Nine months ago, a federal judge ruled that Google has an illegal monopoly in the search engine market. As the trial is now ending the "remedies" phase of the trial, which began April 21, lawyers for Google and the Justice Department present arguments for how the roughly $2-trillion-dollar company should atone for its monopoly in the biggest tech antitrust case in 25 years.

The DOJ has urged the court to force Google to sell its incredibly popular Chrome browser, given the tremendous advantages it has accrued from over 10 years of monopoly maintenance, and making the company license some of its core search technology. The sale of Chrome, the DOJ argues, will even be the playing field for competitors. Google is instead suggesting that they stop making exclusive agreements with device makers such as Apple and Samsung that require Google to be the default search engine on new phones.

The market that is probably most impacted by Google’s monopoly practices is probably the digital ad market. Here, Google’s market power has allowed them to display rent-seeking behavior by unfairly raising the prices that advertisers pay while also reducing the prices that website owners receive. So, the idea is to make internet advertising cheaper for advertisers and more lucrative for websites by forcing Google to spin off parts of its business, essentially allowing more dollars to flow from the same advertisers directly to the same website publishers without a middleman taking a big cut. This change could also lead to lower consumer prices and higher wages as companies would save money on ads and pass along some of those savings to their customers and workers.

Google has long argued that the DOJ's proposed remedies are too severe, saying they would hurt consumers, the economy and tech innovation. Google CEO Sundar Pichai testified that forcing the company to share its search data would be a "de facto divestiture" of its search engine, representing decades of investment and work.

A possible alternative to the forced sale of some of Google’s subsidiaries, which is a common step in monopoly cases, would be for Google to break itself up. If YouTube, Search, Gmail, Cloud, Play, and Chrome became separate businesses, they’d be among the biggest companies in the world, and could potentially be more profitable than they are together. If so, this could be a win-win for both Google’s investors and customers. 

Discussion Questions:

  1. Discuss the argument that Google’s market power is simply the result of the significant research and development spending made by the company, and to what extent do you agree with this position?
  2. Discuss the potential positive consequences of antitrust regulation involving tech companies such as Google. Who could more competition provide a more efficient exchange of ideas and products?