The Google antitrust trial has finally shown just how much the world’s dominant search engine is willing – and able – to pay to be the default on smartphones and other devices: US$26 billion in 2021 alone, US$18 billion of which went to another tech giant, Apple. While Google has long tried to guard this number, it was always known to be large – and so it is.
What is Google paying for? When you set up a new iPhone, Apple could prompt you on which search engine to use as the default in its Safari web browser. But it doesn’t; it simply selects Google automatically. Of course, one can go into “Settings” and change the default with a few taps of the screen (other options include Yahoo, Bing, DuckDuckGo and Ecosia). But almost nobody will bother with that. So, Google transfers billions of dollars to Apple every year to minimize the chances that iPhone search engine advertising revenue will flow to any company other than Google.
There are several different positions one could take on this issue. You could say that Google is the malefactor. But you also could say that Apple is. After all, instead of requiring users to choose, it gives Google an unfair advantage in exchange for a hefty fee. Perhaps Google is really the victim. Since it has the best search engine, companies that want to maximize the value for their customers ought to choose it anyway. But rather than making Google the default for free, Apple is extorting it with the threat of selling that status to a higher bidder. It is arguably leveraging its single-buyer power to restrain trade and distort competition.
Or, you could say that this is just business-as-usual in the attention economy. By making enormous investments and displaying unmatched creativity and ingenuity, Apple has emerged as the premier supplier of hardware and software value chains. Thanks to its efforts, we now have the iOS platform, a powerful engine of human liberation that has furnished us with extraordinarily valuable access to information, communication and entertainment technologies.
Not only should such ingenuity be rewarded financially; but such rewards should serve a larger purpose, by incentivizing other current and future innovators to focus on creating products and services that are genuinely useful, rather than on pursuing socially damaging activities such as cryptocurrency grifts. The iPhone is one product that Apple can sell. But it can also sell iPhone users’ attention to companies that are willing to pay for it. Why shouldn’t Apple charge what it wants for providing that service?
Finally, one could argue for users to be prompted with a choice, in the interest of ensuring a level playing field among search engines. If Google has the best search engine, it might end up with a 60% share, whereas each of the other four might secure 10%. But what if users who are not fully informed or really paying attention opt for an inferior service unwittingly? The overall real-world user experience will have been degraded in the interest of an abstract “level playing field”.
Each of these positions can be plausibly argued, and high-priced lawyers and economists have already been paid large sums of money to hone those arguments and provide supporting evidence. When it comes to determining which opinion is most faithful to the facts or logically compelling, the devil is in the details. After all, the issue is complex. How does human attention work, exactly, and who should have the right to capture it, direct it or harvest it for data?
In early-modern Poland, nobles had the right to control their serfs and harvest the wealth generated from their labour in the fields. When serfs tried to run away, Cossacks would hunt them down and bring them back for a small fee. It is not surprising to see some commentators referring to our current era as a dawning age of “techno-feudalism”.
Still, this does not strike me as the right term, and I worry that it will lead us to adopt the wrong analogies in trying to understand precisely how the attention-information economy works. My problem is that I cannot think of a better metaphor. Devising one may be the first step toward accurately assessing the world we have wrought.
J. Bradford DeLong is a professor of economics at the University of California at Berkeley, a research associate at the National Bureau of Economic Research and a former deputy assistant US treasury secretary during the Clinton administration.
Copyright: Project Syndicate