The Federal Ruling against Google is finally part of the tipping point, as many have been waiting for a much-needed wave of judicial and legislative activity to begin strengthening the U.S. cognitive infrastructure and cleaning up the information ecosystem. Details of the ruling can be found in this post.

Why This Is Important

• A federal judge said Google’s search engine deals violated antitrust laws. Those deals are big moneymakers.
• Judge Amit Mehta’s ruling has triggered a potentially yearslong process to decide how to punish the company.
• For users, it could mean a future in which Google isn’t front and center everywhere.
• Nvidia’s market dominance has [also] begun to attract scrutiny from antitrust authorities.  The semiconductor giant now faces multiple antitrust probes, raising questions about whether its acquisitions and competitive practices have been fair.

QUARTZ | Google antitrust loss puts 25% of search revenue at stake

[Last week], Google lost the biggest tech antitrust lawsuit since the late 90s.  The federal judge Amit Mehta said in his 277-page ruling that Google is a monopolist and that it broke U.S. antitrust laws in its quest to dominate the search engine market. That has major implications for Google’s business, potentially putting 15% of parent company Alphabet’s revenue on the chopping block.

Google’s search engine is the core of its business. Google Search made up more than half of Google’s total revenue during the second quarter. Search revenue totaled $48.5 billion; total revenue hit $84.7 billion — a 14% increase from last year, which CEO Sundar Pichai attributed mainly to the growth of Google’s search engine. In 2020, nearly 90% of all search queries went through Google. Google dominates search, and Search dominates Google.

J.P. Morgan analyst Doug Anmuth said following the ruling that contracts contested by the courts represent up to 25% of Google Search’s revenue — which equates to about 15% of Alphabet’s total sales. If Google is barred from making distribution agreements like its deal with Apple in the future, that revenue would be put at stake.

WIRED | A US Judge Ruled That Google Is an Illegal Monopolist. Here’s What Might Come Next |

Unbox a new phone in the US and it’s almost certain to have Google as the default way to search the web. Federal judge Amit Mehta on Monday ruled in favor of the US Department of Justice that the contracts Google uses to secure that position violate fair competition laws. Now Mehta must decide what to do about it.  The jurist could order big changes to the unboxing experience, with users having to select their default search provider. He also could go as far as to force Google to sell parts of its business. Mehta scheduled a hearing for September to begin the process of deciding the penalties, but with Google appealing the verdict, it could be years—if ever—before the search giant must comply.

What Next?

The implications for Google will play out over the next year as the Department of Justice antitrust efforts also shift to Nvidia—the DoJ is “reportedly investigating the company in two separate probes.”

On the next year for Alphabet/Google,  as reported by Laura Bratton at QUARTZ:

“The Department of Justice has yet to offer a remedy for Google’s actions, and analysts expect that proceedings to determine those remedies will occur in the next several months.  Several scenarios could play out. The DOJ could ban Google’s distribution agreements, or it could simply impose a monetary penalty on the company. And even if those distribution agreements are banned, users would still likely choose Google Search, Wedbush analyst Dan Ives said in a note to investors late Monday night.

If or when such deals are barred, and if Google loses more than 5% of search revenue as a result, Wall Street would get concerned, Anmuth said in a previous research note. And that could impact its stock price.  Google’s stock price was relatively unchanged following Mehta’s ruling. Anmuth said that’s likely because Google shares already suffered after the company reported second-quarter earnings. Investors reacted poorly to hefty AI expenditures and weak YouTube ad sales.”

WIRED broke down five options over the next year in the fate of Alphabet/Google:

Though legal and economics experts say it’s difficult to guess where Mehta might land with his remedies, they have some ideas of what he might be considering. Here’s a look at five options:

Ban Revenue Sharing:  US courts have generally tried to resolve antitrust violations by ordering an end to the illegal behavior, setting rules to prevent it from recurring, and taking any additional measures needed to ensure that the culprit and its competitors are moved onto an even field.

Require Choice Screens:  Mehta could follow the lead of the European Union, which for years has required Google to offer a menu of search options on Android devices, and recently expanded the rule to the Chrome browser.

Order a Divestiture:  Contract bans and choice screens are examples of conduct remedies. But the Justice Department in recent years has expressed a preference for what are known as structural remedies, or breaking off parts of a company.

Force Google to Share:  Mehta found in his judgment that Google provides users a superior experience because it receives billions of more queries than any other search engine, and that data fuels improvements to the algorithms that decide which results to show for a particular query.

Increase Oversight:  It’s up to the Justice Department to propose to Mehta potential remedies, which Google would then get a chance to rebut. Neither side has previewed what it wants.

Is Nvidia Next?

GZERO AI |  All antitrust eyes are on Nvidia

…by one estimate, Nvidia now controls 80% of the market for AI-grade chips and data centers, far ahead of rivals AMD and Intel.  Naturally, Nvidia’s market dominance has begun to attract scrutiny from antitrust authorities in the US, its home country, and around the world. The semiconductor giant now faces multiple antitrust probes, raising questions about whether its acquisitions and competitive practices have been fair.

The US Department of Justice is reportedly investigating the company in two separate probes: First, it’s looking into whether Nvidia’s $700 million attempted acquisition of Run:ai, an Israeli AI startup, would be anti-competitive. Second, it’s investigating complaints from competitors that Nvidia is abusing its market power. If the government sues, it could seek to block the acquisition, or demand changes to how Nvidia conducts its business.

The investigations into Nvidia come at a time when the US government has been actively supporting the domestic semiconductor industry through initiatives like the CHIPS Act and boxing out China through stringent export controls. But boosting the chip industry and scrutinizing one of its leaders aren’t necessarily at odds.

https://oodaloop.com/archive/2021/10/05/the-information-threat-vectors-why-facebook-regulation-and-accountability-matters/

Additional OODA Loop Resources

The OODA Network on New AI-based Threats and Issues for the U.S. Cognitive Infrastructure, Internet Safety and Wellness for Kids:  Following the initial discussion at the April 2024 OODA Network Monthly Meeting of Domain-Specific Large Language Model Development and Use Cases, and the follow-up discussion on Exponential Technology Disruption, Global Risk, and Geopolitical Futures, the spoofing capabilities of AI creating new threats and issues began a discussion that gradually focused on and distilled more granular insights related to Internet-based Child Safety and Wellness  – and potential preventive business models and platforms. Details of that portion of the meeting discussion can be found here.

Cognitive Infrastructure Worldwide is Under Attack in “the Worst Cognitive Warfare Conditions since WWII”:  What should the U.S. learn from some of the challenges faced by the cognitive infrastructure of other countries?  Following are global updates (since our initial analysis over the course of 2022) of formal nation-state cognitive infrastructure efforts, for good and for ill, and conditions on the ground in various countries.

Networked Extremism: The digital era enables extremists worldwide to collaborate, share strategies, and self-radicalize. Meanwhile, advanced technologies empower criminals, making corruption and crime interwoven challenges for global societies. See: Converging Insurgency, Crime and Corruption

Geopolitical-Cyber Risk Nexus: The interconnectivity brought by the Internet has made regional issues affect global cyberspace. Now, every significant event has cyber implications, making it imperative for leaders to recognize and act upon the symbiosis between geopolitical and cyber risks. See The Cyber Threat