The U.S. Department of Justice’s antitrust case against Google is shaping up to be a defining moment for the tech industry, as regulators target the core of Google’s search business, which generated $175 billion in revenue last year. Following a landmark court victory in August, the DOJ is proposing a series of sweeping measures designed to dismantle Google’s dominance and foster competition in the digital search market. The final proposal, set to be presented in November, could mark a seismic shift in Big Tech’s landscape, with major repercussions for Google and the broader tech ecosystem.
At the heart of the case are Google’s exclusivity agreements, which have long ensured its search engine’s prime position on devices, from smartphones to laptops. These deals, such as the $20 billion per year it pays Apple for preferential treatment on iPhones, have made it difficult for competitors to gain a foothold. The DOJ aims to terminate these contracts, potentially redistributing billions of dollars and lowering advertising costs for businesses that have been overpaying due to Google’s market stranglehold.
The DOJ is exploring a wide range of potential remedies to address Google’s dominance, with varying degrees of severity. Among the most drastic proposals is breaking up Alphabet into smaller companies. However, less severe options include forcing Google to share the data that underpins its search results, restricting its data mining practices from other websites, blocking payments to rivals to maintain its default search engine status, and preventing the company from using its products—
such as Android, Chrome, and Play—to enhance its search engine.
In response to the DOJ’s plans, Google has not taken the news lightly. The company released a blog post characterising the DOJ’s proposals as “radical and sweeping,” arguing that they risk harming consumers, businesses, and developers. Google contends that these suggestions extend far beyond the specific legal issues at hand and plans to respond in detail to the DOJ's recommendations.
Despite the dramatic possibilities, the prospect of a breakup remains unlikely. History indicates that such drastic measures are rare. After Microsoft was found guilty of monopolistic practices in 2000, a court sought to break the company into two entities; however, this verdict was partially overturned on appeal. Microsoft ultimately settled with the Justice Department by changing some of its business practices. Similarly, AT&T faced antitrust action in the 1970s and was compelled to dismantle its monopoly, but such outcomes have become increasingly rare in recent decades.
Given this historical context, most analysts are sceptical that Alphabet will be broken up, though other significant restrictions could be imposed. As the case unfolds, it presents an opportunity for a major reconfiguration of the tech landscape, with the potential to reshape competition in digital services.
Alphabet Inc. (NASDAQ: GOOG), currently ranked 6th among trending AI stocks, holds significant interest for investors. The company is under watch as earnings season approaches, and analysts anticipate a slowdown in profit growth among S&P 500 firms, with tech expected to lead the way. A recent note from Bank of America maintained a Buy rating with a $206 price target, suggesting that while the DOJ's actions weigh on stock performance, the market remains optimistic about Google's prospects.
The final decision will be crucial not only for Google but also for the future of antitrust enforcement in an industry that has become a cornerstone of modern life.