Remedies' trial decision a green light for AI. RTZ #833

Google and Apple got good news on the ‘Remedies’ phase of Google’s antitrust trial on Search deals and Chrome use. Lot of nuance in the decision, but the big picture is both companies can continue their current course with some adjustments. Part of the reason is AI providing sufficient news ‘competition’ to the incumbents in this This AI Tech Wave to date. Let’s unpack.

CNBC was exultant for Google in “Google stock jumps 8% after search giant avoids worst-case penalties in antitrust case”, with Apple up too after hours:

• “A federal judge ruled that Google can keep its Chrome browser but will be barred from exclusive contracts.”

• “U.S. District Judge Amit Mehta’s decision comes nearly one year after he ruled Google illegally held a monopoly in internet search in the landmark antitrust case.”

• “Google pays Apple billions of dollars per year to be the default search engine on iPhones. Shares of the iPhone maker rose 4% after hours.”

OpenAI, if public would likely have been down a tad after the news, because it means they won’t havve an exclusive AI distribution deal with Apple post this announcement.

And they won’t get to buy Google Chrome, and will have to compete with their own AI Browser. Goes without saying that Perplexity as well won’t be able to get its hands on Chrome as well. But good PR move nevertheless.

And Apple will be able to continue to do business around Siri and Apple Intelligence, with Google on AI Gemini, Google Chrome and beyond, expanding their AI options ahead. Clarifies their AI options ahead.

The decision did call for Google to share it share results and some data to rivals, but did not call for a Google break up or selling of its Chrome browser. Google responded here to the news. And there were responses from Google critics.

The WSJ lays it out in “Google Barred From Exclusive Search Deals but Avoids Harsh U.S. Court Remedies”:

“Judge declines other proposals to improve competition, saying AI has injected choice into the market”.

“A federal judge on Tuesday barred Alphabet’s Google unit from paying to be the exclusive search engine on devices and browsers but declined to order more drastic changes that the company had opposed.”

“The judge didn’t bar Google from making payments for distribution of its products, saying such a move would harm downstream partners. He also declined to require other remedies sought by the Justice Department, such as divestiture of Google’s Chrome browser.”

That one was a big one of course, preserving so much optionality for all the incumbents ahead.

“U.S. District Judge Amit P. Mehta’s order follows his decision last year that Google illegally monopolized the search market for more than a decade. That opinion said Google used illegal distribution agreements with companies such as Apple to build and maintain a 90% market share and prevent rivals from building competitive alternatives.”

“While Mehta’s earlier ruling was a blow to Google, Tuesday’s decision adopted much of the company’s position on what should happen now. Mehta said a judge’s job was to approach remedies with humility, and he said the competitive dynamics of the marketplace were changing already, largely because of AI technology.”

“There are strong reasons not to jolt the system and to allow market forces to do the work,” Mehta wrote.”

This was the Solomonic part of the decision, wrapped in the competitive options that AI potentially represents.

Markets were more binary around the decision:

“Google shares were up more than 8% in after-hours trading.”

“The ruling caps a five-year battle in Mehta’s court that began when the Justice Department sued Google in the waning months of the first Trump administration, the government’s first major lawsuit challenging an alleged monopoly in a generation. After the judge ruled that Google engaged in illegal practices to preserve its search engine monopoly, he held another trial phase earlier this year to decide what should be done to address the company’s violations and improve future competition.”

Could have gone against Google and Apple in so many ways:

“The government had been seeking stiff remedies against Google, including both structural changes to its business and restrictions on its conduct. Google proposed a narrower set of restrictions, arguing the government hadn’t met the high legal bar for more sweeping measures.”

But the decision threaded the needle throught the AI driven competitive opportunities ahead.

“The remedies trial focused on the evolving search marketplace, including the growing role of artificial intelligence. Some AI companies testified that they had trouble getting device makers and carriers to give prominent placement to their chatbots because those companies feared angering Google. An Apple executive caused a stir with testimony that Google searches in its Safari browser had recently fallen for the first time in two decades. He also said Apple would likely offer AI options such as ChatGPT or Perplexity in Safari within the next year.”

All this means win-win news for most in the tech and AI marketplace. With a lot more options to compete for big and small companies ahead in this AI Tech Wave. Stay tuned.

(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)