US weighs Google break-up in landmark antitrust case

Sundar Pichai, Google's chief executive, second from right, arriving to testify at an antitrust case against Google in Washington DC last year. Photo / Haiyun Jiang, The New York Times

The US government is considering seeking the break-up of Google to end its monopoly in search, in what would be the boldest effort yet to rein in one of the world’s most powerful tech companies.

The potential remedy was set out by the Department of Justice this week and comes after federal prosecutors won a landmark case in August, when a judge ruled Google had violated US antitrust law and branded the company a “monopolist”.

In a court document detailing the sanctions that the DoJ might seek from Amit Mehta, the judge presiding over the case, prosecutors said they were “considering behavioural and structural remedies” that would prevent Google from using products such as the Chrome browser, Play app store and Android operating system to give its search engine an edge over competitors or new entrants.

The DoJ could also seek to force Google to share users’ search data with rivals and restrict its ability to use search results to train new generative artificial intelligence models and products.

A break-up of Google would reorder a search market in which the company handles more than 90% of online queries and would transform a business that has made its parent company, Alphabet, one of the most valuable in the world.

“For more than a decade, Google has controlled the most popular distribution channels, leaving rivals with little-to-no incentive to compete for users,” the DoJ said.

“Fully remedying these harms requires not only ending Google’s control of distribution today, but also ensuring Google cannot control the distribution of tomorrow.”

The 32-page filing from the DoJ contains its initial remedy proposal and advances the trial to its second stage, in which Mehta will determine the sanctions to be imposed on Google.

In August, Mehta ruled that Google had spent tens of billions of dollars on exclusive deals to maintain an illegal dominance over search.

Google hit back at the proposed remedies, calling them “radical and sweeping”, beyond the scope of the legal issues in the case and a threat to “consumers, businesses and American competitiveness”.

Shares of Alphabet were down 1.8% just after midday in New York on Wednesday. They have risen more than 15% this year to give the group a market value of $2 trillion (NZ$3.3t), the fourth-largest for a listed company in the world.

The Google case could potentially be the biggest antitrust victory for the DoJ since a judge ordered the break-up of Microsoft 24 years ago for illegally squashing competition.

However, that ruling was overturned on appeal a year later, making the Google lawsuit a second chance for the DoJ to fundamentally dismantle a Big Tech company’s dominance of a key sector.

As part of the second phase of the Google trial, the DoJ and Google are set to file their proposed final judgments and witness lists on November 20 and December 20, respectively.

Mehta has set hearings for the remedy requests in April and has said he aims to hand down a decision by August 2025. Google has vowed to appeal against the decision as far as the US Supreme Court, which could take years longer.

In its court filing this week, the DoJ identified four areas that its remedies framework for Google needed to address: search distribution and revenue sharing; generation and display of search results; advertising scale and monetisation; and gathering and use of data.

In addition to potential spin-offs, prosecutors said remedies could include banning the exclusive contracts at the heart of the case – in particular the $20b that Google pays annually to Apple to be the default Safari search engine – as well as imposing “non-discrimination” measures on Google products such as its Android operating system and Play app store.

The DoJ is also considering requiring Google to share its vast trove of data gathered to improve search ranking models, indices and advertising algorithms, which prosecutors argue was accumulated unlawfully.

To address any data privacy concerns that result, Google could be “prohibit[ed] from using or retaining data that cannot be effectively shared with others”.

The DoJ also recognised the disruptive impact that AI would have on online search.

Prosecutors are concerned that Google will “leverage its monopoly power” to feed its AI features and want websites to be able to opt out of being used to train Google’s AI models or inclusion in its AI-generated summaries.

Google’s dominance over search text ads needed to be addressed by lowering barriers to would-be rivals or licensing its ad feed to others, independently from search results, according to the court filing.

The second phase of the trial will be a critical test for Jonathan Kanter, who inherited the case and has ushered in a tougher enforcement policy in the past three years as head of the DoJ’s antitrust unit.

Kanter has sued Apple and has a second case against Google’s ad tech business in progress.

Big Tech critic Lina Khan, chair of the Federal Trade Commission, has challenged Amazon and Meta in separate cases.

The filing comes close on the heels of other legal defeats for Alphabet.

A California judge this week ordered the company to open its Android operating system to rivals, allowing them to create their own app marketplaces and payment systems to compete with Google Play.

Google said it would appeal against the verdict.

Written by: Stefania Palma in Washington and Stephen Morris in San Francisco

© Financial Times