On October 9, analysts highlighted that the U.S. Department of Justice’s proposed actions to curb Google’s dominance in online search could threaten the company’s primary revenue source and hinder its progress in artificial intelligence, despite a final resolution potentially being years away. The DOJ indicated on Tuesday that it may request a court to require Google, a subsidiary of Alphabet (GOOGL.O), to divest key assets such as its Chrome browser and Android operating system, which the agency alleges have been instrumental in maintaining Google’s unlawful monopoly in the search market.
It’s just one of several possible remedies being weighed by prosecutors. Other options include prohibiting Google from collecting sensitive user data, mandating that it share its search results and indexes with competitors, allowing websites to opt out of having their content used to train AI models, and requiring Google to report to a “court-appointed technical committee.” Alphabet investors, already facing multiple antitrust challenges this year — including a ruling on Monday that compels Google to open up its app store — reacted by sending shares down 1.5% to $161.86 by Wednesday’s close, following the DOJ announcement.
The proposed remedies target the core of Google’s internet dominance, which has made the company synonymous with search, potentially cutting into its revenue and creating opportunities for rivals to expand.
The DOJ has essentially dissected Google’s success strategy and is determined to break it apart,” said Gil Luria, managing director and senior software analyst at D.A. Davidson.
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“The suggested privacy and data collection remedies would force Google to either share the vast amounts of data it gathers or halt its data collection altogether. Since it’s likely Google will opt to share the data, this move could empower its competitors and even foster new competition,” Luria added.
Analysts cautioned that AI-related solutions could potentially disrupt Google’s business, which is already facing pressure from startups like OpenAI, the creator of ChatGPT, and Perplexity, an AI-driven search engine.
Google’s share of the U.S. search ad market is projected to drop below 50% by 2025 for the first time in over a decade, according to research firm eMarketer.
“The last thing Google needs in the larger AI battle is to be hamstrung by regulators,” said Bernstein analyst Mark Shmulik.
Competitors that could potentially benefit from regulatory actions include other search engines like DuckDuckGo and Microsoft Bing, as well as AI challengers such as Meta Platforms and Amazon.
“The framework acknowledges that no single remedy will fully dismantle Google’s illegal monopoly. A combination of behavioral and structural changes is necessary to restore competition in the market,” said Kamyl Bazbaz, senior vice president of public affairs at DuckDuckGo.
