Key Points
- DOJ proposes remedies to break up Google’s search monopoly, including divesting Chrome and Android.
- Restrictions on data collection and AI use could weaken Google’s market position.
- Competitors like DuckDuckGo, Microsoft Bing, and Meta could benefit from these measures.
- Analysts doubt the feasibility of these broad remedies, expecting legal challenges to follow.
The U.S. Department of Justice (DOJ) has proposed a series of remedies to curb Google’s dominance in the search market. These remedies could weaken Google’s core profit engine and hamper its progress in artificial intelligence (AI). Although the case outcome could take years, analysts suggest these remedies may substantially damage Google’s business.
Among the DOJ’s proposed solutions, one major possibility is forcing Google to divest key parts of its operations, such as its Chrome browser and Android operating system. These assets have helped Alphabet Inc. (GOOGL.O), Google’s parent company, maintain what the DOJ has deemed an illegal monopoly in online search. Additional remedies include prohibiting Google from collecting sensitive user data, mandating that it share search results and indexes with rivals, and allowing websites to opt out of having their content used for AI training. The DOJ also suggested having Google report to a “court-appointed technical committee.”
These proposals come as part of the DOJ’s ongoing antitrust actions against Google, which have shaken Alphabet investors. Following the news, Alphabet shares dropped 1.5%, closing at $161.86 on Wednesday. Monday’s ruling requiring Google to open its app store to competitors further compounded investor concerns.
According to Gil Luria, senior software analyst at D.A. Davidson, the DOJ’s remedies aim to dismantle Google’s success formula, especially by limiting its access to user data. It could force Google to share data with competitors or stop gathering it altogether, which could strengthen rivals and spur new competition.
The AI-related remedies could have a particularly disruptive effect on Google when it faces increasing pressure from emerging competitors, such as OpenAI, the developer of ChatGPT, and AI-powered search engines like Perplexity. Analysts, including Mark Shmulik of Bernstein, warn that these restrictions could tie Google’s hands in the ongoing AI race, giving competitors like Microsoft Bing, DuckDuckGo, and Meta Platforms an advantage.
Despite the proposed measures, some analysts remain skeptical about their feasibility. Adam Kovacevich, CEO of tech industry trade group Chamber of Progress, criticized the DOJ’s approach as overly ambitious and unlikely to survive legal appeals. Meanwhile, AJ Bell’s investment director, Russ Mould, said that while the risk of a forced breakup has been known for some time, most investors seem unconvinced that it will happen.
