How to break up a company like Google?

Photo illustration: Intelligencer

“Google is a monopoly and operates as a monopoly to maintain its monopoly,” a federal district court ruling said earlier this month. Specifically, it monopolizes “general search services and general text ads in search.” That advantage has allowed it to earn “monopoly profits”—Google’s net income was about $74 billion in 2023—mostly from search. That kind of thing is pretty rare in the industry. In the 1970s, it was AT&T and it was phones. In the 1990s, it was Microsoft and it was PCs. In 2024, out of a pool of likely candidates—mobile phones? E-commerce?—it’s search.

Google, of course, plans to appeal the ruling. In the meantime, an emboldened Justice Department is considering what to do next. There are significant but narrow options, such as preventing Google from paying companies like Apple to become the default search provider on iPhones and other devices, or requiring the company to share or license search data. And then there’s the big one, according to Bloomberg:

Trying to break up Alphabet Inc.’s Google is one of the options being considered by the Justice Department after a landmark court ruling that found the company had a monopoly on the internet search engine market, according to people familiar with the proceedings.

That’s what the government did with AT&T and failed with Microsoft. Breaking up a national telecommunications company was complicated but fairly intuitive—you basically draw a map. The plan to break up Microsoft was to separate its operating system business from everything else, including Office, which, again, is fairly easy to understand. Microsoft’s core products were connected but arguably separate and profitable businesses that sold related but different things.

Google is a little weirder. It is best known for the products it gives away for free, and it makes most of its money by selling ads to companies that want to reach those free users. The huge revenue it generates from ads sold on its search engine has funded investments in (and purchases of) a huge range of other products. Some of these brands, including YouTube and Maps, share a basic free, ad-supported business model with its search engine. Others, such as Google Cloud, are completely different kinds of companies and exist to sell services to corporate clients. Chrome, the world’s most popular web browser, makes Google money by sending people to its search engine. Android, the world’s most popular smartphone operating system, makes money for Google through its Play app store, where it takes a cut of sales of apps and digital services, but Alsoagain, sending users to products like Search. Much of the Google empire, with dozens of distinct products and brands, is supported AND held together by a massive digital advertising operation. How do you break something like that down?

According to Bloomberg, the main possibilities are a separation of Android (Google was separately and successfully sued in a California court over its app store policies) and a separation of Chrome. Chrome Separation AND banning Google from paying to be the default search engine in third-party browsers would be interesting. Chrome’s biggest independent competitor, Firefox, is developed by the Mozilla Foundation, which derives most of its revenue from such an arrangement with Google. Microsoft’s Edge web browser is now based on Chromium, the same open-source browser project that Chrome is built on, and which is funded and maintained primarily by Google. Apple’s browser, Safari, stands to benefit from the chaotic collapse of the browser ecosystem, except that part of its value to its parent company—and, again, the crux of the antitrust case—is that Google pays it $20 billion a year to be the default search engine. Similarly, Android is free software based on an open-source project, maintained and funded primarily by Google, and used by almost every major smartphone maker in the world, except Apple. Separate it from Google AND disconnect it from Google Search, and the project would need an entirely new business model. The final option — a chaotic dark horse — is to order Google’s advertising business to be separated from everything else.

Some critics see Google’s tangled dealings as evidence that a breakup would be over the top, unnecessarily disruptive, or counterproductive. They may be right. But it also works the other way around—the fact that splitting off and spinning off Chrome would likely lead to the collapse of the entire browser market as we know it is a pretty strong argument. Down Google’s unparalleled power and influence. Similarly, a practical argument against Chrome breaking away is that the continued existence of the world’s most widely used smartphone operating system depends on Google’s advertising business, and that the company’s massive secondary platforms are essentially just features of the search engine. Google’s users see many of its products, some of which dominate their markets, as distinct and important. Isn’t it strange that most of them couldn’t exist as standalone companies, or at least that they didn’t have to try?

Whether Google is broken up or regulated more lightly is also a matter of electoral politics, albeit an odd one. On the one hand, the Justice Department, led by Biden appointee Merrick Garland, has been aggressively pursuing the case for years and winning; on the other, the department’s original lawsuit against Google was filed in October 2020 with the public support of Trump appointee William Barr, who publicly embraced the president’s personal vendettas against Google that had little to do with the search monopoly. The plan to break up Microsoft didn’t survive the transition from the Clinton administration to the Bush administration, but tech antitrust law has since been repoliticized in ideologically complicated ways. Some big Democratic donors with ties to the tech industry are pushing Harris’ campaign to take a softer stance on antitrust. The appeal could take years, leaving Google’s fate — even if remedies are determined by the end of 2024 — to the Supreme Court in, say, 2027.

Google, meanwhile, has a chance to challenge or prove the court’s ruling in a less desirable way: either by buying its way to continued dominance in the age of artificial intelligence, or by spending money and confronting new threats to its search business so aggressively that it turns out it wasn’t as dominant as it seemed.