News broke this week that the U.S. Department of Justice wants to force Alphabet Inc.'s Google to sell Chrome, its dominant web browser. That has led to much head scratching in the tech industry.

Sure, Chrome is an important moat for Google's business, but is it really the source of the company's power? And if a company buys Chrome for an estimated $20 billion, wouldn't that mean someone else controls two-thirds of the browser market?

Read the tea leaves carefully and there's more happening here. The DOJ, for one, seems to be moving quickly to get ahead of any efforts by the incoming Trump administration (of which more, later) to shut down its most ambitious work in decades. There's something larger looming on the horizon.

Google is too large for the DOJ to break it up all at once, and the agency has two separate cases against the company, each pushing for spinoffs of different parts of the business.

The department's efforts on Chrome relate to a case it filed in 2020, focusing on Google's search monopoly. But the DOJ also filed another case in 2023 that's arguably more important, targeting its ad tech business. As a reminder: Google dominates digital advertising by controlling both the marketplace for online ads, and the essential tools that advertisers and websites need to participate. The business generates roughly $200 billion in annual revenue.

That's great for shareholders, but a raw deal for advertisers and website owners. Trade stocks and you'll pay pennies on the dollar in transaction fees. But an advertiser is more likely to pay 30 cents on every dollar they spend on ad-buying tools, according to the DOJ's suit, making the ad market work most profitably for Google above all. (Google's lawyers have argued that it competes fiercely against others including social media and video-streaming sites for ad dollars.)

The "structural remedies" that the DOJ calls for in both cases -- potentially the first breakup of a conglomerate since AT&T Inc. in the early 1980s -- are very much needed.

Tech giants have long seen the multi-billion-dollar fines they get from regulators as a cost of doing business. When the Federal Trade Commission fined Meta Platforms Inc. $5 billion in 2019, its stock went up. And companies have been known to skirt regulatory efforts to force better behavior. Breakups at least address the root of tech firms' power, which is scale.

"Divestiture is a more effective remedy," says Anne Witt, professor of law at EDHEC Business School's Augmented Law Institute. "The downside is it's more invasive." That's why pushing to first divest Chrome makes sense as a prelude to breaking up the ad tech business, even though that's where Google's real market power lies.

Trying to disentangle Google's ad tech business, a byzantine network of interplaying units, will require careful strategic planning by regulators, so the DOJ needs to build up institutional knowledge and legal precedent to make the bigger move. Breakups of past monopolies also started with smaller actions.

Before the DOJ split AT&T into seven regional holding companies known as "Baby Bells," for instance, it filed several smaller cases through the 1970s, building up to the main 1974 case that led to the forced sales.

Much of this depends on whether the DOJ's efforts survive under President Donald Trump. When Bloomberg News Editor-in-Chief John Micklethwait recently asked whether Google should be broken up, the then-candidate responded, "Look, Google has got a lot of power. They've been bad to me..."

"You would break them up?" "I'd do something," Trump replied. "They've become such a power. How they became a power is really the discussion. At the same time, it's a very dangerous thing because we want to have great companies. We don't want China to have these companies. Right now, China is afraid of Google."

Trump may be unsure where he stands, but a breakup is by no means off the table. Not only was the DOJ's search case filed at the tail end of Trump's last term, but incoming Vice President JD Vance has publicly said Google should be split up. Elon Musk, now a key player in Trump's administration, has also long worried about the company's consolidation of control in artificial intelligence. (He also has a vested interest in the matter, as the founder of a new AI company and chief executive officer and "technoking" of Tesla Inc., for which the technology is integral.)

There's a good chance, in other words, that the DOJ's efforts could prevail -- albeit slowly. The court is holding hearings on the proposed breakup in April 2025, with U.S. Judge Amit Mehta expected to rule by August.

Google will almost certainly appeal, and the process could take years. Still, if history is any guide, kicking things off with a divorce from Chrome isn't just strategic. It's the opening move in what could eventually become the biggest antitrust showdown since AT&T.

2024 Bloomberg L.P. Distributed by Tribune Content Agency, LLC.