That calming sound you hear is a sigh of relief reverberating from Mountain View, CA. As you may have heard, Google received some good news in the form of a stay of divestiture for its Chrome browser. Though it still faces punitive and preventative antitrust measures, the biggest bullet has been dodged.
As background, District of Columbia Judge Amit Mehta ruled in August 2024 that Google is indeed a monopoly. Likely actions floated at the time included spinning off and selling the Chrome browser, as well as ending its exclusive deals with Apple and others to gain default search engine positioning.
But Mehta’s ruling this week states that Google can continue to strike deals with “distribution partners for preloading or placement of Google Search, Chrome, or GenAI products.” That most notably includes a $20 billion per-year deal with Apple to make Google the default search engine in Safari and Siri.
But the bigger win for Google is that won’t be required to divest Chrome. This would have been a big deal – not just due to its hit to Google but in the broader context of the budding AI browser wars (more on that in a bit). Google’s stock – and Apple’s, for that matter – jumped on the news of this ruling.
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Causal Connection
Channeling our go-to corporate legal expert, James Ward, following this story has been a lesson in antitrust law. As Judge Mehta stated in his ruling (paraphrasing), it’s not just about being a monopoly. The court must discern between anticompetitive acts and monopoly position due to a superior product.
Google has a bit of both going on, and that’s reflected in Mehta’s ruling. Most importantly, he did not agree with DOJ’s argument that anticompetitive acts have occurred to a degree that would justify forcing a sale of Chrome. DOJ also argued for the sale of Android, which was rebuffed for the same reason.
“After two complete trials, this court cannot find that Google’s market dominance is sufficiently attributable to its illegal conduct to justify divestiture,” Judge Mehta said regarding Chrome. He added that such “radical structural relief” would require a more heightened causal connection.
But Google isn’t out of the woods. Several smaller actions will be enforced, including the inability to condition the licensing of apps in the Play Store on distributing or preloading Google services like search. It also can’t condition revenue-sharing from one Google app on the placement of another.
Market Forces
On balance, the latest development is obviously good news for Google, which not only keeps a linchpin in its architecture but avoids the onerous process of surgically removing it. But the most under-discussed angle is the implication for Google’s positioning in the AI browser wars, as noted earlier.
Several AI engines are launching or planning to launch web browsers. The thought is that the browser is the perfect place to infuse agentic AI functionality; and is a wide funnel opening for freemium AI business models. Google now gets to develop that, and avoid Chrome falling into the hands of an AI competitor.
In fact, the rise of all of this AI competition provided an ironic twist for Google. That competition worked in its favor in terms of demonstrating that it faces ample free-market challenges to its positioning. In that sense, regulating away its competitive advantages could be seen as federal overreach. Mehta agreed.
The rise of search competition posed by generative AI presents “strong reasons not to jolt the system and to allow market forces to do the work,” he said.
