Informed Pulse

DOJ, States Formally Recommend a Google Breakup

By Paul Thurrott

DOJ, States Formally Recommend a Google Breakup

The U.S. Department of Justice (DOJ) and several U.S. states filed a set of proposed remedies in US v. Google late Wednesday, barely meeting the judge's November 20 filing date. As rumored, the federal agency recommended that Google be forced to divest itself of its Chrome web browser to deprive the company of the primary distribution point of its antitrust abuses in Search and online advertising.

But the DOJ's (and states') recommendations go well beyond that.

The Department also recommends that Google be forced to divest itself of Android or make major behavior changes that prevent it from abusing its mobile OS; halt exclusionary agreements with Apple, Samsung, and others; allow third parties to access its search results and other data; make major changes to its advertising business; and make other changes.

"For more than a decade, Google has unlawfully maintained its monopolies in general search services and search text advertising through a web of anticompetitive practices," the DOJ and states filing notes. " Google has manipulated its control of Chrome and Android to benefit itself, while sharing monopoly profits under conditions to induce third parties across the ecosystem to help Google maintain its monopolies. Google's exclusionary conduct has, among other things, made Google the near-universal default for search and ensured that virtually all search access points route users' valuable queries and interaction data to Google. Google's unlawful behavior has deprived rivals not only of critical distribution channels but also distribution partners who could otherwise enable entry into these markets by competitors in new and innovative ways. Google's conduct has resulted in significant anticompetitive effects -- causing 'market foreclosure,' 'preventing rivals from achieving scale,' and 'diminishing the incentives of rivals to invest and innovate'."

Federal judge Amit Mehta asked the DOJ and states to propose remedies that would "prevent future violations and eradicate existing evils" while providing a "comprehensive framework" to restore competition. This is a high bar, and it appears that the agency struggled to meet all these requirements, in part because the various components of Google's business are so intertwined and architected to work in harmony to protect and extend its dominance.

We will endlessly debate the specifics, but Judge Mehta's requirements for the eventual remedy are clear. Google illegally maintained and extended monopolies in Search online (text) advertising, and it must be prevented from doing so going forward. These markets must be opened to competition. And Google must be denied the benefits derived from its abusive conduct.

"The playing field is not level because of Google's conduct, and Google's quality reflects the ill-gotten gains of an advantage illegally acquired," the filing explains. "The remedy must close this gap and deprive Google of these advantages. Restoring competition to the markets for general search and search text advertising as they exist today will require reactivating the competitive process that Google has long stifled."s

This is what the DOJ and states came up with.

Halt all exclusionary "pay for play" contracts. Google must "stop third-party payments" to Apple, Samsung, Mozilla, and others "that exclude rivals by advantaging Google and discouraging procompetitive partnerships that would offer entrants access to efficient and effective distribution." It must also halt "self-distribution" of its Search and advertising products and services on Pixel, Android, and elsewhere,

Divest itself of the Chrome web browser. Chrome is "a key method for distributing search to consumers" and so Google must be forced to divest itself of the browser "so that rivals may pursue distribution partnerships that this 'reality of control' today prevents. Google must be prohibited from owning or investing in a web browser or any related product, including "query-based AI products."

Divest itself of the Android mobile OS or. Android is also "a key method for distributing search to consumers," but here the DOJ offers the judge two options: Force Google to divest itself of the mobile OS or require the firm to make behavioral changes with federal oversight that would "blunt Google's ability to use its control of the Android ecosystem to favor its general search services and search text ad monopolies as well as limit Google's ability to discriminate in favor of its own search and ads businesses." Should Google return to its illegal behaviors, the Court could then "return to the first option."

Prevent Google from engaging in "self-preferencing" behavior. Because it has consistently subverted organic search results to direct users to its own products and services in Search, Google must be prevented from doing so going forward.

Prevent Google from acquiring or investing in AI, browser, search, or advertising companies. To prevent future abuses, Google should be "prohibited from owning or acquiring any interests in search rivals, potential entrants, and rival search or search ads-related AI products, and it must immediately divest any such interests it owns."

Require Google to give third parties access to its search index, results, and other related data. "Through its unlawful behavior, Google has accumulated a staggering amount of data over many years, at the expense of its rivals," the DOJ notes. To remedy this "anticompetitively acquired advantage," Google must be forced to make its search index available at marginal cost, and on an ongoing basis, to rivals and potential rivals; to provide rivals and potential rivals both user-side and ads data for a period of ten years, at no cost, and on a non-discriminatory basis; provide publishers, websites, and content creators with data crawling rights; syndicate its search results for ten years, and more.

Force Google to reduce switching costs in online advertising. Because Google charges "supracompetitive" prices for online advertising and related services, it must now give advertisers "the information, options,and visibility into the performance and cost of Google Text Ads necessary to optimize their advertising across Google and its rivals." In short, it must halt its degradation of online advertising, which was done to advantage itself by paying advertisers less.

Deploy a Technical Committee to oversee Google's compliance. Because Google can't be trusted to simply comply with the Court's ruling, a Technical Committee will need to be created to ensure compliance. Here, the DOJ cites a similar (and successful) oversight of Microsoft in the wake of US v. Microsoft 20 years ago.

Prevent Google from side-stepping the remedies. The remedy must prevent Google from "frustrating or circumventing the Court's Final Judgment by manipulating the development and deployment of new technologies like query-based AI solutions that provide the most likely long-term path for a new generation of search competitors, who will depend on the absence of anticompetitive constraints to evolve into full-fledged competitors and competitive threats."

Prevent Google from engaging in retaliatory behavior. Because Google's partners will inevitably seek more profitable partnerships in the wake of this ruling, the firm must be prevented from retaliating against those partners.

"Given that third-party outreach and discovery on Google are ongoing, Plaintiffs [the DOJ and U.S. states involved in the case] will continue to investigate and evaluate the remedies necessary to restore competition to the affected markets," the filing notes. "Plaintiffs reserve the right to add, remove, or modify provisions of the PFJ [proposed final judgment] as needed following further engagement with market participants and additional remedies discovery."

Judge Mehta will hold hearings in early 2025 at which Google, the DOJ, and the states can issue final arguments about the proposed remedies. And he's said he'll issue his final ruling by August 2025.

Google has issued a public statement about the proposals. Interestingly, the firm agrees that halting its exclusionary agreements with Apple, Samsung, and Mozilla makes sense. But it claims the DOJ proposals go far beyond the requirements of the ruling against it.

"The U.S. Department of Justice (DOJ) tonight filed a staggering proposal that seeks dramatic changes to Google services," Google chief legal officer Kent Walker writes. "The DOJ chose to push a radical interventionist agenda that would harm Americans and America's global technology leadership. DOJ's wildly overbroad proposal goes miles beyond the Court's decision. It would break a range of Google products -- even beyond Search -- that people love and find helpful in their everyday lives ... DOJ's approach would result in unprecedented government overreach that would harm American consumers, developers, and small businesses -- and jeopardize America's global economic and technological leadership at precisely the moment it's needed most."

Google will file its own proposal in December, Walker says, and it will make a "broader case" at the hearings in early 2025. He also notes that this is just the beginning of a "long [appeals] process," which is fair enough: Google will obviously fight this every step of the way, as it should.

But his comments echo the belligerent language Microsoft used with antitrust regulators before it finally bowed to the inevitable, realizing that it was better to work with regulators and the courts so that it could have a say in the changes that will come. For now, we can simply wait to see where Judge Mehta lands. To date, he hasn't been very sympathetic to Google's wishes.

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