Google breakup: inside Alphabet's awkward legal dance with regulators

Remedy portion of closely watched antitrust case is under way

A tug of war is developing betwen the US Department of Justice and Alphabet, owner of Google

The US government and Google are locked in an awkward, albeit required, legal dance as each side tries to convince a judge how severe or relaxed the remedies to a lack of competition in search will be following a landmark legal ruling.

Last August, US District Judge Amit Mehta ruled that Google had been illegally exploiting its dominance in the search sector to stifle competition and innovation and ultimately harm consumers with less choice.

For those unfamiliar with how big tech antitrust cases work, what’s currently unfolding in court between Google and the Department of Justice might seem unusual.

A sign displayed in Washington District Court shows two trials that could have a major impact on millions of users. Cody Combs / The National

During the opening arguments of the remedy portion of the trial, the DOJ has pushed for Google to be forced to sell its Chrome browser, which dominates search in terms of market share around the world.

Federal regulators have also expressed the aim of curtailing Google’s development and distribution of artificial intelligence products, with hopes of stopping the company from replicating what it has done in the search sector in the context of the burgeoning AI sector.

The Alphabet-owned Google, meanwhile, disagrees with the assessment that it was illegally squashing competition, and in some ways is still trying to get the case thrown out – but that looks increasingly unlikely.

A phalanx of federal lawyers depart court in Washington as regulators and Google try to get the upper hand during the remedy portion of an antitrust trial. Bloomberg

For Google’s portion of its opening arguments, one of the company’s lawyers bashed the solution pitched by the DOJ, describing it as “a wishlist for competitors looking to get the benefits of Google's extraordinary innovations”.

Meanwhile, much like a regular trial, both sides are calling witnesses to the stand. Competitors, business analysts and industry experts are being peppered with questions about what remedies to Google’s search monopoly might look like, and most importantly, to speculate about the potential ripple effects.

Gabriel Weinberg, chief executive of DuckDuckGo, a browser and search engine competitor to Google, was the latest witness called to the stand this week. Mr Weinberg told the court that Google’s Chrome browser could be worth as much as $50 billion if the company were forced to sell it.

Because antitrust trials of this size are few and far between, experts have been hesitant to speculate on what remedy might be decided upon. The DOJ sought to ask questions that showed how DuckDuckGo might benefit, while Google litigators sought to show how a strict remedy might hurt DuckDuckGo.

Mark MacCarthy, a senior fellow at the Institute for Technology Law and Policy at Georgetown University in Washington, has studied antitrust policy for several decades, and said Google’s dominance presents a unique challenge, even after its legal defeat.

“To do it right would require unprecedented co-operation among the courts involved,” he said. “My view is that this would be better done by a new digital regulatory agency.”

Millions of users will be affected by the results of the remedy portion of Google's antitrust trial, but it remains to be seen how

With the Trump administration’s current obsession is with cutting resources to various federal agencies, it’s unlikely there’s an appetite from the White House to create anything new to oversee a Google monopoly remedy.

That said, Mr MacCarthy said enforcement mechanisms need to be applied persistently, and for a long period of time for any sort of effectiveness in the Google case. “To enforce a divestiture the judge would have to supervise ongoing restrictions to prevent Google from recreating the anticompetitive arrangements by contract rather than through ownership,” he explained.

Neil Chilson, who was chief technologist for the Federal Trade Commission during the first Trump administration and is now head of AI policy at the Abundance Institute, didn’t mince words with his criticisms of US regulatory efforts as the remedy portion of the trial gets under way.

“Of particular concern are the remedies seeking to regulate Google’s development and distribution of generative AI tools, which are outside of the scope of the case. Google has some of the world’s best AI technology but competition is fierce and international,” Mr Chilson said.

“Other remedies, like breaking out Chrome, for example, not only wouldn’t address the core conduct that the court found problematic (exclusive contracts for default placements), it would also cripple a very popular free product that consumers love.”

On that point, the both Alphabet and the DOJ might agree: Chrome is the dominant search engine. The question now is, what will happen to it? Whatever the result, hundreds of millions of users could be affected.

All this is unfolding as Google deals with the fallout of another court ruling that found the company abused its market dominance in advertising technology. Google plans to appeal.