The U.S. Department of Justice demands Google to divest the Chrome browser, experts question feasibility
The U.S. Department of Justice has demanded that Google divest its Chrome browser and proposed measures to limit its dominance in the search market, but experts believe these proposals may face legal challenges. Google has been found to illegally monopolize the search market, and prosecutors are asking it to sell Chrome and share data with competitors. Experts point out that the Trump administration may alter this effort, and legal battles could last for years. Google has called this move government overreach, which could harm consumers and small businesses
According to the Zhitong Finance APP, U.S. antitrust regulators are demanding that Google (GOOGL.US) divest its Chrome browser and have proposed other measures to limit the company's dominance in search, but experts believe these proposals may face legal challenges due to their extreme nature.
In August of this year, Google was found to have illegally monopolized the search market. U.S. Department of Justice prosecutors proposed to the judge on Wednesday that Google must sell its Chrome browser, share data and search results with competitors, and possibly sell its Android smartphone software.
These proposals are part of a landmark case aimed at reshaping how users find information. However, experts say the incoming Trump administration may alter this effort, and legal battles could last for years.
Resistance to Divesting Google
Kevin Walkush of Jensen Investment Management stated, "I think this demand is a bit excessive." Jensen Investment Management holds Google stock and is skeptical about the Chrome divestiture plan.
In the early 2000s, the U.S. Department of Justice accused Microsoft (MSFT.US) of illegally monopolizing the web browser market and sought to break it up. The ruling was overturned by an appellate court, and Microsoft ultimately reached a settlement with the U.S. Department of Justice.
Walkush anticipates that this case will take years to resolve as Google appeals. "The wheels of justice do not turn quickly," he said.
Google has called the U.S. Department of Justice's actions "an unprecedented overreach by the government that will harm American consumers, developers, and small businesses."
The case may also face challenges from Trump.
Although the search lawsuit against Google began during Trump's first term, Trump stated in October that he might not pursue breaking up Google, as it could harm the U.S. tech industry.
Chrome is the most widely used web browser and is a pillar of Google's business, providing valuable user data and helping the company target ads effectively. Google's total revenue for the most recent quarter was $88.3 billion, with more than half coming from search advertising.
It is estimated that Chrome holds two-thirds of the global browser market share, but as an independent browser, its value would plummet.
Megan Gray, former chief legal officer of search engine competitor DuckDuckGO and a former attorney at the Federal Trade Commission, stated, "The value of Chrome to Google is that it enhances its advertising and search businesses. Without that, Chrome is just a data proxy."
Critics argue that a forced sale would not address several key issues raised in the U.S. Department of Justice lawsuit, including search monopolization.
Gus Hurwitz, a senior fellow and academic director at the University of Pennsylvania Carey Law School, stated, "The remedies proposed by the U.S. Department of Justice will face significant resistance," as Chrome can run search engines other than Google's. "The courts want any remedies to have a causal relationship with the underlying antitrust issues. Divesting Chrome absolutely does not solve that problem." Other restrictive measures are "too harsh"
The U.S. Department of Justice has proposed a complete ban on Google from providing incentives to favor its search engine. This includes Google's partnership with Apple (AAPL.US), where Google pays Apple billions of dollars each year to make Google Search the default search engine on Apple smartphones.
Evercore analysts stated that the proposed restrictions are "too harsh."
Hurwitz from the University of Pennsylvania noted that given the popularity of Google Search, Apple might continue to use Google as the default search engine even without any agreements or payments.
The U.S. Department of Justice also requires Google to authorize search results at a symbolic cost and to share the user data it collects with competitors for free.
D.A. Davidson analyst Gil Luria mentioned that it is difficult to determine the impact of Google opening its search data until the terms are clearer. The Center for Journalism & Liberty stated that Google licensing its search data to news publishers would have a "transformative" impact, as it would help publishers better understand their audience.
As of the time of writing, Google was down nearly 1% in pre-market trading. The stock closed down 5% on Thursday