• The US government’s antitrust effort to break Google’s de facto monopoly in online search will be a protracted affair
• Department of Justice (DoJ) is determined to take on big tech – and Google is in its cross hairs
• ‘Behavioural and structural’ remedies could result in dismemberment of the company
• Action is also being taken to prevent Google becoming a monopoly in AI
• Google will fight the effort every inch of the way and likely for years to come

For years now, various US government agencies and courts, alarmed by Google’s overwhelming domination of the online search industry, have threatened to bring it and its sprawling parent company, Alphabet, to heel – but to little avail. Now, though, things might be changing – just at a time when the digital search world is being transformed by generative AI (GenAI).  

Back in August this year, a federal judge ruled in an antitrust case that Google has constructed and maintains rigid control over internet searches to such an extent that it constitutes a pervasive illegal monopoly that allows the company to process more than 90% of all search traffic and enables it routinely and deliberately to abuse its commanding market position to deny rivals the opportunity to compete fairly in the sector.

Then, a month ago, a second antitrust case brought against Google by the US Department of Justice (DoJ) was unsealed. It differs markedly from the earlier case. This time prosecutors, doubling down in their determination to curb what they see as Google’s many excesses, are indicating that they intend to apply “behavioural and structural remedies” to rein in the company and pursue a policy that will result in Google’s dismemberment,  be that via voluntary amputations made by Google itself or, more likely, the compulsory lopping off of various tentacles via legislation.

Specific to the DoJ’s proposal is that Google will be required to divest itself of its Chrome browser and its Android operating system. Further steps may include a prohibition on the pre-installation of Google’s search engine on electronic devices, including laptops and smartphones, and putting a stop to the practice of using Chrome as a default setting on new devices. Another restriction may require Google to share search data and information with rival providers of search engines.

The DoJ is also seeking to prevent Google from monopolising AI by repeating the strategies and tactics it used to dominate internet search. Thus it will prohibit Google from acting to limit any potential AI rivals’ access to content and permit websites to opt out of Google using their content to train AI models.

If those requirements come to pass, it will have a massive effect on how users find information online and will cut a wide swathe through Google’s revenues. In the second quarter of this year, ‘Google Search & Other’ accounted for $48.5bn of Alphabet’s revenues, equal to 57% of total sales. There’s a lot to play for.

Google pays device manufacturers to make its search engine the default ‘choice’ on their handsets and PCs. By maintaining dominant market share in this way Google has ensured it continues to make enormous sums of money. In a statement, the DoJ says it intends to come down hard because, “fully remedying these harms requires not only ending Google’s control of distribution today but also ensuring Google cannot control the distribution of tomorrow.”

The second lawsuit centres on Google’s acquisition and application of digital advertising technology, which website creators depend on to make them money. Google permits websites to sell advertising on their webpages and also lets advertisers buy advertising space that will be seen by users. As might be expected, Google gets paid by both sides of that equation. 

In a submission made before the second lawsuit was unsealed, the DoJ contended that, “Google’s monopolies in each of these separate markets was no accident but rather the result of a campaign to condition, control, and tax digital advertising transactions over 15 years. This campaign was exclusionary, anticompetitive, and mutually reinforcing.”

To bolster its argument, the DoJ pointed out that Google’s ongoing M&A activities have resulted in its domination of every aspect of online advertising, with Google not only controlling the supply and demand sides of online advertising but also what the DoJ calls “the point of exchange where those sides meet”. 

The DoJ submission adds, “One industry behemoth, Google, has corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the wide swathe of high-tech tools used by publishers, advertisers, and brokers, to facilitate digital advertising” and use its market dominance to price gouge advertisers and charge at least a third of every transaction completed via its advertising technology.

The lawsuit alleges that Google uses its dominance to deliberately overcharge advertisers. That windfall has resulted in the company earning the bulk of its revenues of tens of billions of dollars each year from its advertising technology.

Google bites back

Unsurprisingly, Google will not passively sit by and allow itself to be pulled apart. In a blog post – a scattergun defensive broadside entitled DOJ’s radical and sweeping proposals risk hurting consumers, businesses, and developers – Lee-Anne Mulholland, Google’s vice president of regulatory affairs, sketches out the main defensive arguments that will be used to counter the DoJ’s case as Google’s lawyers build a multi-layered, detailed rebuttal for a court hearing sometime in 2025.

In essence, Google will claim that the US government is “pursuing a sweeping agenda that will impact numerous industries and products, with significant unintended consequences for consumers, businesses, and American competitiveness. The DOJ’s outline also comes at a time when competition in how people find information is blooming, with all sorts of new entrants emerging and new technologies like AI transforming the industry,” according to the blog.

Basically, the argument is that the DoJ doesn’t understand how the internet works and Google will attack the very foundation of the prosecution case by claiming that “refusing to deal with rival companies is not an antitrust violation and that the justice department is not correctly defining the digital ad market.” The blog characterises the lawsuit as “a meritless attempt to pick winners and losers in a highly competitive industry”.

Additionally, the company scaremongers in claiming that forcing it to share search query data, clicks and search results with its rivals “could create major privacy and security risks” because, so it says, that particular area is protected by “strict security standards” that prevent “bad actors” from identifying individuals and their search histories. The claim is also that such a move by the government “could lead to the creation of copycats and create a disincentive for other companies to innovate in search.”

A further contention is that “splitting off Chrome or Android would break them, and many other things. We [Google] have invested billions of dollars in Chrome and Android. Chrome is a secure, fast, and free browser and its open-source code provides the backbone for numerous competing browsers. Android is a secure, innovative, and free open-source operating system that has enabled vast choice in the smartphone market, helping to keep the cost of phones low for billions of people.”

Google’s strategy seems to be to throw everything but the kitchen sink into its defence mix in the hope that something will stick. Further gilding the lily, it also claims that, “Changes to the online advertising market would make online ads less valuable for publishers and merchants, and less useful for consumers. Google’s innovative ads system has levelled the playing field for small businesses and publishers."

Thus, “Small advertisers can reach customers the same way as large ones do – with no minimum spend and no upfront commitments. And this ads system helps small websites earn revenue from online advertising, just like large publishers. Government-mandated changes could disrupt this, and tilt the field at the precise moment that competition is thriving.”

And on it goes, “Unreasonable restrictions on how Google promotes our search engine would create friction for consumers and harm businesses” while “overbroad restrictions on distribution contracts designed to make Google Search easily available would create friction for people who just want to easily search for information. And those restrictions would reduce revenue for companies like Mozilla (reducing its ability to invest in its own browser) and Android smartphone makers (potentially raising phone prices).” 

It is also evident that Google is extremely concerned about restrictions the government might place on its plans to be a major force in AI. Here it is falling back on the catch-all caveat that DoJ interference in its AI strategy “would hamper competition” in a technology that is important for America’s technological and economic leadership.

Apparently, “Business models in AI, much less winners and losers, have yet to be determined, and competition globally is fierce. There are enormous risks to the government putting its thumb on the scale of this vital industry – skewing investment, distorting incentives, hobbling emerging business models – all at precisely the moment that we need to encourage investment, new business models, and American technological leadership.”

For a monolithic bureaucracy, the DoJ is moving quickly and will file a much more detailed plan to extend the regulation of Google by 20 November this year. Google has been given a deadline of 20 December to submit its response. Amit Mehta, the judge currently allocated to overseeing the progress of the lawsuit, will rule on the various remedies by August 2025.

But that won’t be the end of the matter. We can be sure that the deep-pocketed Google will prevaricate and appeal any and all judgments for as long as it can – and that could be for years on end.

– Martyn Warwick, Editor in Chief, TelecomTV