EXECUTIVE SUMMARY

• Earlier last month, a judge for the U.S. District Court for the District of Columbia ruled in the remedies phase of the Google Search antitrust case, largely rejecting the Department of Justice’s (DOJ) extensive remedies proposals but still imposing some restrictions to address Google’s search monopoly.
• Specifically, the court ruled that Google must share search data with its competitors over the next five years and cease contracts that gave the company’s applications default permissions on devices and platforms; yet the court did not grant the more intrusive and disruptive remedies sought by the DOJ, including the divestiture of Chrome and a limit on artificial intelligence investments.
• This ruling has prompted some critics to argue existing antitrust law fails to adequately regulate large technology companies, but proposals to expand the domain of antitrust law would dispense with the necessary examination of consumer effects and rigorous economic analysis currently required and would likely stifle U.S. technology innovation.

INTRODUCTION

Earlier last month, a U.S. District Court in the District of Columbia released a long-awaited decision on the remedies for the Department of Justice’s (DOJ) antitrust case against Google Search, which the court had previously found to maintain an illegal monopoly. Specifically, the court ruled that Google must share its data with competitors but allowed the company to retain Chrome and continue investments in artificial intelligence (AI) unabated, a lighter judgment than what the DOJ initially proposed the tech giant should face.

The DOJ had previously requested a variety of remedies ranging from minor behavioral changes to sweeping structural changes. These remedies included the divestiture of Chrome, a limit on AI investments, restrictions on default agreements, and more.

Because the court disagreed with the DOJ’s broader proposals, some antitrust reform advocates have called for legal changes to allow for additional per se liability on Big Tech companies, arguing that current antitrust law is insufficient to protect consumers and ensure a healthy and competitive market. Yet doing so would ignore the beneficial competitive effects of Google’s practices and investments and could therefore limit large technology companies’ ability to innovate and invest in new technologies. For example, while Google Search was declared a monopoly by the same court in August 2024, the case was largely argued before generative AI even became commercially available. Now, many use generative AI as a direct substitute for traditional search engines, loosening Google’s market dominance. Lawmakers should be skeptical of calls for antitrust reform that fail to consider the wider competitive effects of firms’ practices and that would limit innovation in tech.

REMEDIES DECISION

The DOJ requested extensive remedies. First, it requested the court prohibit the end of exclusive deals with original equipment manufacturers, mobile carriers, and browser developers that make Google applications the default programs. Second, it requested that Google share data with rival search engines to help improve their services and better compete with Google. Third, it requested a limit on Google’s AI investment to prevent future monopolization of AI markets. And finally, it requested the divestiture of Chrome, Google’s trademark search engine. The DOJ looked to apply these remedies to combat Google’s search monopoly, which allowed it to generate the strongest advertisement revenue and search data of its peers, most notably DuckDuckGo and Bing.

Despite the DOJ’s broad requests for intervention, such as the structural separation of Google Chrome and extensive data-sharing requirements, the court only levied three distinct remedies on Google. First, Google is prohibited from entering or maintaining exclusive contracts for its services. This means Gemini, Google Search, Chrome, and Google Assistant cannot be the default platform for any original equipment manufacturers or mobile carriers if Google pays for the right. Second, Google must make certain search index and user-interaction data available to its qualified competitors for five years. While the exact extent of this data and its impact on Google isn’t known, we can expect this to be a contentious point of appeal. Last, Google must provide qualified competitors with search and search text ads syndication, attempting to accelerate their timeline to compete in search.

While this decision will substantially impact Google’s operations, the Justice Department was looking for further comprehensive remedies. The DOJ requested the above remedies, along with a limit on AI investment and a divestiture of Chrome. The court decided to reject these remedies, primarily due to the evolving landscape of generative AI. Limiting Google’s ability to compete in AI limits consumer welfare, as it would bar Google from competing on innovation and price with the rest of the large technology companies. Further, the court explained that divesting Chrome would be “unnatural,” as the platform cannot support itself. Generative AI also poses a threat to Google’s search monopoly in the short term by competing with its search function, limiting the need for drastic reforms to restore competitiveness to the market.

CALLS FOR REFORM

Because the court’s remedy did not go as far as the DOJ proposed, some prominent advocates of antitrust reform have called for legislative changes. Most notably, Senator Klobuchar (D-MN) called for sweeping antitrust reform, specifically touting her American Innovation and Choice Online Act, which targets self-preferencing by large technology platforms. The bill would broaden the application of antitrust remedies on Big Tech and give antitrust enforcers the right to seek broad injunctions, emergency interim relief, and potentially forfeit executive compensation. Senator Elizabeth Warren (D-MA) similarly called for greater antitrust scrutiny in the technology sector, calling the D.C. ruling a “slap on the wrist.”

IMPACT ON INNOVATION AND COMPETITION

These calls for changes to antitrust law often ignore the competitive effects of given practices, and outlawing concentration as a per se harm inevitably undermines consumer welfare. Therefore, regulators should be careful not to stifle innovation in technology markets.

The tech landscape is the quickest evolving marketplace in the world, highlighted by consistent improvements to innovative products. Nokia was once the top mobile phone developer, Yahoo! the search engine of the future, and MySpace the dominant social network. All three of these companies were leaders in their respective spaces but eventually failed to grow with the dynamic tech marketplace. Similarly, Microsoft faced a significant antitrust case over its browser applications while the smartphone and mobile browser markets evolved in the 2000s. While the case did not directly prohibit Microsoft’s entry into the smartphone market, the challenges of antitrust litigation disrupted Microsoft’s ability to allocate resources to penetrate the market, later described by Bill Gates as his “biggest mistake.” If today’s tech companies likewise fail to innovate and invest in pro-consumer features, new startups and other large rivals will cut into their market share, potentially driving them out of business.

In Google’s case, generative AI is the first major disruption it has faced in general search. Like Apple’s replacement of BlackBerry, Chrome of Yahoo!, and Facebook of MySpace, GenAI aims to disrupt search and rewire how consumers receive information. AlixPartners – a consulting company – predicts that Google’s share of the search advertising market will shrink by year’s end from 51 percent to 48 percent in the United States and continue this trend as it concedes market share to the likes of OpenAI and Perplexity.

By allowing Google to remain a player in AI and retain Chrome, the court’s ruling allows dynamic competition in AI to continue flourishing. As Google, Microsoft, Meta, and Amazon push to innovate, consumers benefit from tangible improvements in AI tools. Further, as they continue to compete, downward pressure is applied to costs for consumers as companies race for AI dominance. If the court had overcorrected and limited Google’s ability to compete in AI, this delicate balance could have been disrupted, harming consumers as new generation technologies emerge.

If legislation were introduced that required Google to divest Chrome or otherwise limit its ability to make investments in AI, the company would almost certainly fall behind its rivals in the near term, as Meta and Microsoft invest heavily in AI capacity, resulting in fewer players in an AI arms race to unseat Google’s search monopoly. Antitrust law was created to protect consumers, not to change market dynamics.

CONCLUSION

As the AI market grows and steadily becomes one of the largest and most impactful markets in the global landscape, proponents of stricter antitrust remedies for large tech companies should recognize that allowing large technology companies to innovate can often lead to greater consumer welfare in the long run, rather than strict regulations in times of great change.