A federal judge is seriously contemplating the possibility of breaking up Google following a landmark ruling last week that found the company had illegally abused its monopoly in search. This potential court-ordered breakup would be one of U.S. history's most significant antitrust actions. Yet, splitting up the tech giant could prove incredibly complex.
The ruling, handed down by Judge Amit Mehta, stems from a case initiated by the Department of Justice in 2020. The judge concluded that Google’s $26 billion in payments to competitors, most notably Apple, to maintain its dominance in search violated antitrust laws. The court determined that this behaviour stifles consumer choice and hampers innovation.
The court is now tasked with deciding on a remedy, from imposing new rules on Google to outright ordering the company to split. While some reports suggest that a breakup is on the table, executing such a move is challenging. Antitrust-based corporate breakups are rare and often difficult to implement effectively. For instance, a federal judge once ordered Microsoft to be broken up. Still, the company managed to avoid this outcome through a successful appeal. AT&T’s division into seven regional companies in the 1980s was the most notable example of an antitrust-mandated breakup. However, many of these companies emerged over time, reducing the long-term impact of the breakup.
Even if Judge Mehta decides that Google should be divided, determining how to do so is no simple task. Google’s dominance is largely driven by its search advertising business, which generates the bulk of the company’s revenue. Although it has expanded into areas like YouTube and Google Cloud, these segments are not central to the antitrust issues. Possible targets for a split, such as the Chrome browser or the Android operating system, present their challenges, as they are open-source and accessible to consumers, making it difficult for them to separate into standalone businesses.
Moreover, the tech industry evolves rapidly, often rendering legal remedies obsolete by the time they are implemented. With the rise of AI-driven search technologies, the search market's landscape could change significantly before any court-ordered breakup takes effect.
Historically, American courts have been reluctant to dismantle successful companies, preferring to impose behavioural remedies. Competitors like Yelp and DuckDuckGo have already urged the court to establish rules that would prevent Google from using payments to secure its dominance as the default search engine.
While the idea of breaking up Google might appeal to some, the logistical and legal hurdles make it far more likely that the court will opt for measures short of splitting the company into new entities. As one law professor succinctly said, "Courts don't like to play CEO."
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