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At the end of the day, antitrust enforcement is all political. It is up to the government of the day to prosecute violations and pursue sanctions vigorously.
As such, uncertainty remains over the latest developments in the US case against Google. The Justice Department’s Trust Busters filed for bankruptcy this week, seeking a wide range of sanctions against the company. Whether this marks a turning point for the company is now as much a political question as it is a legal one.
Forcing Google to retire its Chrome browser is the most eye-catching part of the proposed sanctions. But the Justice Department is also seeking a web of business restrictions that would bind Google and expose it to a decade of outside scrutiny. The proposal is slightly less dramatic than the broader split proposal the Justice Department has said it is considering pursuing. However, it includes a more detailed set of restrictions on one of Google’s core strategies: using a range of products and services to drive users to its search engine.
It is difficult to argue with the Justice Department’s decision to impose such broad sanctions. Merely banning the practices that helped give Google its dominant position, exclusive search distribution agreements that have been determined to be illegal, will not reverse the harm. The market is already tilted decisively in our favor. In addition to opening new avenues for potential rivals, regulators want to prevent Google from using its search monopoly to dominate an AI market that is on the verge of forming.
Two self-reinforcing factors make it particularly difficult for other companies to influence the search market. The high volume of searches on Google generates a large amount of data, giving you an edge in terms of quality. Google’s dominance also means it can monetize its searches with advertising at a higher rate than its rivals. If the Justice Department succeeds in distinguishing between the two, there will be repercussions across the internet. Much of the tech industry revolves around search giants, relies on their software and is funded by search traffic and advertising dollars.
Forcing Google to retire Chrome would cut off one important source of search traffic. The Justice Department stopped short of calling for Android separation as well, but suggested it should be a fallback option if Google fails to fully open its mobile OS to other search engines. Separating one or both of these software products from Google’s search engine would deprive Google of an important traffic source. Chrome’s new owners would have every incentive to rebuild their relationship with Google through an independent commercial agreement. If that route is cut off, it will likely fall into the hands of Microsoft’s Bing company. This is a huge gift to one of Google’s biggest rivals. Newcomers like OpenAI may also want to buy Chrome, but the cost can be prohibitive.
Microsoft and OpenAI are also likely to be the main beneficiaries of another key piece of the Justice Department’s proposed relief package, which would allow Google to maintain its search engine partnership with Apple in any form. be unable to do so. The Justice Department’s efforts to throttle the flow of Google’s search traffic extend to the company’s internal product strategy. If the court agrees, Google will be prevented from “bundling” its search engine with important products.
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These changes will definitely hinder Google. But whether any of these will be enough to support a new generation of startups that want to tap into Google’s search market using new generative AI services is still an open question. . In addition to lacking widespread distribution, Google also lacks large amounts of user data and a huge advertising machine.
The Justice Department’s answer is to force Google to share much of its data, which the company warns could compromise user privacy. Stimulating competition would also require Google to enter into a 10-year syndication agreement that would allow other companies to distribute its search results. Rivals could also be given full access to Google’s advertising for a year to even out some of the financial imbalance.
This is not the first time a landmark antitrust case against a big tech company has crossed administrations in Washington. In 2000, a court ordered Microsoft to be broken up, but the software company lost a partial victory on appeal, overturning sanctions and losing efforts to reverse antitrust rulings. The new administration in Washington chose to settle the case before the legal battle resumed. Whether Google can hope to emerge from its legal crisis in a similar way will be the first big test of the new Trump administration’s attitude toward Big Tech.
richard.waters@ft.com
