The U.S. said on Tuesday it may ask a judge to force Alphabet's (GOOGL.O), opens new tab Google to divest parts of its business, such as its Chrome browser and Android operating system, that it says are used to maintain an illegal monopoly in online search.
In a landmark case, a judge found in August that Google, which processes 90% of U.S. internet searches, had built an illegal monopoly. The Justice Department's proposed remedies have the potential to reshape how Americans find information on the internet while shrinking Google's revenues and giving its competitors more room to grow.
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"Fully remedying these harms requires not only ending Google's control of distribution today, but also ensuring Google cannot control the distribution of tomorrow," the Justice Department said, opens new tab.
The proposed fixes will also aim to keep Google's past dominance from extending to the burgeoning business of artificial intelligence, prosecutors said.
The Justice Department might also ask the court to end Google's payments to have its search engine pre-installed or set as the default on new devices.
Google has made annual payments - $26.3 billion in 2021 - to companies including Apple (AAPL.O), opens new tab and other device manufacturers to ensure that its search engine remained the default on smartphones and browsers, keeping its market share strong.
Google, which plans to appeal, said in a corporate blog post that the proposals were "radical" and said they "go far beyond the specific legal issues in this case."
Google maintains that its search engine has won users with its quality, adding that it faces robust competition from Amazon (AMZN.O), opens new tab and other sites, and that users can choose other search engines as their default.
The world's fourth-largest company with a market capitalization of over $2 trillion, Alphabet is under mounting legal pressure from competitors and antitrust authorities.
A U.S. judge ruled on Monday in a separate case that Google must open up its lucrative app store, Play, to greater competition, including making Android apps available from rival sources. Google is also fighting a Justice Department case that seeks the breakup of its web advertising business.
As part of its efforts to prevent Google's dominance from extending into AI, the Justice Department said it may seek to make available to rivals the indexes, data and models it uses for Google search and AI-assisted search features.
The logo for Google LLC is seen at their office in Manhattan, New York City, New York, U.S., November 17, 2021. REUTERS/Andrew Kelly/File Photo Purchase Licensing Rights, opens new tab
Other orders prosecutors may seek include restricting Google from entering agreements that limit other AI competitors' access to web content and letting websites opt out of Google using their content to train AI models.
Google said the AI-related proposals could stifle the sector.
"There are enormous risks to the government putting its thumb on the scale of this vital industry — skewing investment, distorting incentives, hobbling emerging business models — all at precisely the moment that we need to encourage investment," Google said.
The Justice Department is expected to file a more detailed proposal with the court by Nov. 20. Google will have a chance to propose its own remedies by Dec. 20.
U.S. District Judge Amit Mehta's ruling in Washington was a major win for antitrust enforcers who have brought an ambitious set of cases against Big Tech companies over the past four years.
The U.S. has also sued Meta Platforms (META.O), opens new tab, Amazon.com and Apple claiming they illegally maintain monopolies.
Some of the ideas in the Justice Department's proposals to break up Google had previously garnered support from Google's smaller competitors such as reviews site Yelp (YELP.N), opens new tab and rival search engine company DuckDuckGo.
Yelp, which sued Google over search in August, says spinning off Google's Chrome browser and AI services should be on the table. Yelp also wants Google to be prohibited from giving preference to Google's local business pages in search results.
In Europe, Google is unlikely to face a breakup order from EU antitrust chief Margrethe Vestager before she leaves office next month due to the complexity of the case although there is pressure to speed up the process, sources with direct knowledge of the matter told Reuters.
Reuters reported last month that Vestager is considering an order to end Google's anti-competitive practices in its adtech business, but will not order a breakup as she had previously warned.
Google earlier this year sought to end the EU antitrust investigation with an offer to sell its advertising marketplace AdX but European publishers rejected the proposal as insufficient, other people with direct knowledge of the matter told Reuters.
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Reporting by Jody Godoy in New York, additional reporting by Foo Yun Chee in Brussels; Editing by Matthew Lewis, Chris Sanders, Edwina Gibbs, Elaine Hardcastle
[Reuters]