• The DOJ may require Google to divest parts of its business, like Chrome and Android, to address its online search monopoly.
  • Google’s U.S. search ad market share is forecast to drop below 50% by 2025, according to eMarketer.

The U.S. Department of Justice (DOJ) is proposing measures to dismantle Google’s search dominance, which could impact its profits and growth in artificial intelligence (AI). The DOJ may request a judge to force Google, owned by Alphabet Inc. (GOOGL.O), to divest key business areas like its Chrome browser and Android operating system, which it claims help maintain Google’s online search monopoly.

Other options being considered include restricting Google’s collection of sensitive user data, requiring it to make search results and indexes accessible to competitors, and allowing websites to opt out of their content being used for AI training. Google may also be required to report to a "court-appointed technical committee."

Investors reacted to the news, causing Alphabet’s shares to fall by 1.5% to $161.86. Analysts suggest these remedies target the core of Google's business, potentially reducing revenue and opening opportunities for competitors. Gil Luria, managing director and senior software analyst at D.A. Davidson, commented,

"The DOJ has reverse engineered Google's formula for success and is intent in dismantling it."

He added that the proposed data-sharing requirements could strengthen rivals.

AI-related measures may also hinder Google’s progress, especially as it faces competition from startups like OpenAI and AI-powered search engine operator Perplexity. According to eMarketer, Google’s U.S. search ad market share is expected to drop below 50% by 2025. Bernstein analyst Mark Shmulik noted,

"The last thing Google needs right now in the broader AI battle is having to fight with one hand tied behind their backs by regulators."

Companies like DuckDuckGo, Microsoft Bing, Meta Platforms, and Amazon could benefit from these regulatory actions as the market opens up further.

Edited by Harshajit Sarmah