Shares of Alphabet, Google’s parent company, dropped nearly 5% in early trading on Monday. This decline followed the Justice Department’s announcement that it is pushing for a breakup of Google, citing its monopoly in the online search market.
The Justice Department has formally requested that U.S. District Judge Amit Mehta require Google to sell its Chrome web browser. This move comes after Judge Mehta previously ruled that Google has an illegal grip on the search market, supported by significant payments to partners like Apple, which ensure Google’s search engine is the default on many smartphones.
In a strong statement, the DOJ accused Google of using "illegal conduct" to build an "economic goliath" that disrupts the marketplace, ensuring its dominance. The filing emphasized that consumers are left to deal with Google’s demands in exchange for a search engine they use for free.
The news about the breakup proposal coincided with a tough day for the stock market, where the tech-heavy Nasdaq index fell nearly 600 points, or 3.2%. Since the beginning of the year, Alphabet’s shares have dropped almost 13%.
The DOJ’s proposal aligns with earlier suggestions made by the Biden administration. It suggests that Google should end its default search partnerships with major companies like Apple and AT&T. In 2022 alone, Google paid Apple $20 billion to remain the default search engine on Safari.
Additionally, the DOJ wants Google to share its search and digital advertising data with competitors to create a fairer market. If these initial steps do not achieve the desired results, the DOJ is also considering requiring Google to divest its Android operating system.
Interestingly, the DOJ has shifted its stance regarding Google’s investments in artificial intelligence. It will no longer seek to force Google to sell its AI investments but will require the company to provide advance notice of future AI investments.
Judge Mehta is set to hold hearings in April to discuss the DOJ’s proposals and Google’s response. A final ruling is expected this summer. Google has expressed its intention to appeal the previous ruling, arguing that the DOJ’s proposals could harm consumers, the economy, and national security.
In the backdrop of this legal battle, Google CEO Sundar Pichai was among several tech leaders who attended President Trump’s inauguration, aiming to improve relations with the administration. Recent reports indicate that Google executives have met with Trump officials to advocate for leniency in this case, arguing that breaking up the company could threaten national security.