Two powerful lawyers for the US government are taking on the sultanate of search
The US Department of Justice is considering breaking up Google to end its illegal monopoly on internet search and advertising.
So what? Antitrust enforcers are reaching for the nuclear button. Their goal of ending “extreme concentration” in the US economy has rare bipartisan support, although pursuing a full-scale split of Google is legally risky. As election day nears, two leaders in competition law are piling on the pressure – while trying to keep their jobs.
What’s the beef? In August the DoJ won a lawsuit against Google in which the judge ruled the company was “monopolist” and had taken anticompetitive steps to preserve its 90 per cent share of search. The DoJ has proposed several “remedies”, including
- forcing Google to share search data with rivals and to restrict its use for training AI;
- barring it from contracts like the one it has with Apple to make it the default search engine on devices; and
- “structural remedies” (jargon for break ups) that prevent it from using products like Chrome, Play app store and Android to give it an edge.
Who’s driving it? The Biden administration’s crusade against big tech power is spearheaded by
- Jonathan Kanter, the DoJ’s chief of antitrust leading the Google search case. He’s launched lawsuits against Apple for dominating smartphones, Ticketmaster for driving up gig prices, and Visa for pushing out rivals in payments. He’s called for “urgent” scrutiny of AI dealmaking and “acquihires” – quasi-mergers in which one company hires a target’s staff in order to dodge regulatory hurdles.
- Lina Khan, chair of the Federal Trade Commission since 2021 and at 35 the youngest person to hold the position. She’s been toe-to-toe with Amazon and Meta and, most controversially, tried to block a merger between Microsoft and Activision Blizzard.
“Taking longshots was part of the plan,” says Josh Tzuker, a consultant at FGS Global and former DoJ official. “Jonathan’s stats might be a little bit better but I do think in cases like Microsoft-Activision Lina was trying to push the law in a certain direction.”
Why are they in trouble? As the political mercury rises, so have the voices of political donors calling for Khan and Kanter to be replaced by more “business-friendly” officials. This week the left-leaning Democrat Rep. Alexandra Ocasio-Cortez warned of an “out and out brawl” if Harris capitulated to donor demands to get rid of Khan. Critics include:
- Reid Hoffman, LinkedIn founder and Microsoft board member whose $10 million donation to Harris’s campaign came with one asterisk: drop Khan.
- Marc Andreessen, the Trump-supporting venture capitalist who says regulators are “punitively blocking startups from being acquired”.
- Mark Cuban, the dotcom billionaire who says Khan’s actions threaten the US’s dominance in AI.
It’s not clear what position either presidential candidate will take on antitrust or its proponents, but it’s notable that Trump’s pick for VP, JD Vance, has spoken positively of Khan in the past.
The bigger question is what impact all the Silicon Valley cash sloshing around Washington will have. Investors like Hoffman say the actions of the FTC and DoJ are casting a chill over dealmaking. But scholars like Tim Wu at Columbia argue that companies in an antitrust-lite environment “are more likely to build complementary, often low-impact products” in an attempt to be acquired by the big guys – rather than going public and taking them on.
What’s next? Odds of a full Google breakup look slim. The court would have to prove that lesser fixes – such as injunctions or data sharing – would not be enough to bring back competition in search. Legal proceedings are expected to drag on for years and are unlikely to make a dent in Google’s annual free cash flow of $80 billion.
What’s more… Google could argue its incumbency in search is already being threatened by the emergence of generative AI and platforms like Perplexity. Whoever takes up the antitrust mantle next will help determine whether AI entrenches Big Tech’s dominance, or upsets it.
