Dive Brief:

• Google must sell its Chrome browser, license its search and ad data to rivals and stop entering into agreements that preference its search function on third-party devices, the Department of Justice says in its proposal to end the tech giant’s illegal monopoly in search and online ads.
• “Restoring competition to the markets for general search and search text advertising as they exist today will require reactivating the competitive process that Google has long stifled,” DOJ says in its proposal, submitted Nov. 20 to Judge Amit Mehta of federal District Court in the District of Columbia.
• The agency isn’t proposing an idea it was considering earlier to force Google to sell its Android operating system, instead recommending “behavioral remedies” that would address the search advantages its operating system gives it. But the government will propose the stronger Android remedy, if necessary. “If [the behavioral remedies] ultimately fail to achieve the high standards for meaningful relief in these critical markets,” it said, “the Court could require return to the first option.”

Dive Insight:

In August, Mehta found Google guilty of operating as an illegal monopoly in internet searches and online ads by the way it leverages its Chrome browser, cuts exclusive deals with device makers like Apple and, in a self-reinforcing cycle, uses the data it generates from search to improve its performance at the expense of rivals. 

DOJ says Google must divest Chrome, and not try to re-enter the browser market for five years, because its search and online ad services are built into that browser, leaving rivals without a way to compete for that business. “The Chrome default is ‘a market reality that significantly narrows the available channels of distribution and thus disincentivizes the emergence of new competition,’” DOJ says, referencing the court’s finding in August. 

Chrome has about two-thirds of the browser market globally, according to third-party data. 

Nor can Google be allowed to invest in any technology or company as a way to maintain a presence in the browser market. 

“Following its divestiture of Chrome it [is prohibited] from owning or acquiring any investment or interest in any search or search text ad rival, search distributor, or rival query-based AI product or ads technology,” the agency said. “Investments in or acquisitions of potential rivals would stifle emerging competition or reduce their incentives to challenge Google.”

The agency’s recommendation that Google be required to license the data from search and ad sales that it generates is intended to break the cycle that keeps rivals from improving their search and ad results.  

“Data at scale is the ‘essential raw material’ for ‘building, improving and sustaining’ a competitive general search engine,” DOJ says, referencing findings from the August decision. “Through its unlawful behavior, Google has accumulated a staggering amount of data over many years, at the expense of its rivals.”

To break that cycle, the agency says, Google needs to make its search index available at marginal cost, and on an ongoing basis, to rivals and potential rivals, and also needs to provide them user-side and ads data for a period of 10 years, at no cost. It would also require Google to syndicate its search results, ranking signals and U.S.-based query information for 10 years, and do the same with one year’s worth of search text ads. 

Of all the remedies the agency is proposing, this licensing requirement could end up being the most important, some analysts think. 

“Judge Mehta found factually that the Google search engine was a superior product,” Jeff Cross, counsel at Smith, Gambrell & Russell, told Legal Dive in an email earlier this week. “Judge Mehta made the point that the data was so important to Google that it retained individuals’ search data for up to 18 months.... Requiring Google to license the data to other search engine companies would allow them to be more competitive and would restore competition in the marketplace.”

DOJ’s recommendation that Google be prohibited from entering into agreements with device makers to preference its search services is mainly targeted at deals it has made with Apple that are worth tens of billions of dollars. The deals have kept Apple from becoming a competitor in that market while making Google the default search service on the iPhone and iPad.

With that deal, and with Google’s Android service, the company has effectively sealed up the search market globally. One third-party estimate says the company has 90% of the market. 

“An effective remedy must prevent Google from entering into contracts that foreclose or otherwise exclude competing general search engines and potential entrants,” DOJ says. To that end, Google would be prohibited from “providing third parties something of value (including financial payments) in order to make Google the default general search engine or otherwise discouraging those third parties from offering competing search products.”

In response to DOJ’s filing, a top Google lawyer said the proposals go far beyond what the court imagined when it ruled against the company in August. 

“DOJ chose to push a radical interventionist agenda that would harm Americans and America’s global technology leadership,” Kent Walker, the company’s president of global affairs and chief legal officer, said in a blog post. “DOJ had a chance to propose remedies related to the issue in this case: search distribution agreements with Apple, Mozilla, smartphone OEMs, and wireless carriers.”

Walker said the company intended to offer the court a detailed plan that would stick closer to the issues raised in the decision. “Many of these demands are clearly far afield from what even the Court’s order contemplated,” he said. “We’ll file our own proposals next month, and will make our broader case next year.”

There’s also little likelihood the Trump administration, when it takes office next year, will continue to support the DOJ approach. In mid-October, Trump said he thought Google should face some changes but he stopped short of supporting divestitures that would break up the company. 

Google has “a lot of power” that he would do “something about,” he said in an interview at the Economic Club in Chicago. “I give them a lot of credit. They’ve become such a power. How they became a power is, you know, really the discussion. At the same time, it’s a very dangerous thing [to break them up], because we want to have great companies — we don’t want China to have these companies. Right now, China is afraid of Google.”   

Mehta is expected to hold a hearing on the appropriate remedy in the spring and to issue his ruling in the fall.