AI: Tech History rhymes for Google & OpenAI. RTZ #696

Mark Twain famously said “History never repeats itself, but it does often rhyme.” He of course meant that history echoes in different forms with similar patterns. One such area is the intersection of antitrust actions on old technology waves, as new tech waves emerge.

And how the legal actions against incumbents in the old waves often provide unexpected openings and opportunities for fast emerging ‘new incumbents’ in the newer tech wave. Such is the case for companies like OpenAI in this AI Tech Wave, as old tech leaders like Google, Meta, Apple and others face antitrust legal head winds, as discussed to date.

Axios summarizes this well in “Google ad monopol ruling’s surprise winner”:

“OpenAI wasn’t mentioned once Thursday in a judge’s 115-page decision against Google over its dominance of the online ad market — but the ChatGPT maker stands as a key beneficiary of this legal conflict.”

We’ve seen this movie before, as when the government went after Microsoft in the teeth of its battle with Netscape in the 1990s supremacy of web browsers in the internet wave.

As Axios explains:

“Why it matters: The rise of AI is threatening the heart of Google’s search business at the same moment that the government is pressing its most sustained challenge to Big Tech power in nearly 30 years.”

• “That could open the path for a once-in-a-generation power transition in tech, with AI upstarts like OpenAI and Anthropic best positioned to seize the initiative.”

Battles over past actions often provide relief in battles over the future:

“The big picture: In previous eras of platform transition in the tech world, massive and lengthy government antitrust lawsuits distracted and hobbled industry leaders at key moments, giving new companies and industries breathing room to gain footholds and grow.”

• “It happened in the 1970s and early 1980s, when then-dominant IBM fought a grueling court battle with the U.S. while the new personal computer industry began to take off.”

• “More recently, it happened in the late 1990s, when Microsoft dueled the government in court over its dominance of the browser market — while a tiny new startup called Google began to win over web users.”

Thus the current historical rhyme with Google, and the reasons:

“Now it’s Google’s turn in the docket.”

• “The giant already faces the threat of fines and remedies — like being forced to divest itself of the Chrome browser — as the result of its loss last year in another antitrust case over its dominance of the search market.”

• “With the new ruling, it will next confront a similar process focusing on significant parts of its ad business.”

Time is both an advantage and disadvantage for big tech in the docket:

“Famously, these cases take forever. Even after the penalty phases are concluded, Google will almost certainly appeal each decision — a process that generally takes several years.”

• “After that, the company can also appeal further to the Supreme Court.”

• “Either appellate level might send the case back to the original court for further trial.”

“This glacial pace might seem like good news for Google, which won’t have to change much until all those appeals conclude.”

• “But the delays also extend the period during which Google executives and employees are distracted and demoralized by the process.”

• “Every potential acquisition, every new product rollout and every email conversation inside a company handling this kind of traumatic lawsuit unfolds under a cloud.”

  

As it played out in the previous historical rhyme:

“In Microsoft’s ordeal, after nearly a decade of legal infighting, the company mostly prevailed, and today it remains one of tech’s most powerful and richest players.”

Google still has much in its favor on the AI front with this AI Tech Wave. Google and other tech companies have proactive opportunities with voluntary ‘Spinoffs’ as I’ve outined before. YouTube is but one obvious opportunity with AI tailwinds galore.

Better that than fight and wait for government remedies that may mute their AI advantages going forward. Especially with geopolitical and tariff headwinds ahead.

The history of antitrust and tech provide cautionary codas that need to be kept in mind. 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)