The Department of Justice said last week that it plans to require Alphabet’s (GOOGL, Financial) Google unit to divest a portion of its businesses as part of a broader, unprecedented lawsuit that targets alleged illegal behavior in the online search market. This was reportedly done after a federal judge in August determined that Google has indeed been forming an illegal monopoly over 90% of internet searches.
The DOJ’s move could have wide-ranging implications for how Americans search and cripple Google by cutting off its most significant revenue stream in the US, which may help its competitors to power. In response to allegations of monopoly, the Justice Department could ask for a court injunction ordering Google to sell off its Chrome browser and Android operating system as well as strike financial agreements by which Google pays device-level licenses so that it won’t be installed on newly made equipment. It would also force Google to let rivals access search data.
Google’s AI advancements are facing more scrutiny and could be subject to stricter regulations limiting the company from restricting rivals’ access to crucial content. The DOJ also wants to give websites the ability to block Google from using their content for training AI models, which it posits would ultimately create a fairer competitive landscape.
In response, Google slammed the DOJ’s overarching approach in a blog post and cautioned of possible unintended consequences for consumers, businesses, and American competitiveness. It underscored its heavy payments, in particular the $26.3 billion it paid last year to Apple (AAPL, Financial) and others who could make them the preferred search engine, a key component for continuing to dominate. Monosoff said that this strategy works in their favor as people are not all aware of other good options out there or because newcomers appear like set-up competitors. The developing legal challenge highlights a pivotal moment for tech industry regulation and competition.
This article first appeared on GuruFocus.