Aug 19, 2024 · 37m · another-podcast
Google's Antitrust case
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Toni Cowan-Brown and Benedict Evans analyze the landmark US antitrust ruling against Google, examining search engine economics, the flaws in proposed regulatory remedies, and how generative AI and vertical query routing are reshaping market competition.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The hosts hold 99.6% of the talking time here. How this is scored →
The hosts as informed peer 7.8 Guest teaching 0.5 Guest disagreement 1.9 The hosts pushing back 2.2
speaking balance: gold is the hosts, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 32:39 Benedict's takedown of regulatory mythology
Benedict aggressively dismisses claims that the DOJ's Microsoft case enabled Google or the iPhone as 'ignorant nonsense' and a 'ludicrous set of assertions'.
Hardest push from the hosts ▶ 8:01 Pushback on spinning out Android and ChromeBenedict firmly rejects media speculation about spinning off Android, arguing it is completely irrelevant because an independent Android would face the exact same economic decision as Motorola.
Biggest teaching moment ▶ 12:25 Explaining Apple's native query interception layerBenedict breaks down how Apple's search suggestions panel works technically above Google's layer, educating on how TAC effectively pays Apple not to disintermediate Google.
The host holds their own ▶ 1:07 Masterclass on search engine economics and feedback loopsBenedict synthesizes PageRank, reinforcement learning signals, ad-serving feedback loops, and billions in infrastructure CapEx into a comprehensive structural analysis of search monopolies.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The hosts as informed peer | Guest teaching | Guest disagreement | The hosts pushing back | Why |
|---|---|---|---|---|---|---|
| Search Engine Economics and Default Distribution Deals | 8 | 0 | 1 | 1 | Benedict lays out an exhaustive breakdown of search engine mechanics, PageRank's reinforcement learning loop, CapEx barriers, and the specific market share percentages behind Google's $25B TAC payments. The dynamic is conversational and highly informative rather than adversarial. | |
| Consumer Inertia and the Challenges of Choice Screens | 8 | 1 | 1 | 2 | Benedict contrasts choice screens with European cookie consent banners, demonstrating why forced user choice fails against default consumer inertia. Toni prompts and agrees on consumer habituation dynamics. | |
| Structural Remedies and Multi-Party Game Theory | 7 | 1 | 2 | 3 | Benedict analyzes multi-party game theory involving Apple, Samsung, Microsoft, and carriers if Google's TAC is banned, citing Eddy Cue's testimony. He pushes back on naive assumptions that competitors would immediately capture market share. | |
| Unbundling Query Routing on Apple Devices | 8 | 0 | 1 | 1 | Benedict demonstrates deep technical familiarity with iOS UI search architecture, showing how Apple intercepts queries before reaching Google. He explains that TAC payments function as bribes to prevent Apple from routing vertical queries directly. | |
| Infrastructure Barriers and Utility-Style Search Regulation | 8 | 1 | 1 | 2 | Benedict details natural monopoly regulation, comparing CMA proposals for search data sharing to European telecom line-sharing mandates. He illustrates the massive CapEx fixed costs preventing new entrants from indexing the web. | |
| Strategic Limits of Apple Search and DOJ Contradictions | 8 | 0 | 3 | 2 | Benedict points out the internal contradiction in DOJ antitrust enforcement: simultaneously suing Apple for high-end smartphone dominance while relying on Apple's distribution leverage to introduce search competition. | |
| Generative AI Integration and the Evolution of Search | 8 | 1 | 2 | 2 | Benedict evaluates LLM integration into search experiences, explaining error rates and pre/post-processing requirements that favor incumbents like Google while allowing Siri to selectively offload queries to ChatGPT. | |
| Vertical Search Competition and the Microsoft Antitrust Precedent | 8 | 1 | 2 | 3 | Benedict revisits Microsoft's antitrust history with Internet Explorer, explaining that owning the browser was ultimately the wrong battle compared to search and social. Toni asks whether regulators are fighting the previous war. | |
| Counterfactuals, Enforcement Limits, and Judicial Authority | 8 | 0 | 4 | 4 | Benedict forcefully rejects ahistorical claims that the DOJ's Microsoft ruling caused the rise of Google or the iPhone, calling such arguments ignorant nonsense and differentiating judicial remedies from administrative industry redesign. | |
| Ad Tech Ramifications, Extended Appeals, and Conclusion | 7 | 0 | 2 | 2 | Benedict wraps up by noting the secondary text ad pricing ruling and questioning whether proposed structural remedies like spinning off Chrome or Android would actually alter market incentives or consumer habits. |
Statements from this episode (19)
Federal court ruled Google is an illegal monopoly abusing its power
“This federal court ruled that the DOJ is right and Google is an illegal monopoly that it's abusing monopoly”
Microsoft invested $100 billion in Bing over 20 years for 5-10% share
“Bing has invested about a hundred billion dollars over the last 20 years, and they've got 10%, five to 10% share of US search.”
