The US Justice Department’s proposed remedies to break Google’s search dominance could weaken its main profit engine and hamper its advances in artificial intelligence, although a final result could be years away, analysts said.
The DOJ said Tuesday it may ask a judge to force Google to divest parts of its business such as its Chrome browser and Android operating system, which the Alphabet-owned company used to maintain an illegal monopoly on search. internet.
It’s just one of many possible settlements prosecutors are considering.
Banning Google from collecting sensitive user data, requiring it to make search results and indexes available to rivals, allowing websites to choose their own content being used to train AI products and reporting of Google to a “court-appointed technical committee” are also on the charts.
Investors in Alphabet, which has seen several antitrust actions this year, including a ruling on Monday ordering Google to open its app store, sent shares 1.5% lower at $161.86 at the close on Wednesday after the DOJ news.
The legal remedies strike at the heart of the Internet empire that has made Google synonymous with search and could reduce its revenue while giving rivals more room to grow.
“DD has changed Google’s formula for success and aims to dismantle it,” said Gil Luria, managing director and senior software analyst at DA Davidson.
“The proposed privacy and data collection tools would give Google the choice to either share all the data it collects or stop collecting the data in the first place. Since it is likely to choose the former, this can strengthen its competitors and maybe create new competition”, said Luria.
Analysts warned that AI-related remedies could disrupt Google’s business when it is already under pressure from startups such as ChatGPT creator OpenAI and AI search engine operator Perplexity.
Google’s US search ad market share is projected to fall below 50% for the first time in more than a decade by 2025, according to research firm eMarketer.
“The last thing Google needs right now in the broader AI battle is to fight with one hand tied behind its back by regulators,” said Bernstein analyst Mark Shmulik.
Other companies that could benefit from the remedies include search players such as DuckDuckGo and Microsoft Bing, as well as AI rivals such as Meta Platforms and Amazon.
“The framework recognizes that no single tool can undo Google’s illegal monopoly, it will require a range of behavioral and structural remedies to free up the market,” said Kamyl Bazbaz, senior vice president of public affairs at DuckDuckGo.
‘Spaghetti Cure’
But some industry observers and analysts said it was far from certain that the remedies, the biggest US antitrust effort since a case against Microsoft in 1999, would pass.
“DD is throwing spaghetti at the wall,” said Adam Kovacevich, CEO and founder of the Chamber of Progress, a trade group that represents technology companies.
“It may score some headlines, but it’s not legal. “The DOJ is rejecting remedies that go far beyond the judge’s decision, and history tells us that broad remedies will not survive the appeals process,” Kovacevich said.
However, Russ Mould, investment director at AJ Bell, said this risk had been known for a long time.
“Investors don’t seem to believe that a forced split will happen,” he said.
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