Google’s Legal Problems Aren’t Over. Here Are 3 Overlooked Antitrust Risks.

Members of the antitrust division of the U.S. Justice Department arrive at federal court in Washington, DC on May 30, during U.S. v Google. (Al Drago/Bloomberg)

U.S. v. Google ended with a whimper, not a bang this past week. Though Google Search was declared a monopoly that had shut down competition, it escaped the worst of the government’s proposed remedies. The stock soared 9% on the news to a record high. Still, there are significant antitrust dangers in front of the company that investors seem to have overlooked.

In his decision, U.S. District Judge Amit Mehta skirted the most drastic remedies proposed by the plaintiffs—the U.S. Department of Justice and most of the states—because circumstances have changed since the initial trial that declared Google Search a monopoly.

In the late 2023 “liability” phase of the trial, no one brought up the nascent competition from artificial-intelligence search engines. By 2025, when the court was considering remedies, the landscape had drastically changed, with Google seeing its first real competition in years from ChatGPT, Perplexity, and others.

“The emergence of GenAI changed the course of this case,” Mehta wrote in his ruling.

Google’s lawyers made that argument forcefully in the remedy phase of the trial, and Mehta agreed with them. “Venture funding in ‘internet search’ was considered Silicon Valley’s ‘biggest no fly zone’,” he wrote in his opinion. “The money flowing into this space, and how quickly it has arrived, is astonishing. These companies already are in a better position, both financially and technologically, to compete with Google than any traditional search company has been in decades.”

This was the main reason for the judge’s light touch. But Google didn’t get away unscathed. Here are three areas in which Google’s business could still be hurt by the court’s ruling:

Data sharing: A potential time bomb in the decision are the data-sharing remedies that made it through. Mehta shaved off much of the plaintiff’s proposals in this regard, but he left in some crucial parts that, with a lot of time, talent, and investment, could enable competitors to reverse engineer Google Search and the underlying technologies.

This could be a difference-maker for upstart AI search engines from Perplexity and OpenAI that currently rely on less complete web data. Until now, Google’s biggest competitive advantage in search has been its unique view of the web and how users interact with it. Maybe no longer.

The threat of AI disruption might have saved Google from a court-ordered breakup, but the company still faces a long-term threat from AI—and potential rivals will now be amplified by the data sharing requirement.

The Case May Not Be Over. Mehta said Google could continue making payments to Apple, which can keep its search engine as the default option on Apple devices. Apple investors breathed a sigh of relief here, as the “revenue sharing” came to $20 billion in 2022. But Mehta said he could still revisit this part of the ruling over the six-year term of his decision “if competition is not substantially restored through the remedies the court does impose.”

Then there is the issue of appeals. Neither Google nor the Justice Department would commit to appealing but the DOJ seemed open to the idea, stating in its press release, “We will continue to review the opinion to consider the Department’s options and next steps regarding seeking additional relief.”

It could use the leverage of an appeal to negotiate a better deal for the plaintiffs, to Google’s detriment. Or it could go to trial where the remedies could be vacated and sent back to Mehta with further instructions that are less favorable to Google.

Pending Cases. There will be more cases around Google antitrust, both abroad and in the U.S. The search monopoly case began in 2020 under the first Trump administration, but a second suit was filed in 2023 by the Justice Department during Joe Biden’s presidency. This case revolves around Google’s advertising network, which acts as a market for buying and selling digital ads across the web. Think of it like Nasdaq’s role in facilitating stock trades. The liability phase of this trial concluded in April with Google being declared an illegal monopoly for the second time. The remedies phase begins later this month in the U.S. District Court for the Eastern District of Virginia.

According to the DOJ, Google’s ad exchange has a majority market share, and is one of the biggest buyers and sellers on its own network, as if Nasdaq was one of the largest buyers and sellers of stock on its own exchange. “Google positioned itself to function simultaneously as buyer, seller, and auctioneer of digital display advertising,” reads the original complaint.

Put another way: In an auction for ad sales, Google effectively gets first and last looks every time, the court said.

Compared with the just concluded U.S. v. Google, the 2023 case “is the much more obvious candidate for divestiture with some kind of structural remedy,” according to Anne Witt, professor of law at France’s Edhec Business School, who has studied Big Tech’s global antitrust challenges.

The DOJ has proposed that Google be compelled to divest the exchange and its seller-side software.

To be sure, the importance of Google’s ad network to Alphabet’s business has waned. Once 21% of company revenue, it dwindled to 8.7% in 2024. The decline comes as Google Search AI Overviews have reduced traffic and ad demand on the web.

Still, the importance of the business can’t be measured just in dollars. Should the judge force Google to divest, the company would lose its 360-degree view of the market for digital ads. That could negatively impact its revenue and gross profit margin in its larger ad businesses, Search and YouTube.

And what about Google’s regulatory risk in the EU? That’s for a future column.

Write to Adam Levine at adam.levine@barrons.com