- 2024-09-17
- News
Antitrust Storm: Will Google Take a Hit?
For titans across various industries, antitrust is the sword of Damocles hanging overhead.
In American history, the once-dominant Standard Oil was split into 34 regional oil companies for illegal market monopolization; during the same period, the American Tobacco Company was also divided into four companies by antitrust laws.
Even the mighty Morgan Bank, under the influence of antitrust laws, was split into Morgan Stanley and J.P. Morgan; Alcoa, after an 8-year lawsuit, was forcibly divided, marking the end of the aluminum trust; the telecommunications giant AT&T, after a 12-year lawsuit, was also split into eight subsidiaries.
Today, companies like IBM, Microsoft (MSFT.US), and Intel (INTC.US) have also faced antitrust investigations.
In the late 1990s, Microsoft faced antitrust litigation over issues such as the bundling of its operating system with other software, indirectly providing space for the rise of other internet companies like Google (GOOGL.US).
Now, Google has also come before the antitrust laws, and the once-beneficiary will also face the antitrust storm directly.
On Wednesday (local time), the U.S. Department of Justice officially requested the court to urge federal judges to force the sale of Google's Chrome web browser. Previously, Google had been ruled to have violated U.S. antitrust laws with its search business.
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The Department of Justice believes that divesting the Chrome browser will allow Google's competitors to vie for the market share they should have had and will break Google's long-standing monopoly on the search engine market.
Furthermore, the Department of Justice also stated that Google should be prohibited from signing exclusive agreements with third parties such as Apple (AAPL.US) and Samsung, and from prioritizing the promotion of its search services in other products.
Launched in 2008, according to market research firm Statcounter, the Chrome browser accounts for nearly 67% of the global browser market, making it an absolute market leader.
For Google, the Chrome browser is the primary access point for users to access Google's search engine, bringing a significant amount of traffic and users to Google. Google also collects a vast amount of user data through the Chrome browser, serving its advertising business, with ad revenue being the largest contributor to Google's revenue. Additionally, the Chrome browser is a key component of Google's ecosystem.
On October 29th, after the market closed (local time), Google's parent company Alphabet released its financial report for the third quarter of 2024. The data shows that in the third quarter, Alphabet's revenue increased by 15% year-on-year to $88.268 billion, with Google's advertising revenue at $65.854 billion, further broken down into Google search and other businesses contributing $49.385 billion in revenue.
It is evident that the Chrome browser holds a pivotal significance for Google, and being forced to sell it would have far-reaching implications.
And this is not the end of the antitrust saga.
It is reported that the conflict between the U.S. Department of Justice and Google has escalated. In addition to divesting the browser, the Department of Justice is also considering splitting Google's Android system division.
Furthermore, some reports suggest that the Department of Justice is also considering splitting the Google Play app store and limiting the training content of its AI models.
According to Statcounter's data, the Android system is also the world's most popular mobile device operating system, accounting for about 71% of the market share, with most Android devices pre-installed with Google's applications, thereby generating a continuous stream of revenue for Google.
From the above news, if this set of combined blows is really delivered, Google is likely to suffer a "severe injury".
Stimulated by this news, Google's stock price has fallen significantly, with Google-A falling by 4.74% and Google-C falling by 4.56%, significantly underperforming other tech giants.
In response to the Department of Justice's proposal, Google has expressed strong disagreement and stated that the current proposal by the U.S. Department of Justice is too radical, warning that it will harm consumers and businesses.
The aforementioned proposal is the first complete proposal by the U.S. Department of Justice on how to mitigate the damage caused by Google's illegal monopoly. Google will submit its own opinions next month for the court's reference. The Department of Justice plans to revise its views again in March 2025, followed by a two-week hearing in April, with the judge expected to make a final ruling by the end of next summer.
It is understood that in October 2020, the U.S. Department of Justice filed an antitrust lawsuit against Google. Before formally suing Google, the U.S. Department of Justice had conducted a two-year antitrust lawsuit against Google.
After the Biden administration took office, the U.S. government's antitrust stance became more aggressive, successively appointing several antitrust-hawkish scholars to lead the Department of Justice and the Federal Trade Commission (FTC) and other antitrust regulatory agencies, continuing and updating antitrust lawsuits against internet giants such as Google, Amazon, and Meta.
However, in public interviews, it has been stated that they will not seek to split Google like Biden, but will only make changes to make Google's competitiveness "fairer".
Overall, U.S. authorities previously sought to impose heavy antitrust penalties on Microsoft, but Microsoft avoided the fate of being split up. Whether Google will ultimately be split up remains to be seen. However, even if it ultimately avoids being split up, Google's operations may inevitably be affected to some extent.
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