The U.S. considers split up Google’s business and the giant revolts: “Splitting Chrome or Android would destroy them”

The U.S. Department of Justice (DOJ) has proposed a framework of solutions to address Google’s anticompetitive practices, as the company has been accused of fostering monopolies in the general search and search advertising markets. With these proposals, the DOJ aims to restore competition in these sectors, which will also impact related markets such as artificial intelligence (AI) and digital advertising.

The August precedent: “Google is a monopolist”

This past August, U.S. District Judge Amit P. Mehta concluded that Google had acted as a monopolist and used its monopoly power to set supra-competitive prices for search text ads. In the ruling, the court determined that Google’s distribution agreements are exclusive and have anticompetitive effects, with the company failing to provide valid procompetitive justifications for these agreements​​. “Google is a monopolist, and it has acted to maintain its monopoly,” the judge explained.

The proposals outlined in this new document build on that historic ruling and are designed to dismantle the entry barriers Google has erected, preventing the company from monopolizing future technological markets​​.

Additionally, the text addresses a long-standing issue hovering over the tech giant: the potential forced breakup of its business.

“The plaintiffs are considering structural and behavioral remedies that would prevent Google from using products like Chrome, Play, and Android to leverage Google Search and related search products and features, including emerging search access points and features like artificial intelligence, over rivals or new entrants (…) Google’s long history with the Chrome browser, with its pre-installed default Google Search, significantly reduces the distribution channels available, thereby discouraging the emergence of new competitors. The Google Play Store is essential on all Android devices, and Android agreements are, of course, a vertical tool through which Google enforces anticompetitive restrictions on distribution.”

4 Key Areas of Action

The DOJ is proposing interventions in four main areas:

1. Search Distribution and Revenue Sharing

According to the document, Google has controlled distribution channels for over a decade through agreements and payments to partners that stifle competition. These agreements have allowed Google to dominate the most popular channels via contracts with device manufacturers and browser developers, ensuring that Google Search remains the default search engine on most devices in the U.S.

In the August ruling, it was established that these agreements led Android device manufacturers, such as Samsung and Motorola, to preinstall Google’s search engine and other Google apps on their devices. This effectively ensured that Google would be the default search engine on most Android devices​​.

By doing so, Google not only eliminates competition but also ensures that rivals like Bing or smaller search engines do not have equal opportunities to compete.

The document proposes limiting or even banning these payments, which would force manufacturers to evaluate other options based on the product’s quality rather than financial incentives. Another option under consideration is the implementation of “choice screens” on devices and browsers, similar to those applied in Europe after antitrust cases. These screens allow users to select their preferred search engine during the initial setup of the device or browser, rather than imposing Google Search.

2. Generation and display of search results

The DOJ aims to prevent Google from using its market power to favor its AI products at the expense of third parties. Competitors must have equal access to web content and AI generation tools​​.

The DOJ expresses concern that Google, with control over a vast search and advertising ecosystem, could exploit this advantage to favor its own generative AI products over those of competitors. These technologies allow Google to generate more complex and detailed responses for users by utilizing third-party content (such as websites or databases) without necessarily providing the recognition or benefits those third parties deserve.

This approach gives Google considerable control over how search results are generated and displayed. Through the use of generative AI and tools like Retrieval-Augmented Generation (RAG), Google can generate responses without redirecting users to the original websites. This reduces web traffic to third-party sites, harming content creators and other web services that rely on the traffic Google used to send their way​​.

Among the proposed measures, the DOJ is considering banning Google from using contracts or other practices that undermine rivals’ access to web content. The aim is to level the playing field by requiring Google to allow websites indexed for Google Search to opt out of contributing to the training or appearance of any Google-owned AI products or features, such as AI-generated summaries within Google Search.

3. Data accumulation and usage

Google has benefited from a massive accumulation of data through its monopolistic behavior. The DOJ suggests that Google should be required to share certain data with its competitors to level the playing field. Additionally, the DOJ is evaluating how to implement this without compromising user privacy​​.

