A federal judge on Tuesday ordered a shake-up of Google’s search engine in an attempt to curb the corrosive power of an illegal monopoly while rebuffing the U.S. government’s attempt to break up the company and impose other restraints.
The 226-page decision made by U.S. District Judge Amit Mehta in Washington, D.C., will likely ripple across the technological landscape at a time when the industry is being reshaped by breakthroughs in artificial intelligence — including conversational “answer engines” as companies like ChatGPT and Perplexity try to upend Google’s long-held position as the internet’s main gateway.
The innovations and competition being unleashed by AI also reshaped the judge’s approach to the remedies in the nearly five-year-old antitrust case brought by the U.S. Justice Department during President Donald Trump’s first administration and carried onward by President Joe Biden’s administration.
“Unlike the typical case where the court’s job is to resolve a dispute based on historic facts, here the court is asked to gaze into a crystal ball and look to the future. Not exactly a judge’s forte,” Mehta wrote.
The judge is trying to rein in Google by prohibiting some of the tactics the company deployed to drive traffic to its search engine and other services. The ruling also will pry open some of the prized databases of closely guarded information about search that have provided Google with a seemingly insurmountable advantage.
The handcuffs being slapped on Google will preclude contracts that give its search engine, Gemini AI app, Play Store for Android and virtual assistant an exclusive position on smartphone, personal computers and other devices.
But Mehta stopped short of banning the multi-billion dollar deals that Google has been making for years to lock in its search engine as the default on smartphones, personal computers and other devices. Those deals, involving payments of more than $26 billion annually, were one of the main issues that prompted the judge to conclude Google’s search engine was an illegal monopoly, but he decided banning them in the future would do more harm than good.
The judge also rejected the U.S. Justice Department’s effort to force Google to sell its popular Chrome browser, concluding it was an unwarranted step that “would be incredibly messy and highly risky.”
Partially because he is allowing the default deals to continue, Mehta is ordering Google to give its current and would-be rivals access to some of its search engine’s secret sauce — the data stockpiled from trillions of queries that it used to help improve the quality of its search results. That is a measure that Google had also fiercely opposed, contending it was unfair and would raise privacy and security risk for the billions of people who have posed questions to its search engine — sometimes delving into sensitive issues.
The Justice Department’s antitrust chief, Gail Slater, hailed the decision as a “major win for the American people,” even though the agency didn’t get everything it sought. “We are now weighing our options and thinking through whether the ordered relief goes far enough,” Slater wrote in a post.
In its own post, Google framed Mehta’s ruling as a vindication of its long-held position that the case never should have been brought. The decision “recognizes how much the industry has changed through the advent of AI, which is giving people so many more ways to find information,” wrote Lee-Anne Mulholland, Google’s vice president of regulatory affairs. “This underlines what we’ve been saying since this case was filed in 2020: Competition is intense and people can easily choose the services they want.”
The Mountain View, California, company has already vowed to appeal the judge’s monopoly findings issued 13 months ago that led to Tuesday’s ruling.
“You don’t find someone guilty of robbing a bank and then sentence him to writing a thank you note for the loot,” said Nidhi Hegde, executive director of the American Economic Liberties Project.
Investors seemed to interpret the ruling as a relatively light slap on the wrist for Google, as the stock price of its corporate parent, Alphabet Inc., surged more than 7% in extended trading. That would translate into a nearly $200 billion increase in Alphabet’s market value, if the shares follow a similar trajectory in Wednesday’s regular trading session.
Allowing the default search deals to continue is more than just a victory for Google. It’s also a win for Apple, which receives more than $20 billion annually from Google, and other recipients of the payments.
In hearings earlier this year, Apple warned the judge that banning the contracts would deprive the company of money that it funnels into its own innovative research. The Cupertino, California, company also cautioned that the ban could have the unintended consequence of making Google even more powerful by pocketing the money it had been spending on deals while most consumers will still end up flocking to Google’s search engine anyway.
Others, such as the owners of the Firefox search engine, asserted that losing the Google contracts would threaten their future survival by depriving them of essential revenue.
Apple’s shares rose 3% in extended trading after the ruling came out.
Mehta refrained from ordering a sale of Chrome because he decided there wasn’t adequate proof the browser served as an essential ingredient in Google’s search monopoly, making a divestiture “a poor fit for this case.”
Chrome would have been a hot commodity had the judge forced Google to put it on the auction block. Perplexity submitted an unsolicited $34.5 billion offer to buy Chrome last month. And during court testimony earlier this year, a ChatGPT executive left no doubt that service’s owner, OpenAI, would be interested in be interested in buying Chrome, too.
But the judge decided forcing Google to open up parts of its search data to rivals such as DuckDuckGo, Bing, and others will offer he best and fairest way to foster more compelling competition. In doing so, Mehta still narrowed the scope of the Justice Department’s request and will limit the access to Google’s search index and query histories.
While the wrangling over Mehta’s ruling continues, Google is facing another potentially debilitating threat in another antitrust case brought by the Justice Department targeting the digital ad empire that was built up around its search engine. After different federal judge in Virginia declared that some of the technology underlying the ad network to be an illegal monopoly earlier this year, the Justice Department plans to make its case for another proposed breakup in a trial scheduled to begin later this month.
