Larry Page and Sergey Brin have never liked spending time with reporters. “Larry can be a very sensitive and nice guy, but he has huge trust issues and is not very socially adept,” a Google spokesperson once told me. “Sergey is very social, but he doesn’t trust people he perceives as below his level of intelligence.”
Still, in the fall of 1999, a new publicist encouraged the Google co-founders to visit the East Coast for a small press tour. Only a year old, Google was still under the radar and few knew its fascinating story. Page put the entire World Wide Web on Stanford University servers to predict the perfect results for search queries, and Brin used mathematical magic to bring the concept to life. They tried to sell the technology to one of the major Internet portals, but didn’t get any satisfactory terms. So they started their own company. It was still unclear where the revenue would come from. They professed to hate advertising, believing that “search engines run on advertising are inherently biased towards advertisers and away from consumer needs.”
When they came to Newsweek, none of the top editors at the company where I worked at the time wanted to meet them. Web search seemed a niche feature for Yahoo, AOL, and other major portals. So a business editor and I took them to lunch at a seafood restaurant in Midtown. The enormity and hustle of New York City seemed overwhelming to the awkward pair. The idea that their company would one day be worth $2 trillion seemed as unlikely as the Earth rotating on its axis.
A quarter century later, Google (now Alphabet) is worth trillions of dollars. Internet search is as ingrained in our lives as breathing. And Google has 90 percent of the world’s market share. Larry and Sergey MacGyver are shareholders with over $100 billion each, but they are no longer employees or directors. And this week, U.S. District Judge Amit P. Mehta issued a 286-page ruling that Google violated antitrust laws, based on millions of documents, thousands of exhibits, and a nine-week trial. “Google is a monopoly and has acted as a monopoly to maintain that monopoly,” he wrote. And the company, founded by ad-hating founders, now faces a new trial to determine whether it is also a monopoly in digital advertising.
Unthinkable in 1999, Google’s rise from start-up to dominance seems obvious now. Dominance to monopoly has proven to be the natural winner-take-all outcome in the age of Internet scalability. The digital economy creates winner-take-all competitions that give early innovators of humble origins an advantage over entrenched technology leaders who are soon replaced. Today’s top tech companies were all founded by enthusiastic young people with big ideas that were typically rejected by the industry giants of the time. Before Larry and Sergey, there was Bill Gates and Paul Allen, two students who found a market for personal computer software; Steve Jobs and Steve Wozniak, who built Apple II PCs in their garages; and Jeff Bezos, who launched Amazon on a budget to sell goods on the Internet. A few years after Google was founded, Mark Zuckerberg invented Facebook in his dorm room. There’s a common story among technology companies vying for the top: David versus Goliath.
But these slingshots were special. The network effects of the internet, persistent and ubiquitous, accelerate and lock in category leaders. Moreover, these founders were brutal competitors who exploited those advantages to the fullest. Haunted by the story of Nikola Tesla, a brilliant inventor who died in obscurity, Larry Page vowed to never be like Tesla. Microsoft infamously used bundling to stifle competitors (and lost an antitrust case). Jeff Bezos defended his flanks with Napoleon-like zeal, locking in customers with low prices. A young Mark Zuckerberg would shout the word “Dominance!” at the end of meetings. Eventually, as David became Goliath, they fell into a new story: the myth of Icarus. Driven by arrogance about their dominance, and mistaking their network-effect rise for their own sole genius, they flew dangerously close to the sun.
This is the background to Justice Mehta’s ruling. In particular, he focuses on Google’s practice of spending tens of billions of dollars cumulatively to place itself as the default in the address field of Apple and Mozilla browsers. Google argued that it was able to make these deals because its search engine was the best option. Apple would never force an inferior product on its customers. But the judge noted that Google’s dominance is a self-perpetuating phenomenon. Because Google processes nearly all searches, it can collect data on a scale that competitors cannot match. This allows it to improve its search engine in ways that competitors could never dream of. While it is legal to gain a monopoly through superior products or innovation, Maintain Monopolies are illegal, as is restricting competition, so the judge said Google was breaking the law.