Breaking Up Is Hard to Do: Antitrust Officials Weigh Splitting Google and Other Tech Giants

Introduction to Antitrust Actions Against Google

U.S. antitrust enforcers are grappling with the possibility of breaking up major corporations such as Google, an action that hasn’t occurred in nearly four decades. The outcome of several critical cases, including two specifically targeting Google, may alter the landscape of corporate regulation in the United States, possibly marking a return to more aggressive antitrust enforcement.

Government Considerations for Breaking Up Google

The Department of Justice (DOJ) recently submitted a filing to a federal court, outlining potential remedies to address what Judge Amit Mehta has classified as Google’s unlawful monopoly in the search engine market. The DOJ is exploring a “full range of tools” for reestablishing competition, which could include significant “structural” changes to how Google operates. This may involve preventing Google from leveraging its other products, such as the Chrome browser and Android operating system, to benefit its search engine.

Google’s Response to Antitrust Proposals

In response to the DOJ’s proposals, Google released a blog post characterizing the government’s initial recommendations as “radical and sweeping,” claiming they could produce “negative unintended consequences for American innovation and consumers.” The company has been under scrutiny for allegedly paying billions to various browser and phone manufacturers to be their default search engine, a tactic identified by Judge Mehta as a fundamental aspect of its monopoly.

Potential Precedents for Breakups in Antitrust Law

The legal landscape surrounding corporate breakups lacks recent precedence. The last significant ruling occurred in 2001 when a federal appeals court overruled a trial judge’s decision to break up Microsoft. Gene Kimmelman, a senior policy fellow at Yale’s Tobin Center for Economic Policy, stated, “If there is liability and a judge agrees that a breakup is appropriate, that will become the new precedent that brings greater legitimacy to the notion of a breakup remedy.”

The Historical Context of Corporate Breakups

Most prominent breakups in U.S. history can be traced back to the early 20th century, during the trust-busting era. Justice officials have successfully disintegrated monopolies like Standard Oil and AT&T. The last substantial breakup was AT&T’s legal separation in 1984, which occurred after the company negotiated terms with the government as opposed to awaiting a judiciary ruling on antitrust violations.

Contemporary Antitrust Cases Beyond Google

While Google’s case is significant, it is not isolated. The DOJ is also pursuing action against Live Nation, the parent company of Ticketmaster, which may see the spinoff of Ticketmaster as part of the legal strategy. The DOJ alleges that the integration of Ticketmaster into Live Nation created anticompetitive conditions that enforce exclusive contracts with venues.

Similarly, the Federal Trade Commission (FTC) has called for Facebook, now Meta Platforms, to divest Instagram and WhatsApp, as their acquisitions were allegedly designed to stifle competition in the social media sector. However, Meta maintains that it does not monopolize social media and that these acquisitions ultimately benefit consumers.

Challenges Surrounding Corporate Breakups

Obtaining a court’s support for a breakup presents intricate challenges. Legal experts note that judges consider breakups to be an extreme remedy, often fearing the creation of standalone companies that may falter post-split. “Breakups are surprisingly hard from a practical standpoint,” remarked Erik Hovenkamp, a law professor at Cornell University. The justification for breaking up a company must be carefully substantiated by evidence of illegal conduct and detailed analysis of market specifics.

Pending Decisions and Future Directions

As the DOJ prepares its specific proposal regarding Google, due by November 20, the implications of Judge Mehta’s ruling are substantial. His earlier assessment noted that Google lacks genuine competition in mobile search, severely limiting the possibilities for rival search engines to thrive in a market dominated by Google.

In addition, the DOJ’s antitrust division has called for the potential breakup of Google’s advertising technology business. This case, filed earlier this year, alleges that Google acquired startups posing a threat to its market reign and subsequently bundled their services, making it harder for customers to access its products without additional purchases.

Conclusion

As the United States continues to grapple with the challenges posed by corporate monopolies in the digital age, the outcomes of these high-stakes antitrust cases—especially concerning tech giants like Google—may redefine the future of competition in American markets. The judicial decisions rendered in these matters have the potential to evoke a significant resurgence in antitrust enforcement or reinforce existing structures, impacting both innovation and consumer choice across the nation.