Alphabet Shares Fall 5% as DOJ Seeks Chrome Sale

Shares of Alphabet, the parent company of Google, dropped more than 5% on Thursday, marking the largest selloff in 10 months. This decline followed a request from the U.S. Department of Justice (DOJ), which asked Google to divest its Chrome browser in order to end the company’s monopoly on the search engine market. The DOJ argued that selling Chrome was necessary to prevent Google from maintaining its dominance and to allow rival search engines access to the popular browser. Alphabet’s stock fell to just over $166 per share around 2:40 p.m. EST, the sharpest decline since January 30, when the company reported disappointing ad sales that fell below analysts’ expectations.

The Justice Department’s move comes after Judge Amit Mehta ruled in August that Google had violated antitrust laws. The DOJ is asking the judge to order Google to sell its Chrome browser, arguing that such a measure would level the playing field for competitors in the search engine market. Additionally, federal officials are seeking a five-year ban on Google reentering the browser market after the sale and preventing the company from entering agreements with companies like Apple or Samsung to make Google’s search engine the default on their devices. JPMorgan analysts noted that the DOJ’s proposal represents the “worst possible remedies” for Google, suggesting that expanding the search and search ads market for Google’s competitors could significantly undermine the company’s competitive advantage.

Although the DOJ did not call for Google to divest from its Android operating system, it did propose changes to Android that would prevent the operating system from favoring Google’s search engine and ads. If these changes are not implemented effectively, the DOJ has stated that it may push for the sale of Android as well, which would be a major blow to Google’s control over the smartphone market. The DOJ’s actions reflect an ongoing effort to curtail Google’s monopoly in both the search and browser markets, raising concerns about the company’s future business strategy.

In response to the DOJ’s proposal, Google condemned the move, calling it a “radical interventionist agenda.” Kent Walker, Google’s chief legal officer, stated that the proposal would harm both Americans and the global leadership of the U.S. in technology. He also argued that the DOJ’s actions could jeopardize the security and privacy of millions of Americans who rely on Google’s products. Google’s stance reflects the broader implications of the antitrust case, which has already attracted significant attention due to the company’s massive influence over online search and digital advertising.

The legal battle began in 2020 when the DOJ, alongside attorneys general from 11 states, filed an antitrust lawsuit against Google. The case accuses the company of engaging in “anticompetitive and exclusionary practices” to maintain its search engine monopoly, with Google commanding nearly 90% of the U.S. online search market. Judge Mehta’s ruling in August that Google is a “monopolist” has set the stage for further legal proceedings, and the DOJ is pressing for remedies to address Google’s market dominance. As Google prepares to respond to the DOJ’s proposal by December 20, the company faces mounting pressure from regulators to change its business practices and create a more competitive environment for search engines and online advertising.

The case’s outcome could have significant consequences for Google and the broader tech industry. If the court rules in favor of the DOJ’s proposal, forcing Google to divest Chrome or make other structural changes, it could open the door for increased competition in the search and browser markets. Such a shift could alter the competitive dynamics within the tech industry and force Google to adapt its business strategy. While the future of the case remains uncertain, investors are closely monitoring the developments, as the outcome could shape the long-term profitability and growth of Alphabet.

In the coming months, the legal battle will continue to unfold, with further arguments expected from both the DOJ and Google. The DOJ’s push for a Chrome divestiture is just one part of the broader antitrust investigation into Google’s practices, and the case is likely to remain a central issue in discussions about the regulation of tech giants. With Google already facing significant challenges in the form of regulatory scrutiny, the company’s future operations may be significantly impacted by the final outcome of this case.