Federal prosecutors hinted at a breakup of Google in proposals to a federal judge set on stripping the Mountain View technology giant of its monopoly over internet search, but analysts believe court-ordered fixes will stop short of splitting up the company.
Google, officially deemed an illegal monopoly in August by the judge overseeing the U.S. Justice Department’s antitrust lawsuit against the company, described a list of possible changes to its business as “radical” and against the interests of consumers and businesses.
In a nine-page filing this week in U.S. District Court for the District of Columbia, the DOJ said it was considering “behavioral and structural remedies” to prevent Google from using products such as its Chrome web browser, Play app store and Android operating system to create competitive advantage for Google search and related products and features.
Google’s anti-competitive behavior illegally enriched the company and led to “pernicious harms” affecting “the lives of all Americans, whether as individuals or as business owners,” the department stated.
The DOJ did not explicitly call for breaking up Google or forcing it to spin off business units such as its browser and operating system, said Cristina Caffarra, an economist tracking the case for the London-based Center for Economic Policy Research. But the filing “suggests carve outs” from the company, Caffarra said.
Google took the Justice Department’s hint, responding to the Monday filing with a blog post contending that “splitting off Chrome or Android would break them — and many other things.” Google has not yet responded in court to DOJ’s proposals.
Daniel Ives, a technology-industry analyst at Wedbush Securities, said the DOJ filing shows that it is “casting a wide net” for possible remedies in a judicial process that ultimately “is going to lead to some compromise.”
“It’s all a game of poker, because Google is going to battle this in the courts,” Ives said. “I believe Google is going to ultimately have to make concessions and business model tweaks.”
DOJ could later make an explicit demand that Judge Amit Mehta break up Google, Ives said.
“They’re just keeping all their options open,” Ives said.
But Wedbush analysts have concluded that the chances of Google getting broken up stand at less than 5%, Ives said. The mild slide in Google’s stock price since the antitrust filing suggests Wall Street investors are not banking on a breakup, Ives said.
The case was filed in 2020, heralding a new U.S. government legal effort to rein in tech giants, with federal agencies going on to file anti-monopoly cases against Amazon, Apple, and Facebook and Instagram parent company Meta.
In its blog post, Google noted that it had spent billions of dollars on Chrome and Android and that few companies could invest in similar products at the same level.
“Breaking them off would change their business models, raise the cost of devices, and undermine Android and Google Play in their robust competition with Apple’s iPhone and App Store,” Google said. And because so many software developers and device makers use its browser and operating system across industries from cars to laptops to apps, the company said “changes could impact many businesses and the people who use their services.”
Mehta, in his 277-page August ruling that included the monopoly finding, zeroed in on Google’s payments to companies such as Apple and Samsung to make Google the default search engine, with “most devices in the United States … preloaded exclusively with Google.”
The Justice Department said that it may seek an order banning Google from those kinds of agreements “and other revenue-sharing arrangements related to search and search-related products.”
Google asserted in its blog post that “over-broad restrictions” on such contracts that it claimed are “designed to make Google Search easily available” would “create friction for people who just want to easily search for information.”
The proposal also takes aim at Google’s gold: the extensive data it collects on users for the targeted advertising that drives the vast majority of its parent company Alphabet’s profits — $74 billion last year. The company’s monopoly has allowed it to gather and use data at rivals’ expense, the DOJ said. To offset that advantage, the department said it may ask the court to make Google share search data.
Google addressed internet users in its blog post, arguing that “forcing the sharing of your searches with other companies could create major privacy and security risks.”
The department said in its filing that “genuine privacy concerns must be distinguished from pretextual arguments to maintain market position,” and it may propose that Mehta prohibit Google from “using or retaining data that cannot be effectively shared with others on the basis of privacy concerns.”
Because artificial intelligence will probably become important to search — Google is already providing “AI overviews” for many search results — the judge’s orders must ensure “robust competition” reigns in AI-fueled internet search, the department said.
Google in its blog post countered that governmental “hampering” of its AI “risks holding back American innovation at a critical moment” for the country when “competition globally is fierce.”
Prosecutors said they will be demanding more evidence from Google before it files a final proposal, probably in March 2025, for ending the company’s search monopoly. Wedbush analysts predict Mehta, who declared Google a monopoly in search, will issue a final judgment in the case in August. Google is expected to appeal.
Source: www.mercurynews.com