Why are US authorities seeking the sale of Google Chrome? – DV – 11/21/2024

In August this year, Internet giant Alphabet lost the biggest antitrust case it has ever faced when a US judge found that its Google subsidiary was illegally monopolizing the search market. US Federal Court Judge Amit Mehta has ruled that Google’s $26.3 billion (€24.9 billion) payments to other companies to make its internet search engine the default option on smartphones and web browsers effectively prevented anyone another competitor to succeed in the market.

As a result of the August decision, the US Department of Justice (DoJ) is proposing to force Google to sell its Chrome browser.

“Google’s unlawful conduct has deprived competitors not only of important distribution channels, but also of distribution partners who might otherwise have provided competitors with access to those markets in new and innovative ways,” the Justice Department and state antitrust authorities said in a court filing Wednesday.

The Justice Department filed court papers last month saying it was considering “structural remedies” to stop Google from using some of its products. In addition to the sale of Chrome, antitrust authorities are also reportedly demanding that Google take new measures regarding artificial intelligence (AI), as well as the Android operating system for smartphones.

U.S. antitrust officials and several U.S. states have joined the case, which was initially brought under the first Trump administration and continued under President Joe Biden. Touted as the “test of the decade,” the proposal marks the government’s most significant attempt to rein in a tech company’s power since the Justice Department unsuccessfully tried to break up Microsoft two decades ago.

In August, Google said it would appeal the decision because it would amount to a government “overreach” that would harm consumers.

Chrome is the key to Google’s advertising business

Losing Chrome would be a major blow for Google. While nearly 90% of global searches are performed through Google, more than 60% of users rely on the company’s own Google Chrome browser to perform those searches.

Chrome serves as Google’s gateway to the Internet. This allows the company to promote its own products and retain customers, including services such as Gmail for email and Gemini for artificial intelligence.

But more importantly, Chrome is an important part of Google’s core business of selling online advertising. Unlike searches performed in other browsers, Chrome allows Google to collect significantly more data, such as search behavior and preferred websites. This wealth of information helps Google target its ads more effectively.

“If Chrome falls, Google will fall”

Advertising is important to Google and its parent company Alphabet. Alphabet’s advertising revenue totaled more than $230 billion in 2023, accounting for the majority of its total revenue for the year of $307 billion.

Niels Seebach, co-CEO and CFO of digital consultancy Etribes, says that “if Chrome fails, Google will suffer a significant setback.” He told DW that in its current configuration, Chrome is “an integral part of Google’s business model, but probably won’t be able to survive on its own.” Conversely, a Chrome sale will be a major test for Alphabet as well. “Such an event would be a major breakthrough even for the (digital) market.”

Ulrich Mueller of antitrust nonprofit Rebalance Now welcomes the proposal. He adds that selling off Chrome would reduce Google’s advertising revenue and limit its dominance in the market. This could push the company into tougher competition at the expense of the quality of its services, he told DW. Muller also sees potential in alternative business models, such as subscription-based search engines.

However, Seebach notes that it is unclear how long the litigation against Google will last and when the potential breakup will actually occur. “By then, browsers or search engines as we know them today will probably be obsolete,” he said.

Victory for US antitrust advocates

The decision against Google reflects more than a century of US antitrust law. Back in 1911, these laws ensured the breakup of Standard Oil, John D. Rockefeller’s monopoly oil company.

Ulrich Müller says that regulatory scrutiny of monopolies was very intense in the 1960s and early 1970s, but ended in the 1980s when the neoliberal teachings of the Chicago School of Economics allowed for market concentration if monopoly companies were efficient . This led to fewer structural interventions in subsequent years.

However, in the 1980s, one major antitrust case was successfully brought against the telecommunications giant AT&T, which collapsed in 1982.

Some 20 years later, Microsoft became the target of monopoly regulators as a US court ruled that the software giant must be broken up due to its monopolistic practices. The Windows operating system was so tightly integrated with the Internet Explorer browser that it drove competitor Netscape out of the browser market. However, Microsoft appealed the decision, avoiding breakup by giving competitors access to parts of its system.

This article was originally written in German.

Editor’s note: This article originally published on November 20 has been updated to reflect the US Department of Justice’s proposed sale of Chrome.