Google paid $25 billion last year in device revenue share
“Google is paying a revenue share of 25 to 35% of the revenue they get from each search back to the device, and that was twenty-five billion dollars last year.”
70% of US search happens on Google default placements
“About 70% of search in the US happens on a device where Google's made it the default.”
Competitors cannot afford to match Google's default search distribution payments
“Well, no one can afford to match what Google's paying and even Bing, because in fact their monetization per search is worse for the same reason that their search engine results are worse, and no startup could afford to spend a billion dollars a year building i…”
The US court cannot compel Apple to add Safari choice screens
“The court can't make Apple put a choice screen in Safari. Like, Apple isn't in court. Like, they haven't been convicted of anything.”
Spinning out Android as a Google antitrust remedy is structurally irrelevant
“Spinning out Android to me is, like, completely irrelevant, because, like, read back what I just said, like, if Android's a separate company, that's not, why is it going to choose Bing? It's going to have the same decision process that Motorola does.”
Ending Google default search payments will not automatically improve Microsoft Bing
“There's nothing, nothing in ending the TOC per se that is going to make Bing better.”
Google pays Apple $20 billion annually to prevent vertical query routing
“And Apple is being paid twenty billion dollars a year not to do anything else here. So they're being paid twenty billion dollars a year not to say this is a hotel's query, maybe we'll send you straight to booking.com. They're being paid twenty billion dollars …”
Building a search index 75% as good as Google costs billions
“And so just being, like, 75% as good as Google costs hundreds of millions of dollars or billions of dollars just to have the whole thing. It's like, it's, there's a fixed cost to indexing the web.”
General web search is a natural monopoly comparable to utility companies
“The general web search engine is a natural monopoly because you need a lot of money, and then once you spend the money, no one else can do it. So it's like a water company or phone company.”
The DOJ gerrymandered its market definition in the Apple antitrust lawsuit
“The DOJ is suing Apple for having what the DOJ, claiming the DOJ describes as a monopoly of, quote, performance smartphones, which Apple described as gerrymandering, and I'm kind of inclined to agree”
LLMs are poorly suited for web search due to invisible error rates
“I'm really skeptical that you can use an LAM for general web search, just because I think there's a combination of, like, the error rate is real, it matters, and you can't see it.”
Apple is more likely to replace ChatGPT than build a search engine
“It's much more likely, I think, that Apple will shift questions from ChatGPT to its own foundation model than it would shift questions from Google to its own general search engine, I think.”
Owning the default browser yielded no long-term strategic advantage for Microsoft
“Owning the browser didn't get Microsoft anything.”
Apple will maintain Google defaults while routing specialized queries to AI
“Apple will carry on treating Google as the default general search engine. They'll just peel more stuff out into their own foundation model or into chat TPT or into booking.com.”
The Microsoft antitrust case did not create Google or the iPhone
“This is kind of bizarre assertions that somehow the DHA Microsoft case resulted in the rise of Google or resulted in the iPod and the iPhone, which is just ignorant nonsense.”
Programmatic display advertising accounts for only 10% of Google's total revenue
“There's another case coming down the pipe for Google on the display side the programmatic advertising, display advertising side which is, will be, is only 10% of revenue, but, you know, it might be more consequential on that side.”