Although the government has put forward antitrust demands against Google, even not ruling out the option of splitting it, experts warn that this process will be very challenging.
Yesterday, government lawyers told the court that they are studying the possibility of breaking up Google as one of the remedies for internet search monopolies. $Alphabet-A (GOOGL.US)$ However, the breakup was only mentioned in passing, and most of the 10-page document discusses the government's potential final remedy proposal that may be presented to Judge Amit Mehta of the District of Columbia Federal Court on November 20, mainly focusing on restrictions on Google's commercial activities.
Judge Mehta ruled in August that Google's practice of paying fees to smartphone manufacturers and web browser developers to set Google as the default search engine constituted a search engine monopoly. He will make a ruling on the remedies next August.
Despite headlines warning of structural threats to Google, the document only briefly mentions traditional antitrust actions, such as discussions on potentially separating Google's search business from Chrome browser, Android operating system, or Play app store, with specific details still unclear.
"It's just speculation at this stage," said Rebecca Haw Allensworth, an antitrust professor at Vanderbilt University Law School. "This document is meant to give the government more discretion in what they ultimately request."
Alphabet's stock price has not experienced the same trends as standard oil or$AT&T (T.US)$With that split, the stock price only fell slightly by 1.5% to close at $161.86.
Wedbush analyst Dan Ives wrote: "We believe that structural changes resulting from this case are unlikely for Google, and we expect any significant impact to focus on search distribution business."
Some antitrust scholars currently believe that the court should consider splitting tech giants like Alphabet. Boston University Law Professor Rory Van Loo is one of them. He points out that after the splitting of monopolies in the oil and telecom industries, both industries continued to thrive, with good returns for shareholders.
"Defendants always warn of catastrophic consequences of a split," Van Loo said. "But if the facts of the case support it, judges should not hesitate to order a split."
The anti-monopoly leadership of the Biden administration holds similar views. On Tuesday, the "remedy framework" submitted by the Department of Justice and state attorneys general mentioned that Google's internal search index, distribution network, user data, artificial intelligence, and advertising network are intertwined, forming an anti-competitive "moat".
They believe that the remedies for the Google platform must "cross the moat." This refers to the ruling of Judge James Donato of the San Francisco Federal Court on Monday. He ordered Google to open its Android app store to mobile app developers such as Epic Games within three years. Google is appealing.
Unsurprisingly, Google stated that the government's remedies would bring disaster. Lee-Anne Mulholland, Deputy Head of Google's Regulatory Affairs, stated that splitting Chrome or Android would make them "collapse." She also mentioned that the reason smart phones are cheaper is because Google provides Chrome and Android for free. Other proposals from the Department of Justice—such as forcing Google to share user search data with competitors—would threaten user privacy.
However, whether Google should be split and whether Judge Mehta will do so in this antitrust case are two different matters.
"This judge won't do that," predicted Haw Allensworth of Vanderbilt University. She pointed out that the Department of Justice has filed another case in the federal court in Alexandria, Virginia, accusing Google of monopolizing the online advertising market through its ad tech products.
Two district judges cannot coordinate their remedies, so they are unlikely to issue conflicting orders to split the company.
"If you're going to split Google, are you really going to split it twice?" Haw Allensworth asked. "Shouldn't we be considering the company as a whole?"
Editor/Rocky