The US government asked a federal judge last month to force Google to sell Chrome, the world’s most popular web browser.

It was the most extreme proposal by the Justice Department to address Google’s monopoly in Internet search after the judge’s landmark decision in August, which found the Silicon Valley company had violated antitrust laws. To fix the issue, Google will offer its own remedies this month.

The judge, Amit P. Mehta of the US District Court for the District of Columbia, is expected to decide how to address Google’s search monopoly by August. His ruling could cause enormous ripple effects, potentially reshaping the Internet.

Here’s what to expect.

Why does Google face a breakup?

The Justice Department and several states sued Google in 2020, accusing it of illegally protecting its monopoly over Internet search and search advertising.

Google for years had paid companies including Apple, Samsung and Mozilla billions of dollars to be the automatic search engine on smartphones and web browsers. The government said these contracts were designed to entrench Google’s dominance and make it harder for rivals to compete.

Google’s ironclad hold over online search allowed it to gather more data from users, which then made its product better and harder for rivals to dislodge, Justice Department lawyers argued during a 10-week trial last year.

Google countered, among other defenses, that it had simply created the best search product.

Mehta ultimately ruled in favour of the government. Now he must decide how to solve the problem with “remedies” to restore competition to the market.

What did the Justice Department propose as fixes?

Beyond forcing Google to sell Chrome, the Justice Department said in a filing last month that the company should be barred from entering into the exclusive search engine agreements. The judge should also force Google to share its search results and data with rivals for a decade, the government said.

Google should be forced to choose between selling Android, its smartphone operating system, or being barred from taking steps that force companies to bundle its services with Android phones, the government said. And the company should shed any stakes in artificial intelligence companies that it has invested in, since AI can bolster search, the government added.

What is Google’s next step?

The Silicon Valley company has until Dec 20 to submit its solutions to fix its search monopoly.

Walker, Google’s president of government affairs, said the Justice Department’s request reflected a ‘radical interventionist agenda’. — The New York Times

Kent Walker, Google’s president of global affairs, recently said the government was pushing a “radical interventionist agenda that would harm Americans and America’s global technology leadership” and “break a range of Google products”.

Paul Gallant, a tech policy analyst at TD Cowen, said he expected Google to not go beyond what the company wanted to do. That could include an offer to stop paying to be the automatic search engine on phones and browsers, he said.

“It wants to propose something that shows the judge it’s taking this all seriously, but not so much that the judge says, ‘Sounds good – you got it’, and then the company regrets the offer,” Gallant said.

And then?

Mehta has scheduled a hearing starting in April to ask both sides to present arguments for their proposals. Witnesses are also expected to testify.

Throughout the case, Mehta has been careful not to tip his hand. He could take remedies from one side wholesale, or find his own middle ground. In court in November, he said it was clear that the remedies debate would include discussion of the impact of artificial intelligence.

Which companies were broken up previously?

In 1911, a Supreme Court decision broke up Standard Oil, the source of the Rockefeller family fortune. Standard Oil was split into 34 companies, including Standard Oil of New Jersey, which became Exxon, and Standard Oil of California, one of the roots of modern-day Chevron.

Facing pressure from the federal government, AT&T agreed in 1982 to split itself up into regional phone providers.

In 2000, the Justice Department persuaded a judge to order a breakup of Microsoft, which was accused of abusing the dominance of its Windows operating system. But an appeals court overturned that decision the next year.

What would a breakup mean for Google?

A breakup would damage Google, which has built an integrated web of online systems and services to aid its lucrative search business. Last year, the company generated US$175bil from its search engine and related businesses, or 57% of its total revenue. Any split could also dent the company’s considerable profit, which totaled US$74bil in 2023.

If Google is forced to divest Chrome, its search engine’s popularity could erode. Google has 89% of the global search market, according to Statcounter, which compiles tech market data. Any drop in traffic would mean fewer clicks on ads and less revenue.

“Google will lose one of the most powerful moats around its ads business,” said Evelyn Mitchell-Wolf, an analyst at eMarketer, a firm that conducts business research.

A spinoff of Android would also be painful, eliminating Google’s influence over a majority of the world’s smartphones. The mobile operating system brings users into the company’s ecosystem of services and helps it compete against Apple in smartphones and other devices.

If another search engine became the one to be automatically selected on Android devices, that could further diminish traffic to Google’s search engine, hurting revenue and profit.

The final remedies could influence other antitrust lawsuits against Google. A federal judge in Virginia heard closing arguments last month from the Justice Department and the company over accusations that Google has a monopoly in ad technology. 

 - NY Times