The U.S. Department of Justice is considering significant actions aimed at dismantling Google’s dominance in the search market, a move that analysts warn could undermine the company’s primary revenue source and hinder its advancements in artificial intelligence.
However, the final resolution of this situation may still be years away.
On Tuesday, the DOJ announced it might request a judge to compel Google to divest key components of its business, including its widely used Chrome browser and Android operating system, arguing that these assets contribute to an illegal monopoly in online search.
This proposal is just one of several potential remedies under review by prosecutors. Other options include restricting Google from collecting sensitive user data, requiring the company to share search results and indexes with competitors, allowing websites to opt out of their content being used for AI training, and making Google report to a “court-appointed technical committee.”
Experts indicate that these remedies could significantly impact Google’s business model, potentially reducing its revenues while creating more opportunities for competitors. Gil Luria, managing director and senior software analyst at D.A. Davidson, remarked, “The DOJ has reverse engineered Google’s formula for success and is intent on dismantling it.” He noted that the proposed data-sharing measures could empower competitors by forcing Google to either share its data or stop collecting it entirely.
Concerns are also growing about the potential effects on Google’s AI initiatives, especially as the company faces increasing competition from emerging players like OpenAI and Perplexity. Research firm eMarketer predicts Google’s share of the U.S. search ad market may drop below 50% for the first time in over a decade by 2025.
Mark Shmulik, an analyst at Bernstein, cautioned that regulatory constraints could hinder Google’s competitive edge in the AI landscape, stating, “The last thing Google needs right now in the broader AI battle is having to fight with one hand tied behind their backs by regulators.”
Companies such as DuckDuckGo and Microsoft Bing, along with AI competitors like Meta and Amazon, are expected to benefit from any successful remedies. Kamyl Bazbaz, senior vice president of public affairs at DuckDuckGo, emphasized the need for a comprehensive approach to address Google’s market power, stating, “It will require a range of behavioral and structural remedies to free the market.”
However, some industry observers express skepticism about the likelihood of these remedies succeeding. Adam Kovacevich, CEO of the Chamber of Progress, characterized the DOJ’s approach as a “remedy spaghetti” strategy that may grab headlines but lacks legal viability. He cautioned that broad remedies often struggle to survive the appeals process.
Following this announcement, Alphabet’s shares fell as much as 2.8%, reflecting investor apprehension. Nevertheless, Russ Mould, investment director at AJ Bell, noted that investors seem to believe a forced breakup is unlikely, suggesting that the risks have been anticipated for some time.
