The United States considers rare anti-monopoly measures: splitting up Alphabet

According to informed sources, in a landmark court ruling that found Alphabet (GOOGL.US)'s Google monopolized the online search market, the U.S. Department of Justice is considering the rare option of proposing to split Google under Alphabet. This would be the first time the U.S. government has split a company on the grounds of illegal monopoly since the failed effort to split Microsoft Corporation (MSFT.US) 20 years ago. Less severe options include forcing Google to share more data with competitors and taking measures to prevent it from gaining unfair advantages in artificial intelligence products.

In any case, the U.S. government is likely to seek an injunction against exclusive contracts, which are at the core of the Google case. Sources say that if the U.S. Department of Justice pushes forward with the split plan, the most likely departments to be divested are the Android operating system and Google's web browser Chrome. One source mentioned that officials are also considering attempting to force Google to sell its AdWords platform used for text advertising.

On August 5th, U.S. Judge Amit Mehta ruled that Google illegally monopolized the online search and search text advertising market, intensifying discussions within the U.S. Department of Justice. Google has stated that it will appeal this ruling, but Mehta has ordered both parties to begin planning for the second phase of the case, which will involve proposals to restore competition by the U.S. government, including possible requests for a split. The U.S. government's plan will need Mehta's approval, and he will instruct the company to comply. If Google is forced to split, it will be the largest U.S. corporate split since the breakup of AT&T (T.US) in the 1980s.

Sources say that U.S. Department of Justice lawyers consulting with companies affected by Google's actions have raised concerns, believing that Google's dominant position in the search field gives it an advantage in developing artificial intelligence technology. As part of the remedies, the U.S. government may seek to prevent the company from forcing websites to allow their content to be used in some of Google's artificial intelligence products to appear in search results.

Sources say that one of the most commonly discussed remedies by U.S. Department of Justice lawyers is to require Google to divest its Android operating system department, which is used on approximately 2.5 billion devices worldwide.

Charge One: Monopolizing Android Applications

In his ruling, Mehta found that Google required device manufacturers to sign agreements to access its Gmail and Google Play Store applications. He found that these agreements also required Google's search widgets and Chrome browser to be installed on devices in a way that cannot be removed, effectively blocking competition from other search engines.

Before Mehta made this decision, a California jury ruled in December last year that Google monopolized the distribution of Android applications. The judge in that case has not yet decided whether to grant immunity. The U.S. Federal Trade Commission (FTC), responsible for enforcing antitrust laws, submitted a brief on this case this week and stated in a statement that Google should not be allowed to "profit from illegal monopolies." Google paid up to $26 billion to companies to make its search engine the default setting for devices and web browsers, with $20 billion paid to Apple Inc. (AAPL.US) The Mehta ruling also found that Google monopolized the ads appearing at the top of the search results page, known as search text ads, used to attract users to visit websites. These ads are sold through Google Ads, which was renamed AdWords in 2018, providing marketers with a way to advertise based on certain search keywords related to their business. Testimony from last year's trial showed that about two-thirds of Google's total revenue comes from search ads, exceeding $100 billion by 2020.

Sources say that if the U.S. Department of Justice does not require Google to sell AdWords, it may demand interoperability requirements to seamlessly integrate with other search engines.

Charge Two: "Privilege" of Search Engine Data Access

Another option is to require Google to strip its data or authorize it to competitors, such as Microsoft's Bing or DuckDuckGo. The Mehta ruling found that Google's contracts not only ensured that its search engine obtained the most user data—16 times more than the second-ranked competitor—but also that these data flows prevented its competitors from improving their search results and effectively competing.

The recently enacted "Digital Gatekeeper Rules" in Europe also make similar demands, requiring Google to provide some data to third-party search engines. The company has publicly stated that sharing data could raise privacy concerns, so it only provides search information that meets specific thresholds.

In past cases, requiring monopolists to allow competitors access to some technology has been a remedy. In the first case against AT&T by the U.S. Department of Justice in 1956, the company was required to provide royalty-free licenses for its patents. In the antitrust case against Microsoft, the settlement agreement required the tech giant to provide some so-called application programming interfaces (APIs) to third parties for free. APIs are used to ensure that software programs can effectively communicate and exchange data.

Charge Three: AI Product Scraping Website Data

For years, many websites have allowed Google's web crawlers access to ensure they appear in Google's search results. However, recently, some of this data has been used to help Google develop its artificial intelligence.

Last fall, after many companies complained, Google created a tool that allows websites to block AI scraping. But this opt-out option did not address the underlying issue. In May of this year, Google announced that some searches will now come with "AI Overviews," a narrative response that eliminates the need to click on various links. This AI-driven panel appears below the query, displaying summarized information extracted from Google search results.

Google does not allow website publishers to opt out of appearing in AI Overviews, as it is a "feature" of search, not a separate product. Websites can block Google from using snippets, but this applies to both search and AI summaries. While AI Overviews only appear in a small number of searches, the feature's rollout is unstable as some snippets provide awkward suggestions, such as recommending people eat rocks or spread glue on pizza