The U.S. Department of Justice filed an antitrust suit against search giant Google on Tuesday, CNBC informs.
Five experts break down for CNBC what the suit means for parent company Alphabet, whether it has any merit and how Google will defend itself.
Jim Cramer, host of CNBC’s “Mad Money,” poked holes in the logistics of a breakup.
“One, it’s baked in. Two, it’s not the first rodeo. They’ve been able to defend this over and over and over again. There’s a huge number of documents that are in favor of Google. … If they broke up the company … what would you get? You’d get Waymo. You’d get health care. You get fantastic YouTube and you get search. What are they going to do? Break search up into what? Like A through M goes to Facebook?”
Tim Wu, Columbia Law School professor, said the odds of a full breakup are low.
“This is actually a fairly strong suit as they go but the question is, well, what does it accomplish? And, you know, if they go big to try to get some kind of breakup, that would be a big deal. The challenge I think for this suit is even though I think they chose their best lawsuit, it’s almost an exact copy of the Microsoft case they won in the ’90s. The remedies, the natural remedies are just … don’t make Google the default search engine. And that isn’t really going to transform the industry so I think the odds are actually lower on this of there being a real breakup down the road, but you know as they said … nothing is off the table.”
Luther Lowe, vice president of public policy at Yelp, said the DOJ has a straightforward case.
“When a mom does a search for a pediatrician in New York City today, instead of being matched with the best information from across the web, which is what the original bargain of Google was, she’s being unwittingly steered into an objectively lower-quality set of results. And this type of local searching happens literally billions of times a week in the United States. So I think that the U.S. government is going to have a pretty straightforward case here in terms of showing direct empirical evidence of consumer harm.”
Stephen Houck, former chief of the antitrust bureau at the New York state attorney general’s office, laid out the differences between this suit and that against Microsoft in the 1990s.
“We haven’t seen the complaint yet. I’m sure Google will move to dismiss it. Unlike Microsoft, here the problem from the very beginning has been a lack of consumer harm. Google’s products are well liked by consumers. They’re free. Unlike the Microsoft case where the whole objective of Microsoft was to enable itself to continue charging high monopoly prices … [these are] very different cases. The conduct apparently is going to be alleged, it’s also very, very different. Much more severe in the Microsoft case.”
Brian Nowak, senior internet equity research analyst at Morgan Stanley, said Google already underwent a similar scenario in Europe.
“The three things that really stand out to me coming out of this is No. 1, this is going to be a long process, and this is a process that will involve years, not quarters, likely in actually getting resolution. No. 2, as part of that multiquarter, potentially a year, process of politicking and negotiation … it’s not really clear what types of changes Alphabet or Google have to make to their core products and how we think about the real financial impact of those changes. And I would say point three, we’ve already been through a version of this before with search in Europe, specifically in 2018, where the European Commission did force Google to adjust their practices and the way in which they manage the Android ecosystem, essentially, allowing non-Google search engines into Android, into that ecosystem. And what we saw based on that case study at least is that the actual growth trajectory of Google Search revenue within Europe, we don’t really think was materially impacted.”