Microsoft waiting in the wings as Google’s future is decided

Like all the best Silicon Valley legends, the story of Google begins with two computer geeks in a college dorm room.

Larry Page and Sergey Brin, who met as graduate students at Stanford University, wanted to create a search engine that could cut through the tangled mass of data in the ever-growing World Wide Web.

When a user typed terms into this platform, it would not just return every page that mentioned the words in question. Instead, Google would crawl the internet and find you the most relevant pages by measuring how many “backlinks” converged on them.

It was a neat way of ranking websites based on how useful they were to netizens themselves – and quickly made Google so indispensable that “to google” effectively became a verb in common parlance.

Today, Page and Brin’s creation handles more than 70pc of all online searches – making it the de facto gateway to the World Wide Web for the vast majority of people.

Google also sits at the heart of a wider empire, worth $1.7 trillion (£1.36 trillion), that now spans advertising, healthcare, fibre broadband, driverless cars and even robot farming.

But how it got there – sometimes through sharp-elbowed tactics – is now the subject of a blockbuster legal battle that opened on Tuesday and will unfold in the coming weeks.

In the landmark trial, the US Justice Department will argue that Google – whose staff famously adopted the motto “Don’t be evil” – deployed bully-boy tactics to abuse its market dominance, snuffing out search and advertising rivals with ruthless efficiency.

Critics have charged that the case can do little more than shut the stable door after the horse has bolted, if successful.

But others say it will have profound consequences for the regulation of tech – and could shape the future of search, including the growing use of artificial intelligence (AI).

Depending on the case’s outcome, it is a future that could look very different if Google fails to protect its coveted role as the default search engine used by consumers on smartphones and computers everywhere.

Google has been a piece of internet furniture for the majority of the time that most people have had personal computers – the company recently celebrated its 25th anniversary. And its empire stretches across not only consumer services such as YouTube, Gmail, Android and Maps but a web of underlying web hosting and advertising, meaning that it is hard to imagine a world without it.

Before its search engine became dominant, web users would often have to try multiple search sites to find what they were looking for. Its opponents say its present dominance is far from a positive thing.

For example, consumers once used price comparison websites such as Kelkoo and PriceRunner to find online bargains. Google has been accused of killing such sites to boost its own shopping service, meaning consumers are more likely to simply buy from the sites that pay for top billing in its search results.

The company’s status as the default for so many services has also led to accusations that it has become sclerotic: users have complained for years that Google’s search results are getting worse, easily gamed by low-quality sites and stuffed with adverts, while cornering the market in a way that might have prevented a nimbler alternative to get a foothold.

Google might argue that in this parallel universe, it would not have been able to fund the development of Android smartphones that have been billions of people’s first interaction with the internet. Services including email and maps that are funded by Google’s advertising machine could instead require users to pay up.

“This is a white knuckle period for tech but should be short-lived,” says Dan Ives, a Wall Street analyst at Wedbush Securities.

“We believe the risk to Google is a contained one and that Big Tech will prevail.

“But if there is a disruption from the antitrust situation, the winner is Microsoft – which is aggressively going after AI and the overall search market.

“It’s a Game of Thrones-style arms race.”

Google argues its success is down to one thing alone: that it offers a better product than all of the alternatives.

Even on Bing, Microsoft’s answer to Google, the most popular search term is “Google”, according to research published by search engine optimisation company Ahrefs.

This demonstrates that “most people actually prefer using Google”, Kent Walker, Google’s president of global affairs, claimed this month.

Certainly, the search giant has seen off a long list of rivals since the 1990s, from big beasts such as Yahoo! and Ask Jeeves to lesser-known alternatives such as Excite, Infoseek, Alltheweb, Hotwired and Altavista.

At that time, search engine companies were hustling to replace more traditional “classified” sections in newspapers and magazines – conscious that there was a massive money-making opportunity for whoever could dominate the market.

Sir Martin Sorrell, the advertising tycoon behind WPP who now runs digital ads business S4 Capital, remembers meeting Google’s founders at the World Economic Forum in Davos in the early 2000s.

Page and Brin were “strategic” in their thinking, he says, and sought to underline the importance of the web to a gathering of advertising executives – not all of whom were convinced.

“It was at a time when some people thought the web was not very significant,” Sorrell notes – an assumption that was to prove painfully wrong for some.

By 2010, with most of its search rivals gone, Google had cornered two fifths of the internet ad market – more than all of its competitors combined – and was predicting sales of $2.5bn from services such as Adwords, which let companies pay to have their ads appear in search results.

A decade later, that figure has jumped to $43bn annually, with the UK Competition and Markets Authority (CMA) estimating that Google controlled 93pc of the search ads market.

Google cemented its position by making itself the default search engine on many smartphones and computers and then hoovering up user data that it used to better-target advertising, a CMA study found.

The company partly accomplished this through the success of its own popular Chrome internet browser, which overtook Microsoft’s Internet Explorer in 2012. Google also struck a $400m deal with Mozilla for the company to use Google’s search engine on its rival Firefox browser as well.

At the same time, Google ensured it would be the search engine consumers became accustomed to on their smartphones by inking multi-billion dollar deals with manufacturers such as Apple and Samsung.

For example, the deal with Apple – under which Google reportedly pays $20bn a year – means customers who use the Safari app to search the web on their iPhone, Macbook or iPad devices are automatically directed to results on Google.

The company also placed restrictions on companies that used its Android smartphone operating system, requiring them to have the Google Chrome browser app installed by default.

Rival search engines which survive today, such as DuckDuckGo – which markets itself as a pro-privacy alternative to Google – say those advantages create competitive moats that are almost impossible for challengers to breach.

And it is these types of deals which are now being attacked by Department for Justice prosecutors. “This feedback loop, this wheel, has been turning for more than 12 years,” said Kenneth Dintzer, a DoJ lawyer.

“And it always turns to Google’s advantage.”

If prosecutors prevail, they could seek to impose a wide range of penalties on Google, ranging from massive fines to stricter regulatory requirements or even a breakup of its businesses.

Yet as Sorrell points out, the US antitrust case may be fighting yesterday’s battles.

Because rather than traditional search, what may upset Google’s grip on the online ad market is AI – with “chatbot” search results already being pioneered by Microsoft’s Bing and OpenAI’s ChatGPT system.

Google is testing its own version of this format, called Bard.

“It’s ironic that regulators are going after Google just as competition is intensifying,” Sorrell adds. “My own view is they will never be able to keep up with these companies.”

The AI arms race means the future of search is no longer the static lists of hyperlinks dreamt up by Page and Brin at Stanford, but conversational-style answers and even ads featuring personalised text and images for every user – served up in the blink of an eye by a machine.

But somewhere – possibly in a college dorm room – someone may be working on an idea that leads to exactly that.