Google’s Antitrust lawsuit: major breakup dodged

By Jack Liu

Source: Stock Picture

Google has escaped the biggest antitrust threat in its history — for now. Found guilty of abusing its monopoly in search and ads, the tech giant avoided a major breakup as regulators weighed the rise of AI competitors like ChatGPT. The verdict marks a turning point in how Big Tech’s power will be challenged in the years ahead.

In August 2025, a US court found Google guilty of building an illegal monopoly in the search engine market. The court found that Google abused its dominance by reducing consumer choice and weakening its competitors. Ultimately, this monopoly reinforced its dominance in the ad business. This case became the most significant US antitrust trial against Big Tech since Microsoft in the 1990s, with a surprising outcome.

Key evidence

Google controls 90% of the search engine market compared to the tiny 3% of its largest competitor, Bing, according to Statista. This translated to an annual revenue of $348 billion in 2024. Being a monopoly in itself is not unlawful, and Google argued that it is a natural monopoly because it is the first and best search engine, and it bears high operating costs. In an internal study, Google revealed that to reproduce a search engine close of a similar quality, it would take $20 billion annually to maintain it. This exceeds Bing’s entire annual revenue of $12 billion.

However, abusing this dominance is illegal. The Department of Justice describes Google’s monopoly strategy as a vicious circle. First, Google pays billions of dollars to be the default search engine everywhere to grow search queries and data to generate more revenue.  This dominance in the search engine market secured Google a monopoly in the search engine ad business. Then Google uses the user data from its search engine to improve its ad targeting and to drive profits. The loop closes with the profits being reinvested in new exclusive contracts to further fortify the search monopoly.

Exclusive contracts were a centrepiece of the case. Google kept rivals like DuckDuckGo away by paying device manufacturers and browser companies like Apple and Firefox to set Google as the default search engine. In 2021, Google spent $26 billion on those exclusive agreements, effectively reducing consumer choice. Google’s internal study proves the power of defaults in the market: most consumers do not care which search engine they are using, and they would stick with the default even if the quality degraded. Furthermore, Google paid Samsung to pre-install Gemini on its phones, but as the owner of Android, it blocked Motorola from making a similar deal with the rival Perplexity. Since the vast majority of phone manufacturers (around 75% of the market) rely on Android, Google basically has the power to impose its services over rivals, restricting their ability to gain traction in its ecosystem.

The significant payments from these exclusive contracts also disincentivise companies from developing their own search engine. Firms prefer to accept the guaranteed payments over the high risk to compete with Google, where the success is unclear. For instance, Apple gets the biggest share of Google’s total payments, with $20 billion in 2022, to keep it as the default search engine on iPhones. As one of the world’s largest tech companies, Apple clearly has the technical capability to build its own search platform, yet these payments make such a venture financially and strategically unattractive.

Additionally, exploiting its search engine monopoly, Google monopolised the ad business, controlling over 70% of that market. In 2024, 76% of its revenues, or $265 billion, come from ads. Leveraging the user data collection from its search, Google inflated ad prices. Indeed, in emergencies to meet revenue goals, Google has a practice called “Code Yellow” to artificially hike up ad prices by up to 5%, confident that businesses will pay regardless. This price manipulation caused  damage of $100 billion to advertisers, ultimately passed on to consumers.

Recommended remediations

In October 2024, the DOJ urged Judge Mehta to consider restructuring Google's business to restore fair competition. This restructuring could take the form of behavioral remedies, such as banning new exclusive agreements and preventing Google's ability to prioritize its own services, like preloading its apps on Android devices. Another proposed measure involves eliminating tacit default search engine settings on all devices and browsers, and prompting users to explicitly choose their preferred search engine during initial browser setup. A similar policy was already implemented in the European Union in March 2024, when Apple introduced a search engine choice screen with the iOS 17.4 update on iPhones.

Another request was to force Google to share its search data with rivals for a decade, with the goal of closing the quality and advantage gap in search. The two types of data are search index and user data.

In the worst-case scenario, Google could be even forced to sell its Chrome browser and Android OS to end self-favouring. The DOJ argues that Chrome is a “gateway to search” with over 4 billion users and unfairly reinforces Google’s dominance. In the past, Chrome even tracked users in the private “incognito mode”.

What this means for consumers and competitors

While regulators aim to increase choice, these decisions could backfire when it comes to consumer interest. Splitting Android from Google could harm integration and slow innovation, leaving only Apple’s iOS as a fully integrated alternative and defeating the whole point. Indeed, only large companies can afford to invest billions in yearly improvements.

Without Google’s payments, some companies like Apple risk a revenue drop. For smaller companies, the dependence runs even deeper. Mozilla, the developer of Firefox, disclosed that 83% of its 2021 annual revenue came from Google’s default search deal. Without these funds, Firefox’s survival would be at risk, leaving Chrome with even fewer competitors. Ironically, banning these payments could benefit Google even more: most users would likely continue using Google out of habit or preference, allowing Google to maintain its dominance while saving billions in distribution costs.

In the event of a forced sale of the Chrome browser, rivals, including OpenAI and Perplexity, have expressed interest in acquiring it to enhance the integration of their AI on devices. Both companies have launched their first AI powered agentic browser, so the addition of Chrome would give them access to decades of expertise and to a massive existent user base. OpenAI also showed interest in a license for Google’s search index because of quality issues with its own search “provider no. 1”, which is of course Bing (Microsoft is a major investor and partner of OpenAI).

The final verdict: a mild outcome

The final decision was made in August 2025. Despite Google being found guilty of abusing its monopoly for decades and despite the DOJ’s harsh recommendations, Google will face no substantial consequences. The reason is that a lot has changed in the search business since the beginning of the lawsuit in October 2020: the rapid adoption of ChatGPT, spread like wildfire, showed that generative AI seems to shape the future of search, challenging Google’s monopoly. For the first time since 2015, Google’s market share has dipped to below 90% in 2024. So the point of the judge’s decision is to avoid the risk of replacing a monopoly with another one.

This is why the judge ruled that Google could mostly keep doing its business without major changes and would not be forced to divest from any of its products. Google can also keep making deals with partners to be the default search engine or AI, as long as they are not excluding rivals from it. However, Google is required to share its data with competitors.

Markets reacted positively to the averted breakup:  Alphabet shares jumped roughly 8%, while Apple gained 4% thanks to the continuation of its lucrative partnerships with Google.

Conclusion

While Google has avoided a massive breakup, this won’t be its last antitrust lawsuit. For decades, Google has been building an ecosystem empire, which is now constantly under the scrutiny of regulators, trying to open doors for rivals. Currently, Google is also being sued and investigated in the US and EU for its Play Store gatekeeper role.

Nevertheless, this trial marks a turning point: the US sent a clear signal that dominant tech platforms will be held accountable when their market power limits competition. Across the industry, regulators are challenging how Big Tech companies run their platforms.

For investors, Alphabet remains a dominant player. But the combination of generative AI disruption, shifting consumer behaviour and antitrust enforcement means that Google’s margins, once taken for granted, are no longer untouchable.