Will the “splitting event” that hasn't been seen in over 40 years be repeated in the US? Google (GOOGL.US) and the government go to court again over “antitrust”

The Zhitong Finance App learned that since the split of AT&T (AT&T) in 1982, US government departments have not split any local US companies. Today, the US government is trying to persuade a judge to make Google (GOOGL.US), the search engine leader under the American tech giant Alphabet Inc., the next target of the US business to be split.

On Monday local time, Alphabet's Google will face off fiercely with the US Department of Justice and dozens of state-level attorneys general in a Washington court to debate what antitrust remedies the judge will order to prevent the company from continuing to monopolize the online search engine and online advertising market.

Remedies proposed by the US government's antitrust regulators include changes such as requiring Google to sell its Chrome browser business, authorizing internal search engine data to competitors, and stopping paying huge fees to gain exclusive status on other online services and terminals.

Google, on the other hand, firmly stated that the government's proposals would damage a range of products that people use every day, damage America's leading position in technology, and thus hurt American consumers. Google's vice president of regulatory affairs, Lee-Anne Mulholland, said in a blog post on Sunday local time that the US Department of Justice's proposal would “push up all benchmark prices and significantly slow down the pace of innovation.”

According to information, Google representatives have opposed the forced sale of the Chrome browser business and proposed an alternative antitrust remedy: after users are allowed to automatically select their preferred default browser, the company can still share related revenue with competitors.

The final trial decision rests with US District Judge Amit Mehta. Last August, Mehta determined that Google had an illegal monopoly in the Internet search field. Starting this Monday, he will hold a three-week hearing on how to remedy the damage caused by Google's market dominance and monopoly position, and listen to both parties' testimonies during the trial. He said his ruling is most likely to be handed down in August of this year.

In a monopoly ruling report, Mehta stated that Google has illegally dominated the online search and online advertising market by paying more than $26 billion to technology companies such as Apple (AAPL.US) or other interested parties to make their search engine the default browser option on smartphones and web browsers, effectively blocking any other competitor's path to success.

This latest antitrust trial is the latest example of the escalating antitrust pressure faced by Google in recent years. Just a few days ago, another federal judge ruled in another case that Google has unlawfully monopolized the broad online advertising technology market. The decision will trigger another so-called “antitrust remedy hearing” in the next few months.

Google's antitrust remedy procedure is the first time since US tech giant Microsoft (MSFT.US) successfully “came out of the shell” in an antitrust case 25 years ago that a US court considered whether to split a major technology company. If Mehta were to eventually force Google to sell its Chrome browser business, it would be the first time since the split of “Ma Bell” (Ma Bell) — later AT&T — in 1982. Since then, an antitrust case by the US Department of Justice has led to a complete split in the US.

In a 286-page preliminary ruling last year, Mehta wrote: “Google's distribution agreement blocks a large share of the general search services market and harms competitors' competitive opportunities.” He pointed out that through its distribution monopoly business on smartphones and mobile devices or PC browsers, Google has been able to continue to drastically increase online advertising prices without being affected to any extent.

The US government seems anxious for Google to sell its Chrome browser business, license search data to competitors, and stop paying for other services and exclusive status on consumer devices.

“A rare consensus”

The ruling is the result of antitrust investigations and related lawsuits carried out by US government departments over many years. It also shows a “rare consensus”, or “extraordinary alignment” between the Trump administration and the Biden administration in curbing the power of tech giants.

Google-related antitrust cases date back to the Trump administration's first term, when the US Department of Justice launched a large-scale investigation into almost every part of the company's business. In October 2020, the US Department of Justice officially filed the Google search engine case; the case was then continued by the Biden administration and won a major victory in the trial. The case involving Google's advertising technology business also stemmed from this investigation and comprehensive accusation, and was brought by US government antitrust enforcers during the Biden administration.

The US Department of Justice during Trump's first term, and the so-called Federal Trade Commission (FTC) also attacked Apple and Amazon (Amazon.com Inc.) Also, Meta Platforms Inc., still known as Facebook at the time, launched a detailed antitrust investigation. Previously, they believed the US government had taken a “laissez-faire” attitude towards the world's largest technology companies. The Biden administration continued these cases and filed an antitrust lawsuit against Apple in addition to the Google ad technology case; at the same time, an antitrust case involving the Federal Trade Commission's recent request to split Meta is also being tried in Washington.

At the upcoming hearing, Judge Mehta will hear from a number of executives including Google CEO Sundar Pichai and Apple's senior vice president Eddy Cue. Employees of companies such as Microsoft, OpenAI, Verizon Communications Inc., Mozilla Corp., and numerous economists and other expert types of witnesses are also expected to testify in court.

Potentially significant opposition

Needless to say, the US Department of Justice is likely to have major objections because many witnesses do not support their antitrust remedy proposals. For example, if the US Department of Justice's plan is adopted, Apple will also lose billions of dollars in revenue; other browser product developers are also unwilling to lose Google's payment channels and related access rights. Furthermore, not all of the companies involved agree to split Google's Chrome browser business e.

Regardless of Mehta's ruling, it will have a profound impact on the US government's strong integrated ability to regulate the technology industry and more broadly regulate corporate business concentration. However, Google is expected to insist on continuing to appeal and possibly bring the case to the US Supreme Court, so it may take several years for any rectification or anti-monopoly remedy to take effect, rather than take effect immediately this year.

Since Washington unsuccessfully tried to split Microsoft 20 years ago, this is the most important potential move to carry out antitrust control over the illegal monopoly of a major US technology company. This shows that Google may face a long-term legal battle similar to Microsoft at the time. The possibility of a spin-off will continue, and Google will need to go through a lengthy legal process to avoid a spin-off.