The US government is considering breaking up Google

CNN
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For the first time since AT&T was broken up into Baby Bells four decades ago, the U.S. government is considering breaking up one of the world's largest and most consequential monopolies: Google.

The U.S. Justice Department said in a court filing Tuesday night that it may recommend breaking up Google's core businesses and separating Google's search business from Android, Chrome and the Google Play app store.

“This would prevent Google from using products such as Chrome, Play and Android to leverage Google Search and Google Search-related products and features – including new search access points and features such as artificial intelligence – against competitors or new market entrants “The government said in its court filing.

The Justice Department's recommendation came after a federal judge ruled in August that Google had violated U.S. antitrust laws with its search business. The ruling, in which the judge called Google a “monopolist,” set the stage for changes in Google's oldest and most important business and in the way millions of Americans get information online.

In a blog post, Google called the government's potential plan “radical” and argued it could worsen the customer experience: Google said it could “break” Android and Chrome, hamper AI innovation and force the company to share personal data with competitors split. undermine people's privacy.

“This case involves a series of search distribution contracts,” the company said in its blog post. “Instead of focusing on this, the administration appears to be pursuing a far-reaching agenda that will impact numerous industries and products, with significant unintended consequences for consumers, businesses and American competitiveness.”

Shares of Google (GOOG) fell 1.9% in the first minutes of trading on Wednesday before recovering slightly, even as major indexes rose slightly.

The U.S. government argued in the case that Google used multiple interlocking tactics and products under its control to exclude competitors in search, leaving consumers with few choices and a less innovative market for search engines.

At the heart of the case were the billions of dollars in exclusive deals Google signed with other technology companies, including Apple, to make the company the default search provider on smartphones and web browsers. U.S. District Judge Amit Mehta ruled that these deals were anticompetitive.

Now that the court has found that Google violated the law, the next phase of the fight is to find out what penalties the company faces for its wrongdoing. This phase of the case continues, although Google has promised to appeal Mehta's underlying decision. Along with the appeal, the entire process could take months or even years.

Specific penalties the Justice Department could seek include a possible ban on Google's exclusive contracts, according to the government's filing Tuesday. This could lead to huge changes for smartphone users and, for example, lead to the end of the year-long agreement with Apple.

The DOJ added it could ask the judge to require a “choice screen” on electronic devices that would allow consumers to choose their preferred search engine from the start, rather than letting Apple or Google set the default for them. Such selection screens are the norm in other markets such as the European Union.

The U.S. government could also try to stop Google from promoting its search engine in other products it owns. For example, a rule could be required that prohibits Chrome from redirecting searches through Google by default. This type of behavior, known as self-favoring, is coming under increasing scrutiny from policymakers and competition regulators in the United States.

The US Department of Justice also revealed that it is considering how Google's current power in search could lead to an insurmountable advantage in artificial intelligence, given the amount of data required to train sophisticated AI models. The government said it is weighing a proposed penalty for Google that would allow websites to opt out of having their content collected for Google's AI training purposes or appearing in AI-generated summaries of search results. And prosecutors added that they could even try to force Google to provide competitors with the software models used in Google's AI-powered search features.

“Google’s ability to use its monopoly power to provide artificial intelligence capabilities represents an increasing barrier to competition and risks further entrenching Google’s dominance,” the filing said.

The case has been described as the largest technology antitrust case since the U.S. government's antitrust showdown with Microsoft at the turn of the millennium.

When Google announced in August that it would appeal Mehta's decision, Google repeated an argument it had made in court that its search engine is most popular with consumers because it is the best.

“As this process continues, we will continue to focus on building products that are helpful and easy to use for people,” Kent Walker, Google’s president of global affairs, said in a post on X at the time.

Whatever ultimately happens with Google could pave the way for potential remedies in other ongoing antitrust cases against tech giants. Google faces a separate lawsuit brought by DOJ lawyers along with 17 states that claim its advertising business is anticompetitive. Amazon, Apple, Meta and Ticketmaster are also involved in antitrust litigation.