DOJ’s Google breakup remedy puts tech world on notice

The US Justice Department said in a new court filing that it may recommend a break up of Google (GOOG, GOOGL) as an antidote to unhealthy competition in the search engine market, showing just how far Washington is willing to go to rein in Big Tech.

DOJ lawyers used a 32-page document to outline a framework of options for DC District Court Judge Amit Mehta to consider, including “behavioral and structural remedies that would prevent Google from using products such as Chrome, Play, and Android to advantage Google search.”

Google in a blog post said that “DOJ’s radical and sweeping proposals risk hurting consumers, businesses, and developers.”

Its stock fell slightly in pre-market trading Wednesday.

The proposal is the first step from the Justice Department to break up a tech empire since it tried to do so more than two decades ago with Microsoft (MSFT).

That case — which the DOJ referenced in its Tuesday court filing — resulted in a 2002 settlement that opened the door to broader competition in the internet browser software market.

The move by DOJ also sends a signal to other tech giants currently facing antitrust cases from DOJ and other Washington regulators as part of a wide-ranging effort by the Biden administration to rein in what it views as anticompetitive behavior across a number of industries.

The administration has already alleged anticompetitive conduct against tech giants Apple (AAPL) and Amazon (AMZN) and claimed that Microsoft’s acquisition of gaming giant Activision Blizzard would create a gaming market monopoly.

The case against Google targeting its dominance in search resulted in a landmark decision in August, where DC District Court Judge Amit Mehta sided with DOJ and concluded Google illegally monopolized the online search engine market and the market for search text advertising.

Mehta concluded that Google’s agreements with browser providers and devices powered by Google’s Android operating system stifled rivals from entering and growing within the markets.

It will now be up to Mehta to decide what should happen now in a separate “remedies” phase of the trial that will likely start in 2025.

DOJ is expected to provide a more detailed document by Nov. 20 outlining these remedies. But the 32-page document filed late Tuesday offers several points of focus beyond forcing Google to sell parts of its business.

One has to do with contracts that secure Google’s search engine as a default on internet browsers and internet-connected devices that use Google’s Android operating system.

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Google pays as much as $26 billion per year to maintain its position on mobile devices like Apple (AAPL) and Samsung smartphones.

Justice Department lawyers said to prevent further harm they may seek to limit or terminate Google’s use of those contracts that use Chrome, Play and Android to advantage Google search, as well as “other revenue-sharing arrangements related to search and search-related products, potentially with or without the use of a choice screen.”

The DOJ could also ask the judge to force Google to share with rival browsers and search providers the data that it uses to refine its search algorithms, and limit the company’s dominance over search text ads.

DOJ suggested the judge should also consider blocking Google from illegally monopolizing related markets, in addition to the search and search text advertising markets.

It may ask the judge to force Google to give websites more ability to “opt out” of “any Google-owned artificial-intelligence product.”

Google pushed back on the DOJ’s suggestions.

“We believe that today’s blueprint goes well beyond the legal scope of the Court’s decision about Search distribution contracts,” Lee-Anne Mulholland, Google’s vice president of regulatory affairs, wrote in a blog post.

Google has promised to appeal. And Judge Mehta could hold off on any orders to alter Google’s behavior while it challenges his ruling in D.C.’s Circuit Court of Appeals.

The judge would lose the right to impose remedies if Google is found not to have broken the law on appeal.

And even if Google fails and is ordered to change its behavior, Judge Mehta could later adjust his orders to better ensure competition is restored.

Google faces antitrust challenges on other fronts. It is currently defending itself in a separate lawsuit from DOJ alleging a monopoly in the technology used to but and sell online ads.

And earlier this week another federal judge ordered Google to open up its app store as part of the resolution of a suit brought by Epic Games Inc.

DOJ cited that ruling in its Tuesday court filing that outlined a Google breakup as one possible remedy, noting that the judge in the Epic Games case said remedies should “bridge to moat” to combat network effects.

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