According to sources familiar with the discussions, the US Department of Justice is contemplating a potential breakup of Google after a landmark court ruling determined that the company had monopolized the online search market.
This potential action would mark the first significant move by Washington to dismantle a tech giant for anticompetitive practices, with far-reaching implications for the entire tech industry, since the failed attempt to break up Microsoft two decades ago.
Other remedies under consideration include compelling Google to share more data with competitors and implementing measures to mitigate its dominance in artificial intelligence (AI) and sources that wish to remain anonymously disclosed.
A primary focus of the Justice Department’s deliberations is to seek a ban on exclusive contracts central to its antitrust case against Google.
If a breakup proceeds, Google’s Android operating system and Chrome web browser, which are key to its market dominance, are the most likely candidates for divestiture.
According to the sources, there is also consideration of potentially forcing the sale of Google’s advertising platform, AdWords.
The discussions have gained momentum following a ruling by Judge Amit Mehta on August 5, which found Google had unlawfully monopolized both the online search and search text ad markets.
While Google plans to appeal the decision, Mehta has instructed both parties to prepare for the next phase of the case, which will address remedies for restoring competition, including the possibility of a breakup.
Google declined to comment on the potential remedies, and a spokesperson for the Justice Department also refrained from commenting.
If the Justice Department’s breakup proposal is accepted, it would represent the most significant dismantling of a US company since AT&T’s breakup in the 1980s. This could have far-reaching implications for the tech industry, potentially reshaping the competitive landscape and opening up opportunities for smaller players.
Additionally, Justice Department attorneys have expressed concerns that Google’s dominance in search provides the company an unfair advantage in developing AI technologies.
Justice Department attorneys have expressed concerns that Google’s dominance in search provides the company an unfair advantage in developing AI technologies. They might propose restricting Google’s use of website content for AI products, which is necessary for its search results. This could involve requiring Google to obtain explicit consent from website owners before using their content for AI development.
Divesting the Android operating system, which powers about 2.5 billion devices globally, is a prominent remedy under discussion.
Judge Mehta’s ruling found that Google’s agreements with device manufacturers required them to pre-install Google’s apps, including Gmail and the Google Play store, and prevent the removal of Google’s search widget and Chrome browser.
This effectively hinders competition from other search engines.
A California jury found that Google monopolized Android app distribution in a related case. However, a judge has yet to decide on the relief.
The Federal Trade Commission has recently filed a brief in this case, asserting that Google should not benefit from illegal monopolistic practices.
Google has spent up to $26 billion to secure its search engine as the default on devices and browsers, with $20 billion allocated to Apple alone.
Judge Mehta’s ruling also highlighted Google’s monopolization of search text ads sold via Google Ads—a rebranded version of AdWords.
Search ads account for about two-thirds of Google’s total revenue, exceeding $100 billion in 2020.
Suppose the Justice Department opts not to pursue the sale of AdWords. In that case, it might propose interoperability requirements to ensure its functionality across other search engines.
Another potential remedy is requiring Google to divest or license its data to rivals like Microsoft’s Bing or DuckDuckGo.
Mehta’s ruling indicated that Google’s contracts have ensured it collects 16 times more user data than its closest competitor, inhibiting rivals’ ability to enhance their search results.
European regulations have recently mandated that Google make some data available to third-party search engines. This is part of a broader global trend towards increasing competition and data sharing in the tech industry. However, Google has raised concerns about user privacy when sharing data, highlighting the complex balance between competition and privacy in the digital age.
It’s important to note that historical antitrust remedies have included requiring monopolists to provide access to technology, a precedent that could significantly impact Google’s future.
For instance, in 1956, AT&T was mandated to grant royalty-free licenses to its patents, and Microsoft was required to make some application programming interfaces (APIs) available to third parties for free.
Google’s recent use of website data to develop AI tools has also been controversial. The company introduced “AI Overviews,” which summarize information from search results.
While websites can block Google from using snippets, they cannot opt out of AI Overviews, which some view as an extension of search rather than a separate product.
Though the AI Overviews feature is intended to enhance user experience, it has been criticized for occasionally providing misleading or erroneous suggestions.
