How Tech Defaults Shape Competition: What the U.S. v. Google Search Case May Mean for Consumers

How distribution agreements, user behavior, and data scale may influence competition in digital markets

FAANG Antitrust Series
Episode 1
Google

This post is the first in our EconWorks FAANG Antitrust Series examining recent U.S. antitrust complaints against major digital platforms. We begin with Google—and how default search agreements may influence competition in general search services.

---

Introduction

In 2020, the U.S. Department of Justice (DOJ) filed a landmark antitrust lawsuit against Google alleging that the company unlawfully maintained its monopoly in general search services through a network of distribution agreements. These agreements—often involving payments to device manufacturers and mobile carriers—make Google the default search engine on smartphones and browsers.

Unlike traditional antitrust cases that focus on prices, this case centers on how contractual arrangements and product design choices may shape consumer behavior at scale. In particular, the government argues that default placement may influence which services consumers use—not necessarily by restricting choice, but by steering usage patterns in ways that reinforce the incumbent’s position over time.

---

Distribution Agreements as Conduct

The government’s theory begins with Google’s agreements with firms such as smartphone manufacturers and wireless carriers. In exchange for revenue-sharing payments, these firms agree to preinstall Google Search and set it as the default search engine on their devices.

While users are generally free to change these settings, behavioral research suggests that many consumers tend to stick with default options. In this way, contractual arrangements may shape downstream usage patterns even in the absence of technical restrictions.

Figure 1. Distribution agreements set default search placement on user devices, increasing usage and reinforcing a data-driven feedback loop.

This figure shows how contractual agreements between a platform and device manufacturers may result in default placement of a search service, shaping which provider receives user queries over time.

---

From Defaults to Usage

Once a search engine is set as the default on a user’s device, it may receive a greater share of search queries simply because it is preselected. Even small behavioral biases toward default options can scale across millions of devices, increasing usage of the incumbent service.

Figure 2. Default placement can increase usage, generating additional data that may improve search quality over time.

This figure illustrates how default placement may influence user behavior, resulting in increased usage that allows the platform to collect more data and improve the performance of its search algorithms.

---

The Usage Channel

As more users rely on the default service, the provider receives their queries. These queries may generate data that can be used to refine ranking algorithms and improve search results.

Figure 3. User reliance on default search settings increases the flow of queries to the incumbent platform.

This figure illustrates how usage patterns may shift toward a default service, allowing the platform to accumulate data that can enhance future performance.

---

The Data Feedback Loop

Over time, increased usage may allow the platform to collect behavioral data that improves its algorithms. Improved results may reinforce user reliance on the service, creating a feedback loop between usage and quality.

Figure 4. Data generated through usage can improve search quality, reinforcing further use.

This figure depicts a feedback loop in which user queries generate data that enhances algorithmic performance, potentially strengthening the incumbent’s position.

---

Scale and Competitive Outcomes

While increased usage may improve product quality, it may also create challenges for potential entrants. A rival search engine with fewer users may have limited access to comparable data, which limits its ability to compete on performance.

Figure 5. The same data-driven feedback loop that may improve quality can also reduce competitive alternatives available to consumers.

This figure illustrates how differences in scale between an incumbent platform and potential entrants may limit the ability of rivals to compete effectively over time.

---

Consumer Harm: Quality vs Choice

Importantly, the government does not claim consumers necessarily pay higher prices for search services, which are typically free. Instead, the alleged harm may arise indirectly if reduced competition leads to fewer meaningful alternatives, slower innovation, or diminished privacy protections.

At the same time, critics of the government’s case argue that default agreements may reflect legitimate competition for distribution and that consumers remain free to switch services if they prefer.

---

Conclusion

The DOJ’s case against Google raises important questions about how competition functions in digital markets. By examining how defaults, user behavior, and data interact over time, the case highlights a potential tension between short-term improvements in product quality and long-term competitive dynamics.

For consumers, the outcome may influence not only which services appear by default on their devices, but also how competitive digital markets remain in the years ahead.

---

Next in the EconWorks FAANG Series:

Gatekeeping the Ecosystem: Platform Governance and Downstream Competition in Mobile Software Distribution

---