US government considers a breakup of Google

By Clare Duffy and Brian Fung, CNN

(CNN) — For the first time since AT&T was dismantled into Baby Bells four decades ago, the US government is weighing the breakup of one of the world’s largest and most consequential monopolies: Google.

The US Department of Justice in a court filing Tuesday night said it may recommend dismantling Google’s core businesses, separating Google’s search business from Android, Chrome and the Google Play app store.

“That would prevent Google from using products such as Chrome, Play, and Android to advantage Google search and Google search-related products and features — including emerging search access points and features, such as artificial intelligence — over rivals or new entrants,” the government said in its court filing.

The Justice Department’s recommendation comes after a federal judge ruled in August that Google had violated US antitrust law with its search business. The ruling, in which the judge called Google a “monopolist,” set the stage for changes to Google’s oldest and most important business and for how millions of Americans get information online.

Google, in a blog post, called the government’s potential plan “radical,” arguing it could make the customer experience worse: Google said it could “break” Android and Chrome, hamper AI innovation and force the company to share personal information with competitors, undermining people’s privacy.

“This case is about a set of search distribution contracts,” the company said in its blog post. “Rather than focus on that, the government seems to be pursuing a sweeping agenda that will impact numerous industries and products, with significant unintended consequences for consumers, businesses, and American competitiveness.”

Shares of Google (GOOG) dipped 1.9% in the opening minutes of trading on Wednesday before recovering slightly, even as major indexes edged higher.

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

The case centered on the exclusive contracts that Google has spent billions of dollars to form with other tech companies, including Apple, to make it the default search provider on smartphones and web browsers. US District Judge Amit Mehta ruled that those deals were anticompetitive.

Now that the court has determined Google broke the law, the next stage of the fight involves figuring out what penalties the company will face for its wrongdoing. That phase of the case is proceeding even as Google has vowed to appeal Mehta’s underlying decision. Together with the appeal, the entire process could take months or even years to play out.

Some of the specific penalties the Justice Department may seek are a possible ban on Google’s exclusivity deals, the government filing said on Tuesday. That could lead to seismic changes for smartphone users, ending the years-long agreement with Apple, for example.

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

The US government may also seek to prevent Google from promoting its search engine in other products it owns. For example, it could call for a rule barring Chrome from routing searches through Google by default. This type of behavior, known as self-preferencing, has increasingly come under scrutiny by US policymakers and competition enforcers.

The DOJ also showed it is thinking ahead to how Google’s current power in search may lead to an insurmountable advantage in artificial intelligence, given the amount of data it takes to train sophisticated AI models. The government said it is weighing a proposed penalty for Google that would let websites 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 seek to force Google to provide rivals with the software models used in Google’s AI-assisted search features.

“Google’s ability to leverage its monopoly power to feed artificial intelligence features is an emerging barrier to competition and risks further entrenching Google’s dominance,” the filing said.

The case had been described as the biggest tech antitrust case since the US government’s antitrust showdown with Microsoft at the turn of the millennium.

In saying in August that it planned to appeal Mehta’s decision, Google repeated an argument it had made in court that its search engine is the most popular among consumers because it is the best.

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

Whatever ultimately happens to Google could set the stage for potential remedies in other, ongoing antitrust cases against tech giants. Google faces a separate case brought by DOJ attorneys, along with 17 states, who allege that its advertising business is anticompetitive. Amazon, Apple, Meta and Ticketmaster are also engaged in antitrust legal battles.

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