Google, Like Microsoft before It, Avoids a Breakup

The big takeaway from the ruling by District Court Judge Amit Mehta in the U.S. versus Google antitrust case is that Google will not have to divest its browser. The case is said to be notable because it is the first major technology antitrust case since U.S. versus Microsoft in 1998. 

That earlier case, brought by the  U.S. Department of Justice and 20 state attorneys general, alleged that Microsoft illegally maintained a monopoly in PC operating systems and used anticompetitive practices to suppress competition by bundling Internet Explorer with the Windows operating system. 

As in the U.S. versus Google case, the antitrust action alleged that Google, as did Microsoft, suppressed competition by bundling and distribution tactics. 

Judge Thomas Penfield Jackson actually ordered a breakup of the parts of Microsoft that sold operating systems and the part that sold applications (including the productivity suite bundling word processor, spreadsheet and database). 

But that was overruled on appeal. The 2001 Final Settlement ("consent decree") instead included only API disclosure (Microsoft had to share application programming interfaces so third-party developers could build compatible software) and enabled PC manufacturers to install competing middleware (browsers, media players) and change default settings.

The point is that the antitrust action slowed, but did not eliminate,  Microsoft’s dominance in operating systems. But some argue the decision did at least indirectly create space for new competitors in the browser space.

By way of analogy, some will likely argue that the U.S. v. Google decision, if upheld, likewise will slow, but not deter, Google’s leadership in search. 

As was the case for Microsoft, Google will have to take steps to ameliorate its distribution “monopoly.” 

Google is prohibited from entering or maintaining exclusive agreements related to the distribution of Google Search; Chrome; Google Assistant and the Gemini AI app. This includes arrangements that force the use of one product on the distribution or preloading of another (bundling); revenue-sharing tied to placement or multi-year default deals.

Google also must make portions of its search index and user-interaction data available to qualifying competitors and offer search and text-ad syndication services to rival or potential rival platforms. 

Still, the bottom line is that the decision arguably is good for Google.The DoJ had argued for structural remedies (divesting of the Chrome browser, for example). The behavioral remedies are generally viewed by some antitrust experts as weaker and harder to enforce.

The eventual remedies might take years to put into place, and history suggests they will only slow Google's leadership in search, not end it.