Google Stock – Google’s Antitrust Challenges: DOJ Seeks to End Control Over Chrome and Search
Google Stock – Alphabet shares fell by 4% on Thursday following the Department of Justice’s (DOJ) call for Google to divest its Chrome browser as part of a remedy in its ongoing antitrust case. This significant move marks the latest chapter in a yearslong, bipartisan antitrust battle against Google, which continues to draw attention from regulators.
DOJ’s Proposal to Break Up Google’s Control Over Search
The DOJ’s filing on Wednesday night argues that forcing Google to sell off Chrome would “permanently stop Google’s control of this critical search access point and allow rival search engines the ability to access the browser that, for many users, is a gateway to the internet.” This proposed breakup of Chrome is seen as a critical step in addressing what the DOJ deems to be anticompetitive practices by Google in the online search market.
The DOJ’s filing highlights that this move would allow competition to flourish and provide a level playing field for competitors in the search engine market, where Google holds a dominant position. The department suggests that Chrome, which is tightly integrated with Google’s search engine, serves as a major tool for Google to gather data, which is then used for highly targeted advertisements.
Google Faces Increasing Scrutiny in Antitrust Battle
This latest development follows an August ruling by a federal judge that found Google holds an illegal monopoly in both search and text advertising, violating Section 2 of the Sherman Act. The DOJ’s call for Google to divest Chrome marks one of the most aggressive steps taken by the government to dismantle a tech giant since the Microsoft antitrust case, which culminated in a settlement in 2001.
The DOJ’s filing emphasizes that divesting Chrome would stop Google’s unfair dominance in the search access space, potentially creating more competition for search engines and advertising platforms. It further suggests that Google should be prevented from entering into exclusionary agreements with third parties like Apple and Samsung, as well as from giving preference to its search service in its products.
The Impact on Google’s Search Advertising Revenue
Search advertising remains the largest source of revenue for Alphabet, with $49.4 billion generated in the third quarter of 2024, accounting for about three-quarters of total ad sales during that period. The DOJ’s proposal, if accepted, could disrupt Google’s lucrative business model by limiting its ability to leverage Chrome and Android to promote its search service and other products.
Android Divestiture: A Possible Future Move?
While the DOJ is focused on forcing Google to divest Chrome, it also suggested that selling off the Android operating system could help restore competition in the mobile space. However, the department acknowledges that such a move might face significant resistance from Google and other industry stakeholders.
Instead of immediately pursuing the Android divestiture, the DOJ has recommended a series of other remedies, which it believes would be sufficient to curb Google’s ability to use its control over the Android ecosystem to unfairly favor its search services. However, the DOJ has left the door open for the possibility of requiring an Android divestiture if the proposed measures fail to produce meaningful relief in these critical markets.
Google’s Response: Legal Chief Criticizes DOJ’s Proposal
In response to the DOJ’s aggressive proposal, Kent Walker, Google’s legal chief, took to a blog post on Thursday, calling the DOJ’s request an “overbroad proposal” that would have severe consequences for privacy and artificial intelligence (AI) investments. Walker argued that the proposal “goes miles beyond the Court’s decision” and would “break a range of Google products — even beyond Search.”
Despite the DOJ’s actions, Google has indicated it plans to appeal the monopoly ruling, a move that could delay the implementation of any final remedies in the case. The company’s legal team asserts that the proposed breakup and other remedies would harm its ability to innovate and compete in various markets.
Market Reactions: Alphabet’s Shares Drop
Following the DOJ’s announcement, Alphabet’s stock saw a 4% dip, reflecting investor concerns over the potential impacts of the proposed breakup. While Google remains a dominant force in the tech industry, this ongoing antitrust case underscores the growing regulatory pressure faced by major tech companies in the U.S. and beyond. As the case progresses, the future of Google’s advertising empire and its control over Chrome and Android hangs in the balance.
What’s Next for Google?
The DOJ’s proposal for Google to divest Chrome marks a pivotal moment in the company’s ongoing antitrust struggles. With the potential to reshape the landscape of digital search and advertising, the case could lead to significant changes in how Google operates in the online space. For investors, the uncertainty surrounding Alphabet’s future has contributed to stock volatility, leaving the market wondering how this legal battle will play out in the coming months.
If successful, these remedies could usher in a new era of competition in the search and advertising markets, but only time will tell whether Google will be forced to comply with the DOJ’s demands or whether the company will successfully challenge the ruling in court.
Leave a comment