Landmark Ruling Threatens Google’s Search Dominance—AI Sector Braces for Shockwaves

A federal judge just dropped a hammer on Big Tech that’ll send tremors through Silicon Valley. Google’s search empire faces an existential threat—while AI developers scramble to adapt their data-scraping playbooks.

The verdict? Algorithms built on copyrighted content may now need to pay to play. Cue the lawyers licking their chops and VCs recalculating their ’fair use’ loopholes.

Meanwhile in Mountain View: engineers are frantically retraining LLMs with synthetic data—because nothing says ’innovation’ like paying $10M/day in copyright fines while your stock tanks 5% pre-market. The ad-revenue gravy train just hit a constitutional speed bump.

Mehta has indicated he plans to issue his ruling in August

The search engine giant counters that the government’s proposed fixes go too far and WOULD cause irreparable damage to its business. Holding about 90% market share of online search queries in the U.S., the company has suggested a narrower approach: tweak its agreements with Apple, Mozilla, and Android to carve out space for rivals. The tech firm says it will appeal the judge’s ruling.

Each year, the company pays roughly $20 billion to Apple for default placement in Apple’s Safari browser. Any change to that arrangement could erase billions from Apple’s profits.

Mehta is weighing whether to stop Google from sharing revenue with Apple under the current deal, which could change how Google is embedded in the Safari browser. Lawyers and experts warn that his decision may also influence future contracts among tech giants over how AI features are featured on their platforms.

The Justice Department is against Google paying Samsung and Motorola to pre-install Gemini

In court, the Justice Department pointed to Google’s more recent efforts to dominate AI-driven search. According to testimony, Google has begun paying Samsung and Motorola to pre-install its new AI system, Gemini, on their devices. The department argues that this practice aims to capture the next wave of internet search and should be banned.

Shares of Alphabet, Google’s parent company, fell sharply this month after an Apple executive testified that Google searches in Safari had declined for the first time in nearly twenty years. The same executive said Apple plans to offer AI options such as ChatGPT or Perplexity in Safari within the following year.

Google responded in a blog post, saying that overall searches for Apple devices and services have actually risen.

“A formidable question that hovers over the entire proceeding is how should the judge take account of emerging developments and the technology that affect the fortunes of all of these companies,” said William Kovacic, a professor of antitrust law at George Washington University and former FTC chairman.

During the trial, Sundar Pichai, CEO of Alphabet, testified that Google aims to finalize a distribution agreement with Apple by midyear. Under that deal, Apple would tap Google’s own AI model and chatbot, Gemini, to answer user queries—an option Apple already offers using OpenAI’s ChatGPT.

Last week, Google announced the U.S. launch of “AI Mode,” a new way to respond to searches with conversational answers rather than the familiar list of blue links. It represents the biggest overhaul of its search engine in years and is powered by Gemini.

Google has been steadily improving Gemini, which supports AI Mode and other features across its products. Although Gemini’s user base has grown in recent months, it still trails ChatGPT in popularity.

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