Google gets sued

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What's going on?

After a 16 month search into Big Tech, the US government has retrieved its first result: it’s filed a lawsuit against Google for being “anti-competitive” (tweet this).

What does this mean?

Google doesn’t just boast an eye-watering 88% share of the US online search market: it’s also struck a host of exclusive agreements with everyone from Apple to T-Mobile to make its search engine the default on their devices. That’s led the US government to accuse Google of using its overwhelmingly dominant position to make it impossible for rivals to compete. And this isn’t just bureaucratic posturing: it’s the most significant lawsuit of its kind since lawmakers tried to break up Microsoft in 1998, which took three years to resolve.

Why should I care?

For markets: We’re all in this together.
The lawsuit is centered on an exclusive deal that makes Google’s search engine the default for every iPhone. And seeing as Google pays Apple handsomely for the privilege, the latter – no stranger to lawsuits itself – could be bracing for some collateral damage. In fact, the lawsuit alleges this deal could be worth as much as $10 billion every year to Apple – or 15 to 20% of its annual profits. So if it were to go down the drain, it’s safe to say neither tech giant would be too happy.

The bigger picture: Big whoop.
Investors didn’t seem put off by the crackdown: Google and Apple’s shares have kept rising all week, which bodes well for the companies’ earnings updates next week. Snap’s recent results do too: the rival tech firm posted better revenue and user growth than forecast late on Tuesday, and revealed its highest growth rates since 2017. That means it’s joined the 86% of US companies that’ve reported better-than-expected results so far this quarter, up from the 73% average for the last 5 years. That stat is best taken with a pinch of salt, mind you: analysts – for obvious reasons – have had trouble predicting numbers this year…

Originally posted as part of the Finimize daily email.

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