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Eliot Blondet/Abaca/Sipa USA via AP Images
Google might have to sell Chrome, the world's most widely used internet browser.
Last week, the Department of Justice's Antitrust Division proposed a historic breakup of Google's search monopoly, in order to restore competition and resolve conduct that earlier this year a D.C. district court judge ruled violated the Sherman Act. The case follows a familiar cycle in the U.S. tech industry of breakups leading to innovation.
Prior breakups of tech giants such as IBM and AT&T in the 20th century were credited with opening up competition that led to the establishment of Silicon Valley as the world's leading tech hub. Twenty-five years ago, the DOJ initially submitted plans for a breakup of Microsoft, but was overruled by a federal judge. Instead, they ultimately settled for imposing conditions on the firm's behavior that proved moderately successful, also paving the way for the rise of web-native companies like Google.
The proposed Google breakup once again comes at an inflection point for technology. The remedy includes (to use antitrust jargon) behavioral conditions and structural separations, in the form of the forced divestiture of the Chrome browser. It could be immensely impactful for the burgeoning commercial development of artificial intelligence, where Google currently has an inherent advantage over data and distribution points to access users.
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This proposed remedy is the latest development in a battle between federal enforcers and the tech titan spanning more than a decade, and it won't be the final word. Judge Amit Mehta will now hear the remedy arguments and then deliver a decision set for later in 2025. By then, of course, a new administration will be in charge.
This situation is akin to the Microsoft case, when the Bush administration took over for the Clinton administration amid deliberations about the remedy. Most antitrust experts would argue that the result was somewhat watered-down.
Though it's not yet known who exactly will lead the DOJ Antitrust Division, Trump has installed Pam Bondi as his next attorney general. The former Florida state attorney general has a weak record on holding fraudulent business actors accountable, and most recently worked for a lobbying firm that represented Big Tech giants including Google, Amazon, and Uber.
The selection of Bondi does not instill much confidence that Trump is committed to overseeing a breakup, even though his administration brought the initial case at the very end of his first term. The Biden administration then continued the case and won it in court.
There was some speculation that political constraints would temper the Biden DOJ's proposed remedy. Conflicting reports indicated that the DOJ, for example, might consider only a behavioral remedy, or just push for a divestiture of Chrome and not the Android hardware device, an equally important access point for search engines. One theory was that the DOJ might hold back on a far-reaching proposal, because if they went too far the Trump administration would just scrap the whole thing. Instead, the theory went, the current enforcers might opt for smaller concessions, hoping they'd be enough to prevail even under Trump.
The announcement of the DOJ remedy does not really show any signs of relenting. It's a cogent proposal to protect the public from antitrust harms and enable competition.
THE DOJ'S OVERARCHING STRATEGY is that enforcers are seeking not just to rectify past illegal conduct by Google, but also restructure the company in order to level the playing field and ensure future competition. That's a bolder interpretation of the law than in past administrations, but one that the division argues is well within its legal rights.
Judge Mehta's ruling in the case frames the remedy and is worth briefly recapping.
Google in effect holds a monopoly over search today because of an oligopolistic collusive arrangement with various browsers and device manufacturers, the most lucrative one being Apple. Since the 2000s, Google and Apple have maintained a revenue-sharing agreement where Google's search product receives the coveted default status placement on all Apple products in exchange for a massive cut of the spoils: $20 billion a year as of 2022.
That revenue-sharing agreement is a massive obstacle effectively blocking any new innovator from getting a foothold in the search market, because it's nearly impossible to reach an audience on the most widely used computer and mobile products. Google's own Android devices hold significant market share, and the Google search engine is given default status there too.
Through this anti-competitive default status, Google acquired network effects by attracting volumes of traffic, users, and data. The monopoly is at an inherent advantage today because it holds the best search algorithm, acquired from this past illegal conduct.
To rectify that, the DOJ is trying to split apart the various properties that held Google's oligopoly together, and open each up for competition to attract new players. It's doing so by attacking the various distribution choke points.
For one, Google and its browser partners, including Apple, will have to terminate their revenue-sharing agreements. Some will have choice screens or other procedures to give other search engines a fair shake at drawing users. Apple could develop its own competitor, something that it considered doing at various times and was blocked from doing by Google, as evidence presented in court showed.
