Google 'break-up' coming soon? US considering rare antitrust action, could be forced to sell these businesses

The US Department of Justice (DOJ) is reportedly weighing an unprecedented antitrust action against Google, one of the world’s largest tech corporations.

Sunita Iyer

First Published Aug 14, 2024, 4:01 PM IST | Last Updated Aug 14, 2024, 4:01 PM IST

In a potentially landmark move, the US Department of Justice (DOJ) is reportedly weighing an unprecedented antitrust action against Google, one of the world’s largest tech corporations. This follows a significant ruling by Judge Amit Mehta, which found that Google had unlawfully monopolized the online search and search text ads markets. According to Bloomberg, the DOJ is exploring a range of remedies to address the court's decision, with the most drastic option being the breakup of Google.

On August 5, Judge Amit Mehta of the US District Court for the District of Columbia delivered a ruling that has been hailed as a major victory for the government's antitrust campaign. The court concluded that Google had engaged in anti-competitive practices by dominating the online search market, a finding that has set the stage for possible regulatory interventions.

This ruling represents a substantial triumph for the DOJ’s ongoing efforts to curtail the power of major tech firms, which have faced increasing scrutiny over their market influence and competitive practices.

In light of the court’s decision, DOJ officials are reportedly evaluating several potential remedies to address Google’s monopolistic practices. The most extreme measure under consideration involves the breakup of Google’s business, a move that would mark one of the most significant antitrust actions in recent history, reminiscent of the breakup of AT&T in the 1980s.

Among the most discussed remedies is the potential divestiture of key assets, including Google’s Android operating system and its Chrome web browser. Android, which powers approximately 2.5 billion devices globally, and Chrome, a dominant web browser, are seen as crucial components of Google’s market dominance. The separation of these assets could significantly impact Google’s market position.

Additionally, the DOJ is contemplating the divestiture of Google Ads (formerly AdWords), a critical revenue stream for the company. Google Ads, which generated over $100 billion in 2020 alone, accounts for about two-thirds of Google's total revenue. The platform’s central role in Google's business model makes it a likely target for divestiture.

If a breakup is deemed too drastic, the DOJ is reportedly considering less severe options. One such measure could involve requiring Google to share more data with competitors. This could entail mandating that Google make certain data available to rival search engines like Microsoft’s Bing or DuckDuckGo, similar to recent requirements imposed under Europe’s digital gatekeeper regulations.

Another regulatory action reportedly under consideration is a ban on exclusive contracts that have been pivotal in Google's dominance. These contracts, which involve significant payments to companies like Apple and Samsung, ensure that Google’s search engine is set as the default on various devices and web browsers. Reports indicate that Google paid as much as $26 billion for these arrangements, with $20 billion going to Apple alone.

Furthermore, the DOJ is also reportedly examining Google’s advantages in developing artificial intelligence (AI) technology due to its search dominance. The government might seek to prevent Google from using content from websites to develop its AI products, a move aimed at addressing concerns about the company’s control over AI advancements.

Should the DOJ pursue a breakup, the action would require approval from Judge Mehta, who would then direct Google on the compliance process. The DOJ is also consulting with companies affected by Google's practices to gather input on potential remedies.

In response to the ruling, Google has announced its intention to appeal. The company argues that its success is a result of offering a superior product that users prefer for its quality. Kent Walker, Google’s president of global affairs, criticized the decision, stating, “The ruling recognizes that Google offers the best search engine but concludes that we shouldn’t be allowed to make it easily available.”

As the DOJ deliberates its next steps, the tech industry and legal observers await further developments in what could become a defining moment in antitrust history.

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