When a federal judge deemed Google a “monopolist” last year, questions lingered about how he would help restore competition in online search.
On Tuesday, U.S. District Court Judge Amit Mehta for the District of Columbia gave his answers in a highly watched decision that spared the online behemoth from selling its Chrome browser but placed other limits on the search giant.
Google’s parent company, Alphabet, after dodging the most severe penalties, saw its stock surge 9% on Wednesday.
“It’s overall a win for Google,” said Yory Wurmser, a principal analyst at EMarketer. “It’s probably about the best it could have expected, given that they were found guilty.”
Advocacy groups and some tech companies expressed disappointment about the ruling, stating that it didn’t go far enough.
The judge said in his decision that forcing Google to divest Chrome is a “poor fit for this case” and would be “incredibly messy and highly risky” because the web browser isn’t a stand-alone business and is tied to the tech company’s other systems.
But some of the remedies the judge cleared, such as requiring Google to share some of its search data with certain rivals, could open the door to more competition, some experts said.
Google’s dominance grew after it struck exclusive agreements with Apple, Samsung, AT&T and others to be the default search engine on web browsers and mobile devices. As Google became more popular, it gathered a trove of valuable data, which in turn helped improve the quality of its search results.
“Making data available to competitors would narrow the scale gap created by Google’s exclusive distribution agreements and, in turn, the quality gap that followed,” the judge wrote.
Lee-Anne Mulholland, Google’s vice president of regulatory affairs, said in a statement that the company is worried about “how these requirements will impact our users and their privacy” and is closely reviewing the decision.
The U.S. Department of Justice, which filed the antitrust lawsuit against Google in 2020, alleging the company illegally operated as a monopoly, said the remedies mark “an important step forward in the Department of Justice’s ongoing fight to protect American consumers.”
The judge’s lengthy, 200-plus-page opinion comes as artificial intelligence is altering the way people search for information and could reshape Google’s massive advertising business. Instead of sifting through a bunch of results on a search engine, more people are turning to chatbots such as OpenAI’s ChatGPT to quickly find answers.
Google has staked its claim in the AI race by releasing products such as its AI assistant Gemini, providing AI-generated summaries at the top of search results and launching a feature called AI mode that allows people to get conversational answers to questions like they could do on ChatGPT.
“It’s unclear how much that’s going to have an impact on their bottom line,” Wurmser said. “Even if they win with AI mode, it looks like right now that ChatGPT is a legitimate contender.”
Mehta acknowledged in his opinion that artificial intelligence technologies could become “game changers” in the future, but chatbots aren’t close yet to replacing search engines. Today, Google still dominates and “No existing rival has wrested market share from Google,” he said in his opinion.
One of the proposed solutions the judge rejected would have been to require the search giant to display a “choice screen” on every Google browser when a user hasn’t selected a default search engine. Google was barred from entering into certain exclusive contracts, but wasn’t prevented from paying or offering “other considerations” to partners such as Apple if the companies placed its search engine, Chrome or its generative AI products on browsers and mobile devices by default.
Melissa Otto, head of research at S&P Global Visible Alpha, said if Google was forced to sell Chrome it would have “completely discombobulated their business model.”
This year, Google Search is expected to generate $219 billion in revenue with $37.7 billion projected to go to distribution partners, according to the firm’s estimates.
“The question then becomes, in this new generative AI world, is that $220 billion sustainable over the next foreseeable future?” she said. “And that is really the question that the market will start to grapple with next.”
The post Alphabet’s stock climbs after judge rules Google won’t be forced to sell Chrome appeared first on Los Angeles Times.
