Alphabet Inc’s GOOG and GOOGL shares took a hit in after-hours trading on Tuesday following reports that the U.S. Department of Justice (DOJ) is considering a drastic move: breaking up Google.
This news comes in the wake of a federal judge’s ruling last week against Alphabet in an antitrust lawsuit. The judge found that Alphabet’s payments to make Google the default search engine on smartphone web browsers violated antitrust laws by hindering competition. The DOJ’s potential action stems from this ruling and its ongoing scrutiny of Google’s dominance in the online search and advertising market.
The Bloomberg report suggests that the DOJ is seriously considering a breakup of Google, a move that would be unprecedented in scale since the unsuccessful attempt to dismantle Microsoft over two decades ago. If implemented, the most likely candidates for divestiture would be the Android operating system and Google Chrome browser.
However, the DOJ is also exploring less extreme solutions, such as compelling Google to share more data with competitors. This is aimed at preventing Google from leveraging its dominance in search to gain an unfair advantage in its AI products. Regardless of the chosen approach, the government is determined to address the types of contracts that were scrutinized in the recent case.
This potential action highlights the growing concerns over the market power of tech giants. The DOJ’s move, if successful, would send a strong message to other tech companies and could reshape the digital landscape. It remains to be seen how the DOJ will proceed and what the long-term implications will be for Alphabet and the broader tech industry.
It’s worth noting that Alphabet has stated its intention to appeal the recent antitrust ruling. The outcome of this appeal could significantly influence the DOJ’s next steps. Google remains the most widely used search engine globally, generating over $300 billion in annual revenue. A forced breakup would be a monumental event, comparable in scale to the AT&T breakup in the 1980s.
The potential impact of this situation on Alphabet’s future remains uncertain. The DOJ’s actions, along with the evolving legal landscape, could force the company to make significant changes to its business model and operations. This is a developing story that will continue to unfold in the coming months.