But the DOJ decided that to restore competition, the remedy would have to go further, by divesting Chrome. To put this in finer detail, Google was specifically paying Apple because of how crucial the Safari browser is as the entry point on their devices to access any search engine. Browsers are like the shelves in grocery stores. On its own, the technology is not super-advanced, but any search product or other apps need to be discoverable on them to reach customers. For years, Google was essentially paying a premium to get placed in front of rivals on the grocery shelves, and most customers just grab what's in front of them.
By divesting Chrome, Google wouldn't be able to just self-preference its search product on its own shelves. An independent Chrome can offer something like a choice screen for users to decide from a suite of options.
A second major distribution platform is the actual hardware devices, such as Android. For this, DOJ has offered another requirement, albeit a conditional one. If Google violates the remedy agreement or if competition is not adequately restored on Android, it may be forced to sell off that business line too.
Separating out lines of business will only work with additional competition measures, because Google holds a data advantage.
To level the playing field and incentivize new search competitors, the DOJ is also asking for data-licensing requirements. For a marginal cost, Google will have to share its ill-gotten user data with "qualified competitors" that wish to use it for their own search algorithm. Given that there are reasonable privacy concerns about this user data going to outside actors, the DOJ has set a bright-line principle. As Matt Stoller of the American Economic Liberties Project puts it in the newsletter BIG: "If Google can't share data with rivals while guaranteeing the protection of user privacy, then it can't itself use that data in its products."
Additionally, for ten years, competitors can syndicate Google's search feed. The remedy includes data-sharing, but also data restrictions. Content creators and publishers can request to be opted out of Google's crawling where their own content is used against them as training data for Google's AI products that threaten to replace human creator industries. Google also would be forced to sell off its AI-related investments, such as in Anthropic.
The goal of this remedy is to limit Google's inherent advantage in search to win the race for generative AI. By enforcing data-sharing and limiting Google's self-preferencing of its own products and web crawling, the DOJ is trying to level the playing field.
THESE REMEDIES ARE FAR-REACHING but have a clear organizing framework and intention behind them to restore competition. But the problem is that the incoming Trump administration, which will be tasked to see this proposal through, has not yet stated its intentions.
Despite the first Trump administration bringing the original lawsuit, Trump has recently softened on the tech giant he once railed against. Google's CEO Sundar Pichai has showered Trump with praise, in a clear attempt to curry favor with the president-elect. He recently had a phone call with both Trump and Elon Musk.
Silicon Valley's attempts to win Trump over seemed to have found some success on the campaign trail. During an interview with the editor in chief of Bloomberg in October, Trump was asked directly about the prospects of breaking up Google. He demurred while suggesting that he saw Google more as a domestic national champion whose power he wouldn't want to diminish.
Trump's main gripe with Google has long been its perceived political bias against him in its search listings, privileging bad headlines about his campaign. For Trump, reacting to personal slights or subservience does tend to be his main modus operandi for policymaking, rather than ideological commitments. Google cozying up to him could easily make their business troubles go away. They could, for example, tweak the algorithm to boost positive headlines about Trump as an olive branch.
Vice President-elect JD Vance, on the other hand, has expressed a somewhat firmer or at least more comprehensive view of what he thinks should be done about Google.
He spoke earlier this year at a conference called RemedyFest hosted by venture capital firm Y Combinator, which was entirely about how to fix Google's monopoly. At that conference, Vance offered praise of FTC chair Lina Khan and mostly applauded the ongoing attempts to break up Google, as he reinforced that week on Twitter.
Vance did echo Trump's criticism of Google's search monopoly for exhibiting a liberal bias in its news search results. But he went into more detail about how he believes the government could actually undo that power over communication. "Does Google need to have YouTube and other platforms built underneath the Google umbrella?" Vance said. "There's a good argument that if we want to be pro-innovation, we want to ensure new entrants can change these things up, so that you want to be pro-competition and separate these market verticals as much as possible."
Vance's professed view of Google would be directly in line with the actual remedy submitted by the DOJ. How the incoming administration approaches this question may be a matter of who has Trump's ear last: Vance, or the donors.