Who lost the antitrust case? Google or Apple?

In November of last year I wrote a series of posts regarding the relationship between Google and Apple in light of the antitrust trial that Google was facing. The expected verdict was issued (Google was declared a Monopolist and found to be abusing that position). Many more appeals will follow and a remedy will need to be agreed upon–a process which will take many years. The implementation of any remedies will take yet more years.

Nevertheless, commentary on this trial has continued to center of the harm the verdict will do to Apple. Since Apple receives a substantial amount of highly profitable revenue from Google for search defaults, the conventional wisdom is that, due to this verdict, Apple is at a very high risk of losing that revenue. Very little has been said about what harm the verdict will do to Google. The paradox to me is why there is no connection being made between the implied loss to Apple being necessarily a gain to Google.

Since almost all people will continue to use Google on Apple devices, regardless of default, not paying for distribution (through defaults) will lead to a huge boost for Google’s bottom line. In other words, most comments currently imply that a verdict declaring Google an abusive monopolist will result in a huge benefit to Google. So I ask again: why would Google management fight against such a verdict? Surely it would have been far more beneficial to argue to lose rather than to win this case! The court will force Google to make more money.

But my conclusion last November was that “a declaration that this [default placement] deal is invalid simply means that Apple and Google would craft another deal that would work around the restrictions. And that new deal would probably turn out to be more beneficial to Apple. [and less beneficial to Google.]”

The reason would be that Apple would increase its bargaining power because Google has, necessarily, decreased its own by losing the case.

I’ll be exploring the topic further as part of a broader examination of the regulatory impact on Apple at WWIC on Sept 19th. Hope to see you there.