The Department of Justice kicked off its remedy hearing for Google on Monday, meaning the Court will decide what’s next for Google since it has ruled the search giant is a monopoly.
The DOJ first filed the lawsuit in 2020, and last year, a federal judge ruled that Google had violated antitrust law by spending billions to make its search engine the default on iPhones, Android devices, and web browsers. According to court documents, Google paid Apple $20 billion in 2022 to be Safari’s default search engine.
Proposed remedies include separating Chrome and Android through a spin-off or sale, sharing search data with rivals, and ending search revenue-sharing agreements with Apple to make Google the default search engine on iOS.
“If Google’s conduct is not remedied, it will control much of the internet for the next decade and not just in internet search, but in new technologies like artificial intelligence,” Assistant Attorney General Gail Slater said in remarks before opening arguments in the Google Search remedies trial on Monday.
Meanwhile, Google doesn’t plan to go down without a fight, and it plans to appeal. In a blog post, Lee-Anne Mulholland, Google’s vice president for regulatory affairs, called the DOJ’s remedy proposals “unnecessary and harmful.”
Mulholland wrote that the DOJ’s proposals would make it harder for people to use Google search, raise prices on mobile phones since device makers rely on search distribution revenue, lead to “jeopardizing your privacy and security” by sharing sensitive search data with other companies, and “hamstring” how Google develops AI as it embarks on a technological race with China.
As for the remedy to split Chrome and Android, Mulholland wrote that this would “hurt businesses built on them,” “undermine security,” and increase device costs.
With Google’s plans to appeal, analysts have said a final decision could be delayed several more years.
“Bottom line, Google will fight this proposed settlement tooth and nail. Do not expect any changes til all the dust settles after the appeal case is heard,” Dan Morgan, senior trust portfolio manager at Synovus, wrote in a note to investors.
On April 17, Judge Leonie Brinkema of the US District Court for the Eastern District of Virginia also ruled that Google violated antitrust law by monopolizing the digital advertising industry. The DOJ has asked the court to have Google divest Google Ad Manager, which is used for publishing and selling ads.
Breaking up Chrome and Android
Google would experience a “big loss” if it had to separate its Chrome business, given all the data the search giant collects from search results and targeted advertising in Chrome, said Dave Heger, senior analyst at Edward Jones.
“I would be surprised if it went all the way to forcing a separation of Chrome, but I do kind of wonder about the revenue sharing agreement and default browser if there would be some kind of focus on that kind of relationship,” Heger told Business Insider.
Likewise, Android generates revenue for Google in multiple ways, such as through the Play Store and by driving users to other Google services like search, YouTube, and Gmail.
“All-in-all, the divestiture of Chrome and possibly Android would detrimentally impact Google’s ability to direct traffic on the desktop and mobile device, negatively impacting both revenues/profits,” Morgan wrote.
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Google’s search deal with Apple
Ending the revenue-sharing agreement with Apple could save Google billions of dollars, although it means Google would no longer be the default search engine for iPhone users and would be at a loss if Apple made a deal with another browser.
Also, if fewer people use Google, it lessens the value of Google search as the company modifies its algorithms based on data it collects from users’ search results.
“It drives a lot of traffic when you think about how many people are doing searches on their phone,” Heger said. “It would certainly have an impact.”