US weighs Google breakup in historic Big Tech antitrust case

The US Justice Department is considering asking a federal judge to force Google to sell off parts of its business in what would be a historic breakup of one of the world’s biggest tech companies.

Antitrust enforcers are weighing a breakup to mitigate the Alphabet business’s dominance in search, the agency said in a court filing on Tuesday, confirming an earlier Bloomberg News report. Judge Amit Mehta could also order Google to provide access to the underlying data it uses to build its search results and artificial intelligence products, it said.

The US Justice Department “is considering behavioural and structural remedies that would prevent Google from using products such as Chrome, Play, and Android to advantage Google search and Google search-related products and features,” the agency said.

Google hit back at the proposals, calling them “radical and sweeping”.Credit: AP

The 32-page document lays out a framework of potential options for the judge to consider as the case moves to the remedy phase. The agency said it will provide a fuller proposal on remedies next month and then begin gathering additional documents and evidence from Google for a two-week remedies hearing in April. Mehta said he will rule on the remedies by August 2025.

The effort is the most significant move to rein in a major tech company over illegal monopolisation since Washington unsuccessfully sought to break up Microsoft two decades ago. The US Justice Department and the Federal Trade Commission have targeted Big Tech dominance, scru deals and investments and accusing some of America’s most powerful companies of illegally dominating markets.

Google shares fell as much as 2.8 per cent on Wednesday and were down 2.3 per cent to $US162 at 3.07pm in New York trading (6.07 am AEDT).

Antitrust pressure from multiple cases is building against Google. Mehta ruled this summer that Google broke antitrust laws in both online search and search text ads markets. Google has already said it plans to appeal Mehta’s decision, but must wait until he finalises a remedy before doing so.

The effort is the most significant move to rein in a major tech company over illegal monopolisation since Washington unsuccessfully sought to break up Microsoft two decades ago.

A breakup of the company “is unlikely at this point despite the antitrust swirls,” said Daniel Ives, managing director and senior equity analyst at Wedbush Securities. “Google will battle this in the courts for years.”

The case is part of a larger US crackdown on technology giants. The Justice Department earlier this year sued Apple for thwarting innovation by blocking rivals from accessing its hardware and software features. The FTC sent inquiries to Alphabet, Microsoft and Amazon.com about their investments in AI startups as part of a study on how these partnerships are impacting competition.

The DOJ said in the filing that Google gained scale and data benefits from its illegal distribution agreements with other tech companies that made its search engine the default option on smartphones and web browsers. Google’s Android business encompasses the operating system used on smartphones and devices as well as apps.

The Justice Department also said it may seek a requirement that Google allow websites more ability to opt out of its artificial intelligence products. The agency said it’s considering proposals related to Google’s dominance over search text ads, such as requirements that the company provide more information and control to advertisers over where their ads appear. The department may also request that Google be restricted from investing in search competitors or potential rivals.

Google criticised the Justice Department’s filing as “radical,” saying it would have “significant unintended consequences for consumers, businesses, and American competitiveness.”

The DOJ’s proposals go “well beyond the legal scope of the Court’s decision about Search distribution contracts,” Lee-Anne Mulholland, Google’s vice president of regulatory affairs, wrote in a blog post.

European Union watchdogs similarly touted the option of a breakup of Google’s business to appease antitrust concerns last year. The bloc’s competition chief Margrethe Vestager said that “divestiture is the only way” to settle worries over how the company favours its own services to the detriment of ad tech rivals, advertisers and online publishers. That EU case - which could come to a final decision by the end of this year - marked the latest escalation in a long-running saga that’s already led to a trio of EU penalties totaling more than €8 billion ($13 billion) for abuses across other Google services.

A group of US states that sued Google over its search monopoly separately from the Justice Department said they may seek to have the tech giant pay for a public education campaign about how to switch search engines.

On Monday, a different federal judge ordered Google to open up its app store for the next three years to resolve a separate antitrust case brought by Epic Games related to its dominance of app distribution on Android smartphones. US District Judge James Donato issued an injunction that takes effect November 1, which bars Google for three years from paying developers to exclusively use its app store or prohibit them from telling customers about how to directly download apps. Google also cannot force developers to use its billing features during that time. The company also plans to appeal that decision.

Last month, the US Justice Department and Google faced off in a third antitrust suit focused on the company’s dominance over the technology used to buy and sell online display ads. Closing arguments in that lawsuit are scheduled for late November and Judge Leonie Brinkema, who oversaw that case, said she plans to rule by the end of the year. Antitrust enforcers have said they plan to seek to force Google to sell off parts of its ad tech business if the court finds the company monopolised that market.

Bloomberg

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