Google’s Grip on Search Is Secure, but Getting Pricier

complying with the European Commission’s demand to loosen up requirements for handset makers to pre-install Google’s apps on their phones has the potential to raise the costs that have already been acting as a counterweight to the profit margins for Google’s lucrative search business. For example, the company pays Apple an undisclosed-yet-sizable sum to direct search traffic from its mobile Safari browser. Google’s traffic-acquisition costs rose 32% for the trailing 12-month period ended in March, outpacing the company’s 22% gain in advertising revenue for that period. But those changes will take some time to show up, and Google is planning to appeal the ruling, which ultimately could lessen its impact. Government actions typically only can accomplish so much against technology giants with the scale to dominate their businesses. In the absence of a mass-market competitor—Apple’s iPhone will only ever reach an affluent consumer base—no amount of unbundling is likely to erode Google’s dominance of services within Android, which is the heir to Windows. Only a shift in technology, possibly to voice-activated services such as Amazon’s Alexa, is likely to challenge Google.