US DoJ may force Google to sell Android, AdWords; Break tech giant into smaller entities: Report

The United States Department of Justice (DoJ) is reportedly exploring the possibility of breaking up Alphabet Inc.’s Google as one of the potential actions following a significant court ruling. This ruling determined that Google had established an illegal monopoly over the online search market, as per a Bloomberg report.

Sources familiar with the matter have indicated that this move would be one of the most aggressive actions taken by Washington since the attempt to dismantle Microsoft Corp. over two decades ago.

Splitting and spinning off companies is not the only way
Although breaking up the tech giant is one option, less drastic measures are also being considered, such as compelling Google to share more data with competitors and implementing rules to prevent it from gaining an unfair advantage in the development of artificial intelligence (AI) products.

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It is anticipated that the government will pursue a ban on the exclusive contracts that were central to its legal case against Google. Should the Justice Department opt to move forward with a breakup, potential candidates for divestiture include Google’s Android operating system and its Chrome web browser.

Additionally, there is speculation that the sale of AdWords, the platform through which Google sells text advertising, could be forced as part of the remedy. The internal discussions within the Justice Department have gained momentum following a ruling by Judge Amit Mehta on August 5, which confirmed that Google had unlawfully monopolised the markets for online search and search text ads.

Google, however, plans to appeal the decision, even as Mehta has instructed both parties to prepare for the next phase of the case, which will involve government proposals for restoring competition, including a possible breakup.

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The outcome of this plan will ultimately hinge on Judge Mehta’s approval, and if enacted, it would represent the most significant forced breakup of a U.S. company since the dismantling of AT&T in the 1980s. In recent consultations with companies impacted by Google’s practices, Justice Department attorneys have expressed concerns about the advantages Google’s dominance in search provides it in developing AI technology. The government may also seek to restrict Google from requiring websites to permit the use of their content for some of Google’s AI products in order to appear in search results.

Breaking Up Google
Among the remedies being discussed by Justice Department officials is the divestiture of the Android operating system, which is currently used on approximately 2.5 billion devices globally. Judge Mehta’s ruling highlighted that Google forced device manufacturers to sign agreements to place its apps like Gmail and Google Play Store as defaults.

These agreements also mandate the pre-installation of Google’s search widget and Chrome browser in a manner that prevents their deletion, effectively stifling competition from other search engines.

This ruling follows a December verdict by a California jury, which found that Google had monopolized the distribution of Android apps. The Federal Trade Commission (FTC), which also enforces antitrust laws, has weighed in on this issue, stating that Google should not be permitted to benefit from illegal monopolization practices.

Furthermore, Google has reportedly paid up to $26 billion to companies to ensure that its search engine remains the default on devices and web browsers, with a substantial portion of this amount going to Apple Inc.

The ruling by Judge Mehta also determined that Google had monopolized the market for search text ads, which appear at the top of search results pages to direct users to specific websites. These ads, sold via Google Ads (formerly known as AdWords), have been a major revenue stream for Google, accounting for over $100 billion in 2020 alone.

If the Justice Department does not mandate the sale of AdWords, it may require Google to ensure that the platform is interoperable with other search engines.

Sharing data access and AI products
Another potential remedy being considered involves forcing Google to either divest or license its data to rival search engines like Microsoft’s Bing or DuckDuckGo. Judge Mehta’s ruling found that Google’s contracts ensured its search engine had access to far more user data than its competitors, making it challenging for them to compete effectively.

Similar measures have been enacted in Europe, where digital gatekeeper regulations require Google to share some of its data with third-party search engines.

However, Google has raised concerns about user privacy, stating that only limited information is shared under specific conditions. The idea of requiring monopolists to grant rivals access to certain technologies is not unprecedented. In a past antitrust case against AT&T, the company was compelled to provide royalty-free licenses for its patents.

Similarly, in the case against Microsoft, a settlement required the company to make certain application programming interfaces (APIs) available to third parties at no cost.

Regarding AI products, Google has long allowed its web crawler to access websites to ensure their appearance in search results. However, some of this data has recently been utilized to help Google develop AI technologies. In response to concerns from companies, Google introduced a tool last fall that allows websites to block scraping for AI purposes. Despite this, the opt-out feature does not apply to all uses.

Google’s recent introduction of “AI Overviews,” narrative responses that summarize information from search results, has also raised concerns. These overviews are integrated into search results, meaning that websites cannot opt out of being included in them. While these overviews currently appear in only a small percentage of searches, their rollout has not been without issues, with some content providing misleading or inappropriate suggestions.