A forced breakup of Google would be the biggest of a U.S. company since AT&T was broken up in the 1980s | Photo: Bloomberg
By Leah Nylen and Anna Edgerton
A rare proposal to break up Google and Alphabet Inc. is one of the options being considered by the Justice Department after a landmark court ruling found the company monopolized the online search market, according to people familiar with the deliberations.
The move would be Washington’s first attempt to break up a company for illegal monopolization since failed attempts to break up Microsoft Corp. two decades ago. Other less severe options include forcing Google to share more data with competitors and measures to prevent it from gaining an unfair advantage in artificial intelligence products, said the people, who asked not to be identified discussing private discussions.
Still, the government is likely to seek a ban on the exclusive contracts that were at the heart of its case against Google. If the Justice Department goes ahead with a divestiture plan, the most likely units to divest are Google’s Android operating system and Chrome web browser, the people said. Officials are also considering trying to force a possible sale of AdWords, the platform the company uses to sell text advertising, one of the people said.
The discussions at the Justice Department have intensified in the wake of Judge Amit Mehta’s Aug. 5 ruling that Google illegally monopolized the markets for online search and search text ads. Google has said it will appeal that decision, but Mehta has ordered both sides to begin planning for the second phase of the case, which will include the government’s proposals to restore competition, including a possible request for dissolution.
Alphabet shares fell as much as 2.5 percent to $160.11 in after-hours trading before erasing some losses.
A Google spokesman declined to comment on the possible solution. A Justice Department spokeswoman also declined to comment.
The US plan would have to be accepted by Mehta, who would order the company to comply. A forced breakup of Google would be the biggest of a US company since AT&T was broken up in the 1980s.
Justice Department lawyers, who have been consulting with companies affected by Google’s practices, have expressed concerns in their conversations that the company’s dominance in search gives it an advantage in developing artificial intelligence technology, the people said. As part of a solution, the government could try to block the company from forcing websites to allow their content to be used for some of Google’s artificial intelligence products in order to appear in search results.
Rupture
One of the solutions that Justice Department lawyers have discussed the most, according to sources, is getting rid of the Android operating system, which is used on some 2.5 billion devices worldwide. In his decision, Mehta concluded that Google requires device makers to sign agreements to gain access to its apps, such as Gmail and the Google Play Store.
Those agreements also require that Google’s search widget and Chrome browser be installed on devices in such a way that they cannot be removed, thereby preventing other search engines from competing, it found.
Mehta’s decision comes after a California jury in December ruled that the company monopolized the distribution of Android apps. The judge in that case has not yet decided whether to award damages. The Federal Trade Commission, which also enforces antitrust laws, filed a brief in that case this week and said in a statement that Google should not be allowed to “reap the benefits of illegal monopolization.”
Google paid as much as $26 billion to companies to make its search engine the default on devices and web browsers, with $20 billion of that going to Apple Inc.
Mehta’s ruling also found that Google monopolized ads that appear at the top of a search results page to drive users to websites, known as search text ads. These are sold through Google Ads, which changed its name to AdWords in 2018 and offers sellers a way to run ads for certain search keywords related to their business. About two-thirds of Google’s total revenue comes from search ads, which amounted to more than $100 billion in 2020, according to testimony at last year’s trial.
If the Justice Department does not require Google to sell AdWords, it could seek interoperability requirements that would allow it to work seamlessly on other search engines, the people said.
Access to data
Another option would be for Google to divest itself of its data or license it to rivals such as Microsoft’s Bing or DuckDuckGo. Mehta’s ruling found that Google’s contracts not only ensure that its search engine gets the most data from users — 16 times more than its nearest competitor — but that data flow also prevents its rivals from improving their search results and competing effectively.
Digital governance rules recently passed in Europe imposed a similar requirement: that Google make some of its data available to third-party search engines. The company has said publicly that sharing data can raise privacy concerns for users, so it only makes information available about searches that meet certain requirements.
The requirement that monopolists allow rivals some access to technology has been used in previous cases. In the Justice Department’s first case against AT&T in 1956, the company was required to grant royalty-free licenses to its patents.
In the antitrust case against Microsoft, the settlement required the Redmond, Washington-based tech giant to make some of its so-called application programming interfaces (APIs) available to third parties for free. APIs are used to ensure that software programs can communicate and exchange data with each other effectively.
AI Products
For years, websites have allowed access to Google’s web crawler to ensure they appeared in the company’s search results. But more recently, some of that data has been used to help Google develop its artificial intelligence.
Last fall, Google created a tool to let websites block data tracking for AI, after companies complained. But that option doesn’t apply to everything. In May, Google announced that some searches will now come with “AI Summary” — narrative answers that save people the task of clicking through multiple links. The AI-powered panel appears beneath queries and presents summary information pulled from Google search results across the web.
Google does not allow website publishers to opt out of AI overviews, as this is a “feature” of search, not a standalone product. Websites can prevent Google from using snippets, but that applies to both search and AI overviews.
While AI overviews only appear in a fraction of searches, the feature’s implementation has been rocky after some snippets offered embarrassing suggestions, such as advising people to eat rocks or put glue on pizza.
First published: August 14, 2024 | 7:18 a.m. IS
Disclaimer:
The information contained in this post is for general information purposes only. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the post for any purpose.
We respect the intellectual property rights of content creators. If you are the owner of any material featured on our website and have concerns about its use, please contact us. We are committed to addressing any copyright issues promptly and will remove any material within 2 days of receiving a request from the rightful owner.