Google ‘Monopoly’ Under Scrutiny, Break-up Threatened!

August 16, 2024 in News by RBN Staff

 

Source: Axios.com

Breaking up Google is hard to do

 

A federal judge is actively considering breaking up Google after a landmark ruling last week that the tech giant has illegally abused its search monopoly.

Why it matters: A court-ordered Google breakup would be the U.S.’s most consequential antitrust action in decades — but figuring out how to split up the company could prove daunting.

Catch up quick: Judge Amit Mehta’s decision last week in a case first brought by the Department of Justice in 2020 held that Google’s massive $26 billion payments to competitors, chiefly Apple, violate antitrust laws and inhibit consumer choice and innovation.

  • Now the court must choose a remedy. That could mean new rules requiring Google to share data or change other practices.
  • It could also mean — as both Bloomberg and the New York Times reported this week — a court-ordered split of the company.

Flashback: Antitrust-based corporate breakups are rare in U.S. history and have been difficult to manage and make stick.

  • A federal judge ordered Microsoft broken up two decades ago, but the company headed off that outcome with a successful appeal.
  • The only other antitrust-mandated breakup on a comparable scale in the modern era was the division of AT&T into seven regional companies in the ’80s.

Yes, but: AT&T was a strictly regulated, government-protected monopoly at the time.

  • Its split-up kicked off a freewheeling era in the telecom business, as antitrust advocates intended.
  • But over the following 20 years most of the constituent parts of AT&T essentially reassembled — like a “Terminator” robot reattaching its limbs.

Between the lines: Even if Mehta decides Google ought to be broken up, it’s not clear where the company’s fracture lines would fall.

  • Google is famously a one-product company.
  • Despite years of placing “other bets” through its Alphabet corporate umbrella, the overwhelming majority of the company’s revenue still comes from search advertising.
  • YouTube and Google Cloud are significant businesses, but neither is very relevant to the issues in the antitrust case.

Some suggest the judge could carve out the Chrome browser and/or the Android mobile operating system.

  • But both these products are based heavily on open source code and provided free to customers.
  • It’s hard to see how they could ever become major standalone businesses.

The big picture: Tech antitrust cases take years while the industry moves in weeks and months.

  • By the time the court has devised a remedy and the appeals process has run its course, the search business will likely look very different.
  • The rise of AI chatbot interfaces is already scrambling the search market — and court-ordered market interventions could be out of date before they ever kick in.

The other side: American courts are reluctant to break up successful companies.

  • Google competitors like Yelp and the privacy-focused DuckDuckGo browser spoke out after Mehta’s decision urging the court to devise new rules preventing Google from paying other firms that make Google Search a default choice for users.

The bottom line: Behavioral remedies are more likely than a move to carve up Google into new pieces.

  • “Courts don’t like to play CEO,” as one law professor told Marketplace.