I share the same fear of your friend. We get pretty significant traffic from Google on several topics, and our traffic (and revenue) would drop sharply if that would change. Although I think the main target of search is the user (the one doing the searching), I do think that Google is mindful of the site owners, as many of them use Adsense.

I’m no expert on the laws dealing with monopolies, but it seems like the ability to devastate such a large segment of the online world has to count for something, where one company has such an overwhelming percentage of search traffic. As users, we might be able to easily jump ship to another search engine, but I think that search competitors could end up in the same boat as Microsoft’s OS competitors if Google’s percentage of search would grow beyond the 60-70% that they have now.