4. Advertising and monetization

Google has used its search advertising monopoly to charge excessive prices. According to the document, Google has limited advertisers’ choices by imposing supra-competitive prices for text ads. The document emphasizes that the entry barriers in this market are so high that they have discouraged investment in new search platforms. This is due to the extraordinary resources required to build and monetize a competitive search engine.

As a result, measures are being evaluated to:

1. Fostering competition by reducing entry barriers: This would enable new competitors to access the search advertising market, which has been dominated by Google. By lowering these barriers, it aims to open the market to new platforms and innovations.
2. Addressing Google’s scale, including its use of emerging technologies like AI: Tools such as Performance Max have reinforced Google’s monopoly in text ads.
3. Licensing or syndicating Google’s ad feed independently of its search results: This would allow other players to monetize ads more fairly without relying on Google’s ecosystem. Specifically, Google would enable third parties to access its ad system (ad feed or inventory) without requiring those ads to be tied to Google Search results. Google’s ad feed could be made available to external portals or networks, allowing them to display ads from Google without using Google’s search engine as the basis. This proposal would allow other platforms and search engines to monetize web traffic independently of Google’s infrastructure.
4. Ensuring transparency for Google advertisers: The DOJ aims to provide advertisers with clear information about search query reports and ad auctions, giving them the option to opt out of certain features, such as keyword expansion and broad match. This would give advertisers more control and insight into their ad campaigns, improving decision-making and reducing reliance on Google’s automated features.

An oversight committee

The text later explains that, in addition to the “structural” sanctions, which could impact the division of Google’s business, the creation of an independent technical committee is being considered. Google would be required to fund and report to a court-appointed committee responsible for overseeing compliance and monitoring for any evasive conduct or retaliatory actions against competitors​​. Additionally, Google would be prohibited from holding stakes in competing companies to avoid conflicts of interest​​.

Google’s answer

Google’s response was swift. In a statement issued just a few hours later, the company contested the U.S. Department of Justice’s (DOJ) proposals. Google expressed concern that the DOJ appears to be pursuing a broader agenda that could lead to unintended consequences for consumers, businesses, and U.S. competitiveness. According to the company, the DOJ’s proposals go beyond the original issue of search contracts and could negatively impact technological innovation and the consumer experience.

En su comunicado, Google destaca varios puntos clave:

1. Division of Chrome and Android: Google argues that separating Chrome or Android from the company could harm their business models, reduce investment in security, and raise device prices. Google claims that this measure would not only affect its products but also the industries that rely on them, from mobile phones to applications:“Splitting Chrome or Android would destroy them (…) We have invested billions of dollars in Chrome and Android. Chrome is a secure, fast, and free browser, and its open-source code serves as the foundation for numerous competing browsers. Android is a secure, innovative, and free open-source operating system that has enabled a wide variety of choices in the smartphone market, helping keep phone costs low for billions of people. Since both Chrome and Android help people access the web and use our products, we offer them (along with their underlying code) for free. Few companies would have the ability or incentive to maintain them as open-source, or to invest in them at the same level we do. Make no mistake: splitting them would change their business models, raise device costs, and weaken Android and Google Play in their competition with Apple’s iPhone and the App Store.”
2. Privacy and Security: One of the DOJ’s proposals is that Google share search queries and results with competitors. Google warns that this could compromise user privacy, as these queries often contain sensitive information. In the hands of companies without strong security measures, these data could be exploited by malicious actors. Google states, “While sharing Google’s search results with others might create some copycats, it could also reduce incentives for other companies to truly innovate in search.”
3. Impact on AI Innovation: Google argues that government intervention could slow the development of its artificial intelligence tools at a crucial moment for U.S. technological and economic leadership. Google maintains that imposing restrictions would distort incentives and could affect global competition in this field.
4. Online Advertising Market: Google contends that the proposed changes to the online ad market could reduce the value of its advertising services for small businesses and publishers, affecting their revenue and making ads less effective for consumers.

Image: Flux Schnell