Google Breakup A Possibility After Monopoly Ruling: Report

Bloomberg reported that, even without the divestitures, the government will likely seek a ban of the “exclusive distribution agreements” at the heart of the case.

The U.S. Department of Justice is considering a divestiture of Google’s Android operating system, AdWords ad sales platform and web browser, Chrome, after a judge ruled the tech giant is a monopoly in the online search and text advertising markets.

Citing anonymous “people with knowledge of the deliberations,” Bloomberg reported Tuesday that, even without the divestitures, the government will likely seek a ban of the “exclusive distribution agreements” that led to U.S. District Judge Amit Mehta ruling against Google on Aug. 5 in the landmark case.

CRN has reached out to Google and the Justice Department for comment.

Google Monopoly Case

The government could also pursue less severe punishment to make competition fair again, including forcing Google to share data with rivals and mechanisms to keep Google from gaining an unfair advantage in the growing artificial intelligence market, according to Bloomberg. Google requires websites to allow Google AI products to leverage their content to appear in search results.

Another option is for requiring Google to implement more interoperability with other search engines or license or divest its data to rivals. Google plans to appeal the decision, according to Bloomberg.

In a post on Microsoft-owned social media platform LinkedIn, Marc Rotenberg – a Georgetown University adjunct professor and founder and president of the Center for AI and Digital Policy (CAIDP) – said “remedies in antitrust cases are not easy.”

“You can break up companies, but the parts tend to congeal and reform like the evil robot in the Terminator series that resumed its shape after a shotgun blast from Arnold Schwarzenegger,” Rotenberg wrote. “Scary.”

Rotenberg proposed as remedies the limit of “collection and use of personal data by Internet advertisers … prohibit for kids … encourage the development of advertising techniques that are less privacy-invasive” and “focus on data minimization.”

“Let advertising companies compete based on the quality of their products and messages, not on manipulating consumers,” he said. “That would be a great outcome!”

Alden Abbott – former general counsel for the U.S. Federal Trade Commission (FTC) and now a senior research fellow at George Mason University – wrote in an article for Forbes that “a federal appeals court may (but is not certain to) overturn the trial court’s decision on liability” and that “this process could drag on for years.”

“The very conduct that Google engaged in enhanced its internet general search engine (GSE) quality, a reality at odds with a finding of anticompetitive monopolization,” Abbott said in the article. “What’s more, there is no good reason to believe that such behavior significantly affected consumer GSE choice. To the contrary, by improving GSE quality, that behavior likely raised consumer welfare, which the Supreme Court has deemed the overarching goal of antitrust enforcement.”

A separate Google antitrust case focused on digital advertising has a trial set for September.

AT&T, Microsoft Set Precedents

A government breakup of Google would mark the biggest dismantling since AT&T in the 1980s. About 2.5 billion devices worldwide use Android, and Google paid upwards of $26 billion to companies to make its search engine the default for third-party browsers and devices. Most of that money went to Apple, according to Bloomberg.

In the 1950s, the Justice Department required AT&T to provide licenses to its patents without royalties to remove unfair competition. And in the landmark Microsoft antitrust case, the vendor had to make application programming interfaces (APIs) available for free to make the competitive landscape more fair, according to Bloomberg.

Phil Walker, CEO of Manhattan Beach, Calif.-based Google partner Network Solutions Provider, told CRN in an interview that he welcomes government regulation when it comes to protecting data privacy.

However, “the timing of government regulation could be too proactive” and stifle areas of innovation such as the emerging generative AI (GenAI) market.

“In the age of AI, we need innovation at a cost and scale," Walker said. "In this new age of change, we need to grow to keep pace with AI, robotics, and what comes next."

Google has more than 100,000 channel partners worldwide, according to CRN’s 2024 Channel Chiefs. Most of these partners work with Google’s cloud and data analytics portfolio as opposed to the ad platforms the antitrust case focused on.

But the case is part of a trend of the U.S. and other governing bodies putting more scrutiny on deals by big technology vendors and how those deals affect competition.

In July, the United Kingdom’s Competition and Markets Authority (CMA) published a letter saying that it can “begin an investigation” into an unusual deal between Microsoft and AI upstart Inflection that resulted in Microsoft hiring Inflection’s co-founder and CEO.

In January, the FTC announced that Microsoft, OpenAI, Amazon, Google parent Alphabet and Anthropic needed to provide information on their recent investments and partnerships.

U.S. antitrust cases against Amazon and Apple are also still on the horizon.