Thursday, November 21, 2024

Google might get broken up after its big antitrust loss

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The Department of Justice could consider breaking up Google (GOOGL), after a federal judge ruled in August that the tech giant monopolized the online search engine market.

To address Google’s monopoly, the Justice Department said in a court filing Tuesday that it will find remedies that would prevent and restrain any present and future maintenance of its dominance in the search market.

This would include “behavioral and structural remedies that would prevent Google from using products such as Chrome, Play, and Android to advantage Google search and Google search-related products and features—including emerging search access points and features, such as artificial intelligence—over rivals or new entrants,” the agency said.

Other restrictions include limiting or prohibiting default agreements, preinstallation agreements, and other revenue-sharing arrangements related to its search and search-related products.

The DOJ sued Google in 2020 for allegedly monopolizing digital search, pushing out competitors. In his decision, federal judge Amit Mehta said Google’s exclusive agreements with companies like Apple allowed it to hike prices for advertisers without any blowback.

Mehta wrote “there is no evidence that any rival constrains Google’s pricing decisions” and that those unconstrained pricing decisions “have fueled Google’s dramatic revenue growth and allowed it to maintain high and remarkably stable operating profits.” The judge noted that nearly 90% of all search queries went through Google in 2020.

This was the first major tech antitrust lawsuit since U.S. v. Microsoft (MSFT), a 1998 case that found Microsoft monopolized computer operating systems and ultimately led to the demise of Internet Explorer. This case has been heavily referenced in recent legal filings given its similarities to the Google lawsuit.

Artificial intelligence is also an area of concern for DOJ, which “will likely become an important feature of the evolving search industry,” particularly given Google’s ability to exclude competitors using its existing muscle in the search industry.

“Google’s ability to leverage its monopoly power to feed artificial intelligence features is an emerging barrier to competition and risks further entrenching Google’s dominance,” the agency said.

While AI won’t be a substitute for search, the DOJ said it is looking to ensure that any limits it imposes on Google also prevent it from establishing future dominance in the space.

In July, Google chief Sundar Pichai said Google Search’s new AI tool, AI Overviews — which had some hiccups in its initial rollout — saw “great progress” and boosted user engagement for 18- to 24-year-olds.

The company has announced a range of new and updated AI products, including new versions of its ChatGPT rival Gemini, as well as a universal AI assistant.

Google is also facing its second major federal antitrust lawsuit in the U.S. this year, focusing on its dominance in the advertising market. That case stems from a 2023 DOJ lawsuit, alleging that the tech giant engaged in “anticompetitive, exclusionary, and unlawful conduct to eliminate or severely diminish any threat to its dominance over digital advertising technologies.”

That lawsuit specifically targets Google’s adtech stack, specifically its Ad Manager, the platform that helps publishers and advertisers manage and buy and sell advertising on sites. The federal government’s complaint proposes the divestiture of the Google Ad Manager Suite, but doesn’t target any of the other areas of Google’s adtech stack.

The Justice Department estimated that Google’s share of the adtech market was between 40% and 90%, as of 2022.

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