Alphabet Inc., the parent company of Google, saw its shares drop by 6% on Thursday following a significant development in the ongoing antitrust case against the tech giant.
The US Department of Justice (DOJ) has called for Google to divest its Chrome browser as part of a proposed remedy to end its dominance in the online search market.
In a filing on Wednesday, the DOJ argued that Google’s control over Chrome gives it an unfair advantage as a “critical search access point,” enabling it to maintain its monopoly over search and digital advertising. The proposal includes banning Google from entering into exclusive agreements with device manufacturers like Apple and Samsung. These agreements, which make Google the default search engine on devices, have been a key focus of the DOJ’s case.
“The divestiture of Chrome is intended to ensure rival search engines gain fair access to the browser many users rely on to navigate the internet,” the DOJ stated.
This move is part of a larger antitrust battle that has spanned years, with a federal judge ruling in August that Google violated Section 2 of the Sherman Act by maintaining an illegal monopoly in search and text advertising.
The DOJ’s filing had an immediate effect on Alphabet’s stock, which closed down nearly 4.6% on Thursday at around $168 per share. Apple, also implicated in the DOJ’s scrutiny due to its search engine agreement with Google, saw its shares decline 0.6%. Despite these dips, Alphabet’s stock had risen 26% year-to-date before this news, and Apple had gained 18%.
Google’s Chrome browser currently dominates the global market with a two-thirds share. This central role has made it a key focus in the antitrust debate. Comparisons have been drawn to Microsoft’s 2001 antitrust settlement, where similar concerns about market dominance were addressed.
Judge Amit Mehta, overseeing the case, plans to determine remedies for Google’s antitrust violations after a trial set for April 2025. Analysts predict the resolution process could extend for several years, with appeals likely regardless of the outcome.
Industry experts warn that the proposed divestiture could cast a long shadow over Alphabet’s stock performance.
“Barring a significant change in DOJ priorities, this case is likely to remain a major overhang on Google shares until a final decision is reached,” said Mark Mahaney, an analyst at Evercore ISI.
Craig Moffett of Moffett Nathanson noted that the Tunney Act, a law requiring judicial review of antitrust settlements, ensures that the case cannot be resolved quickly or without oversight.
In addition to Chrome divestiture, the DOJ also seeks to limit Google’s preferential treatment of its search engine on Android devices, which further underscores the agency’s focus on leveling the playing field for competitors.
With input from CNBC and Investor’s Business Insider.
