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Google GOOGL+1.60% lost a consequential antitrust battle last week over the dominance of its search engine— but it could be just the beginning of major upheaval at the tech giant.
The Department of Justice is now weighing how to tackle Google’s outsize position in search, The New York Times reports, citing unnamed sources with knowledge of the matter. Possible actions include requiring it to spin off certain parts of its businesses, including Chrome or its Android smartphone operating system; making its data available to competitors; or forcing the company to walk away from the pricey agreements it made with companies, such as Apple, that made Google’s search engine the default.
Google was sued by the Justice Department in 2020 for allegedly monopolizing search, pushing out competitors such as DuckDuckGo and Microsoft MSFT+1.05%’s Bing. A federal judge ruled in favor of the DOJ, concluding that Google monopolized the online search engine market. Google has said it plans to appeal the court’s decision.
This marked the first major tech antitrust lawsuit since U.S. v. Microsoft, a 1998 case that found Microsoft monopolized computer operating systems and ultimately led to the demise of Internet Explorer.
Analysts at Wedbush, led by managing director and senior equity research analyst Dan Ives, said in a research note that a breakup of the company “would be a stretch” and that Google would certainly appeal — which could be a years-long process.
The Justice Department and Google have until Sept. 4 to come up with a process to reach a resolution, and a hearing is scheduled for Sept. 6 to plan next steps.
Bigger Big Tech scrutiny
The government’s win against Google “was a huge notch on the belt for the DOJ and now Apple AAPL+0.75%, Amazon AMZN+2.39%, Meta META+0.24% and others will be the focus,” Ives said.
Apple was hit with a sweeping federal antitrust lawsuit in March, that accused the iPhone-maker of being anti-competitive and creating a monopoly over the smartphone market. Ives said this case will likely last for years, and a ultimately a settlement will likely be reached over the next 12 to 18 months.
Consolidation in the tech industry is already on the rise, and is expected to continue to grow, fueled by the rise of artificial intelligence — and the technologies that come with it.
Despite heightened antitrust scrutiny within the tech industry, Ives said it’s “highly unlikely” that this will lead to any significant breaking up of major players. He does, however, foresee that “business model tweaks and heavier scrutiny of M&A will be front and center.”