How a breakup could upend Google (and the tech world)

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Google (GOOG, GOOGL) has a lot at stake if the Justice Department succeeds in breaking up its empire, from control over its search data and Android operating system to the loss of its Chrome browser.

But the biggest threat the company faces is to a search business that is deeply woven into the technology ecosystem of its parent company Alphabet.

Of the $307.3 billion in revenue Google made in 2023, $175 billion came solely from that ad-driven search engine business. The DOJ wants to impose dozens of limitations on the way that Google connects that engine with consumers.

Other parts of Alphabet could also be affected. The DOJ also asked for the company to be prohibited from favoring its video subsidiary, YouTube, which is part of its YouTube Ads business unit.

That unit, which generated $31.3 billion in revenue in 2023, earns money through ads that appear on and around YouTube videos. Google search promotes YouTube video links in response to user queries.

Google's digital ads business, a division that generated $31.5 billion in revenue in 2023, could also be imperiled by a limitation on search favoring YouTube. Advertisers as well as content creators use Google's buyer- and seller-side platforms to target consumers and monetize video content.

It will be up to District of Columbia Judge Amit Mehta, who sided with the DOJ’s monopoly argument in a trial that wrapped up earlier this year, to approve any of the proposals submitted by prosecutors. That could include the sale of Google's Chrome browser and a divestment of its Android mobile operating system.

Even artificial-intelligence investments designed to pay off in the future could be under threat. Prosecutors also called for Google to divest within six months any investment or ownership in rival query-based AI products, as well as rival search text advertising technology products.

That would force Google to unwind its partnership with generative AI startup Anthropic. Google has invested $2 billion in Anthropic, while also hiring the founders of another AI startup, Character.AI.

Taken together, the Justice Department’s requests would dramatically alter the tech landscape. Some legal experts said there is a slim chance Mehta will grant all of the prosecutors' proposals.

WASHINGTON, DC - MAY 31:  Judge Amit Mehta, of the U.S. District Court for the District of Columbia, speaks during the Justice Department's Asian American and Pacific Islander Heritage Month Observance Program, at the Justice Department, on May 31, 2017 in Washington, DC.  (Photo by Mark Wilson/Getty Images)
Judge Amit Mehta, of the U.S. District Court for the District of Columbia, will decide whether Google gets broken up. (Photo by Mark Wilson/Getty Images) · Mark Wilson via Getty Images

"I think it's pretty unlikely that the government will be successful in getting these things," Columbia Law School antitrust professor Erik Hovenkamp told Yahoo Finance.

"In particular, I do not expect the court to order any divestiture. Contrary to popular misconception, antitrust rarely breaks up monopolies."