Google’s antitrust defeat could shape AI markets

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A frequent criticism of regulators in the tech world is that they are always fighting the last war. Markets move too fast for slow-moving antitrust investigations and legal cases to have much effect. 

That complaint is about to be put to the test in the artificial intelligence market, which has been on a tear since the launch of ChatGPT. The US court ruling that declared Google an illegal monopoly in internet search is barely a week old, but there are already close similarities in the way competition is developing in AI. Will the search ruling do anything to influence the way the market develops?

This week, Google showed off its first true AI voice assistant, called Gemini Live. Designed as a natural-sounding conversational interface, assistants like this could one day become the main way people interact with smartphones. Rather than go to a search engine or open an app, just talk to the phone to find information or get things done.

Gemini Live is the first to launch, but OpenAI has already demonstrated a similar service. Given their potential importance, it’s a good bet that every big tech company will want to have one.

In the coming battle for attention between these AI assistants, distribution will be key. Getting in front of the largest possible audience should have powerful, self-reinforcing benefits. AI services get better the more they are used, learning from user prompts. That echoes the central finding in the Google search case: paying for prime position on many handsets gave Google a scale advantage. Once it was able to suck up massive amount of user data, no other search engine stood a chance.

Competition in this new market is not evolving in exactly the same way. Apple chose not to make the huge investment needed to compete in search, instead opting to reap $20bn a year for making Google the default in its Safari browser. But it has set a different course with AI. It may not have a full-scale AI model of its own to rival Gemini, but it has set its sights on using Siri as the voice interface to the iPhone, channelling users to ChatGPT (and eventually other chatbots) for other AI-powered answers to queries.

But for upstarts such as OpenAI, the parallels with how the search market evolved are still chilling. Google said this week that it would embed Gemini in its Android mobile operating system, potentially putting it in front of about 70 per cent of smartphone users.

Its competitors might draw some comfort from the way that antitrust action against Microsoft two decades ago helped to rein in that company’s more aggressive competitive instincts.

Back then, internet search was the new market and Google the upstart trying to gain a foothold. Microsoft could have used its then-dominant Internet Explorer browser and Windows operating system to promote its own search service, squeezing out Google. Under pressure after being found to have acted illegally to maintain its Windows monopoly, however, it held back, leaving room for Google to thrive.

Will things play out the same way with AI, and will Google think twice before using the same tactics that have just been declared illegal in search? It will certainly be under a spotlight in a way it wasn’t before. But there are important differences.

The US, for instance, only found that Google had maintained an illegal monopoly in search, not Android, leaving it freer to act (though the EU mounted a competition case against the mobile operating system).

Google’s decisions about how deeply to integrate Gemini into Android, and how much latitude to give handset makers to integrate other AI assistants, will be key. This week, it said all Android users would be able to run Gemini as an “overlay” on top of other apps, in essence providing an additional layer of intelligence to whatever they are doing. Once embedded in the operating system, this may turn Gemini into an integral part of Android phones, making it hard for rival assistants to gain a foothold.

How the US search case against Google is resolved could play a big part in the outcome. Rather than just trying to bring back competition to the search market, the judge could look to prevent Google from dominating newer markets as well. Splitting off Android and forcing the company to give rivals access to the data on which its AI models are trained are two of the solutions being pushed by the company’s critics.

Remedies are yet to be decided and inevitable appeals will follow. But the legal battle over Google’s old monopoly could still play an important part in determining tech’s future.

richard.waters@ft.com