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Written by: Susannah Streeter | Hargreaves Lansdow
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The US government says it is considering whether to ask a judge to break up search engine giant Google.
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The Department of Justice has indicated this could include "structural requirements” to prevent Google from maintaining its search monopoly.
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It follows a court ruling in August which found that Google had maintained its dominance of online search through illegal practices.
Regulation has been hovering like a dark cloud over Google owner Alphabet for years, so shareholders have been pretty sanguine after this latest twist in its tussles with lawmakers. Shares dipped less than 1% in pre-market trading, with sentiment overall having warmed back up towards tech stocks, with interest rate cuts still eyed, which would buoy the value of potential earnings. It’s likely that this latest regulation rigmarole will result in a multi-year period of appeals and will end in a series of concessions rather than a full breakup.
Even if Google’s power is diminished and it’s not able to be the default search engine on devices owned by big tech giants, it’s sheer might of reputation in the world of search is likely to propel users towards it, nonetheless. The power of Google over the second quarter indicates that its already harnessing AI technology to deliver improvements and get more fingers searching and more eyes on screen. Advertisers are also seeing benefits in terms of higher engagement.
It’s early days but given Alphabet’s super-deep pockets to pour into these new technologies, and its increasing dominance in the Cloud business, Google looks set to stay well positioned to take advantages of future developments. Nevertheless, rivals are still nipping at its heels, and competition is intensifying from the likes of Amazon, which already has a ready well of customers who use the site to search for products. It’s far from clear who will be the winners. as the AI juggernaut continues to rumble, and it could well be an upstart rival rather than a regulator which poses the greatest risk to Google’s search dominance.
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