Tech Tuesday Three: Google's monopoly, X sues advertisers, TSMC sales soar
Programming Note: I’m testing out a new format where every Tuesday, I will share the three most important tech stories along with my analysis. As a result, I’ll be shifting my long-form articles to Thursdays.
Google ruled to be a monopoly
From the Guardian:
Google lost its landmark antitrust case against the US Department of Justice this week after a federal judge ruled the tech giant had built an illegal monopoly over the online search and advertising industry. The decision will probably have immense implications for both Google’s internal operations and how people interact with the most popular page on the internet.
Judge Amit Mehta’s ruling specifically found that Google broke antitrust laws by striking exclusive agreements with device makers like Apple and Samsung, in which Google would pay billions of dollars to ensure that its product was the default search engine on their phones and tablets. During the trial, it was revealed that Google paid companies, including Apple, more than $26bn in 2021 alone to remain the default option for search in Safari. Those deals allowed Google to build a monopoly over search and unfairly suppress competition, Mehta found.
On the surface, this case seems open and shut. After all, Google holds around 90% of the search market share. However, what stood out to me is that the crux of the case hinges on 'Traffic Acquisition Costs' (TAC) payments. Google pays Apple around $26 billion and Mozilla Firefox approximately $510 million to maintain its dominance.
If Google were forced to terminate these exclusive agreements, would consumers actually switch to Bing or DuckDuckGo? Perhaps, but I highly doubt it.
For Apple, a $26 billion dent to its services business would be significant but not company-ending.
However, for Mozilla Firefox, it would be catastrophic. Approximately 86% of its revenue—around $510 million out of a total $593 million—comes from Google’s TAC payments. One might argue that if Firefox had to shut down, it would be a case of the free market at work. However, the loss of Firefox would only further strengthen Chrome’s dominant 65% market share of browsers.
I don’t have a solution but there is something fundamentally flawed with Google search when the first four results are sponsored ads — see example below.
X files antitrust lawsuit against advertisers
From The Verge:
X is suing a group of major advertisers over accusations that they held an “illegal boycott” against the platform formerly known as Twitter. In a lawsuit filed on Tuesday, X claims Unilever, Mars, CVS, Ørsted, and dozens of other brands conspired to “collectively withhold billions of dollars in advertising revenue” through a World Federation of Advertisers (WFA) industry initiative.
Question: How do you get advertisers to come back to your social media platform?
Answer: You sue them, of course!
And just when things couldn’t get more litigious at X, a former Twitter board member is suing X for $20 million in pay.
Despite the rebrand to X, Zuckerberg’s infamous quote that “Twitter’s a clown car that fell into a gold mine” still rings true, although it seems the gold mine has been well and truly exhausted.
TSMC sales soared 45% in July
From Bloomberg:
Taiwan Semiconductor Manufacturing Co.’s revenue rose 45% in July, accelerating its pace of growth from the June quarter and bolstering hopes for sustained strong demand for artificial intelligence chips from the likes of Nvidia Corp.
Looks the AI bubble is still inflating.