Last week, a U.S. judge ruled that Google paid tens of billions of dollars to companies like Apple and Samsung to strengthen its illegal monopoly on web search by making Google search a default pre-installed option on its devices and browsers. The court ruled that it violated antitrust laws.
But Judge Amit Mehta has not yet decided what the solution, or antitrust-speak, “remedy” should be for this violation. In theory, it could be something relatively benign, such as forcing Google to share search data with competing providers. Mehta could order Google to stop paying Apple and other device makers. But Bloomberg’s sources say the Justice Department is also considering the nuclear option of breaking up Google.
This will reportedly force Google to sell its Android mobile operating system or Chrome browser, which is central to Google Search’s dominance, the go-to tool for over 90% of search queries in the US. may mean. The company is also reportedly considering selling its Google Ads platform.
Unsurprisingly, investors in Google’s parent company Alphabet did not warmly welcome Bloomberg’s report. The stock fell more than 3% on Wednesday morning, but has since recovered slightly.
The stock might have fallen further if it weren’t for the fact that a complete breakup of a major tech company is unprecedented and difficult to imagine. (British antitrust regulators forced Meta to back out of its acquisition of GIF repository Giphy a few years ago, but Giphy, now owned by Shutterstock, was not core to Meta’s business.)
of idea However, the breakup of big tech companies is not unprecedented.
Almost a quarter of a century ago, Microsoft was also found to be abusing its monopoly position in the PC operating system market. It was a time when the Web was just starting to take off, and Microsoft violated antitrust laws by bundling its own Internet Explorer bundle with Windows to thwart the advances of third-party browsers such as Marc Andreessen’s Netscape Navigator. I did.
The district court ordered Microsoft to be split into a Windows division and a separate division that handles other Microsoft software such as Internet Explorer. However, Microsoft appealed and won in that at least it no longer faced partition as a remedy. Eventually, the antitrust case was settled in 2001 with a promise to allow manufacturers to ship Windows PCs with other operating systems and software that compete with Microsoft without retaliation.
Microsoft’s near death, in part the result of improper public statements made by the judge during the first trial, was one of the largest corporate breakups in U.S. antitrust history. The most recent example occurred more than 40 years ago, when telecommunications giant AT&T was split up. Long-distance carrier and seven so-called baby bells.
But while Big Tech has never experienced a breakup on this scale, times are changing. Companies like Google, Apple, and Meta have unprecedented scale and power on a global level, play a major role in stock markets, and there is ample political will to rein them in. Jonathan Canter, the Justice Department’s head of aggressive antitrust law, argues: He has long maintained that the only way to deal with Google’s alleged violations is to break it up, but that stance did not prevent him from being appointed assistant attorney general for antitrust matters in late 2021.
The impact of the separation will be felt far beyond Mountain View.
It remains likely that Google will be broken up, given that Google is expected to appeal the ruling and, if the ruling is upheld, a number of less stringent alternative remedies for Judge Mehta to consider. .
But in the unlikely event that Justice Mehta agrees to take the sale route, the consequences would be significant. And it’s an existential crisis for Google, which currently has a market valuation of nearly $2 trillion.
Anything that directly reduces Google’s search revenue (which remains its biggest source of revenue) will hurt. Although Chrome and Android are not clear search products, they each serve as important points of connection with consumers. Chrome has almost two-thirds of the global browser market, and Android has a slightly larger share of the global smartphone market. If either were no longer a Google product, Google would be less able to drive consumers to its money-making services (like search ads).
And if the future of consumer technology is as AI-centric as the industry claims, even Google without Android will be held back in this important area.
Just yesterday, Google held a splashy event to show off its latest lineup of hardware products, including the Google Pixel smartphone. As the event made clear, these devices and the broader ecosystem of third-party Android hardware products are the most important levers for Google’s AI ambitions. Without Android, Google has no clear way to reliably interact with billions of people. Use chatbots and other AI services powered by Gemini on a daily basis. (In fact, we can imagine that Google’s use of Android to promote Gemini is an issue that could lead to future antitrust lawsuits in the US and elsewhere.)
The impact of the Google breakup will be felt far beyond Mountain View, as Google and many of its peers are also embroiled in other antitrust cases that could theoretically lead to similar outcomes. Dew.
The Department of Justice is currently filing a separate lawsuit against Google, which it hopes will result in Google having to sell some of its ad tech business. The Federal Trade Commission has filed a lawsuit against Meta for selling Instagram and WhatsApp. The FTC has also filed a complaint against Amazon, which some experts suggest could lead to a spinoff of the e-commerce giant’s logistics services.
So, because of its timing, Google’s antitrust losses on the search front could mark a tipping point for Big Tech’s major humiliation. If the company wins, it could set a precedent that proves this giant cannot be scaled back. Technology companies will no doubt be hoping this demonstration will scare regulators for decades to come.
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