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After the EU, Google faces a painful reckoning in the US due to the resumption of antitrust proceedings in world news

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After the EU, Google faces a painful reckoning in the US due to the resumption of antitrust proceedings in world news
Written by Leah Nylen, Malthi Nayak and Julia Love

The problem of lack of trust in Google returns.

Although the company defeated European antitrust intervention by paying 6.5 billion euros ($7.1 billion), U.S. officials are now flexing their muscles — and the most painful part is Alphabet Inc.'s unit. there will be no financial penalty, but an impact on the core business that is expected to generate large revenues.

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Within three days, a federal judge ordered the company to open its lucrative app store to competitors, and the Justice Department said it could force the tech giant to shut down some services to address its online search monopoly.

While the breakup may be difficult for the Washington judge overseeing the Justice Department's search case, Google is undoubtedly considering changes to the way it has long operated, antitrust experts say.

“The Department of Justice is trying to find remedies that will not only restore competition in search but also prevent Google from re-entering the market as the market changes,” said Abiel Garcia, an antitrust lawyer and partner at Kesselman Brantley Stockinger LLC . These countermeasures may prompt Google to “reconsider and re-evaluate its business strategy to some extent, but it won't be the case that we won't have Google anymore.”

Google criticized the Justice Department's initial proposal as “radical,” saying it had “significant unintended consequences for consumers, businesses and American competition.”

The company's shares have fallen more than 15 percent since hitting an all-time high of $191.18 on July 10.

“There is a clear disconnect when it comes to the antitrust side and the experiments that Alphabet is doing,” Mandeep Singh, senior technology industry analyst at Bloomberg Intelligence, told Bloomberg TV.

Forcing Google to share its index could help not only find rivals but also artificial intelligence companies looking to enter the space, said Dhaval Mugimane, a senior partner at the West Monroe consulting firm.

Sharing search information “definitely starts competition, which is the goal here,” he said. “That's the secret sauce from Google's perspective.”

Daniel Morgan, a fund manager at Synovus Trust Co., said Coca-Cola was asked to share its recipes with other soda makers rather than being required to share its data with Google.

“The Department of Justice is trying to narrow the entry moat for other search competitors,” Morgan said. “Google's proprietary algorithms, which have given Google its competitive advantage as the world's dominant search engine company, will be available to its competitors as an open source model.”

Vanderbilt Law School professor Rebecca Allensworth, who followed the case closely, said it was “highly unlikely” that U.S. District Judge Amit Mehta would take up the breakup case. Most of the Justice Department's lawsuits against Apple Inc. led to the iPhone becoming the default search engine. He was focusing on the $20 billion Google deal, he said, and not on Chrome or Android – Google products that the Justice Department has identified as potentially exempt.

He said Mehta was closely watching the Microsoft Corp. case, in which the Justice Department successfully sued the Windows maker in 1998 for monopolizing its computer operating system. The judge in the case initially decided that Microsoft should be dissolved before dismissing the appeal.

Allensworth said of Mehta: “There is no way a judge is going to take down Google in this case.

John Quoca, an economist at Northeastern University who has extensively examined antitrust measures, said the breakup “should be considered” at least as a “signal” to Google and other companies facing antitrust cases that antitrust enforcers won't accept a poor solution.

With countermeasures, companies have an incentive to avoid or even force access to data, which can be complicated by questions about who receives data and how much, he said.

“The structural repair track record is quite good,” Kwoka said, noting that the AT&T split came after years of unsuccessful attempts to address behavioral repair issues. “If those in need had waited to bite the bullet, there could have been a lot of collateral damage.”

Bill Kovacik, an antitrust professor at George Washington University Law School, said the Justice Department's filing was a “conscious attempt to present” the issue to the judge by “giving him a hot menu ranging from mild to spicy.”

Despite calling a breakup a “radical” solution for Google, Kovacic noted that today's companies “have a lot of experience merging and separating companies.” He added that some of the Justice Department's proposals – such as requiring companies to share some search data – are already in place in Europe as part of the implementation of new digital gatekeeper rules.

Quoca and Allensworth also agree that the justice system may try to use the severance option as an opening gambit, so Mehta is more likely to choose another solution he prefers, such as data sharing.

“It would be a really progressive medicine,” Allensworth said. “Splitting the indexes would be a good and obvious way” to solve the problems.

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