The federal judge who will decide how to limit Google’s monopoly in search is considering its advantage in artificial intelligence too, and aiming to limit harm to the other players in the market with any resolution.

On Friday in U.S. District Court in Washington, attorneys for Alphabet Inc.’s Google and the Justice Department answered Judge Amit Mehta’s final questions in the government’s monopoly case against the search giant. It will be up to Mehta to decide whether to break up the company and reshape the internet or impose more limited penalties.

Mehta’s first questions to the government focused on whether curbing Google’s position in generative AI was a fitting way to address the company’s dominance in search, He also mulled the possibility of Google being forced to share key data with rivals and banning it from paying to make its search engine the default on other devices.

“Does the government believe that there is a market for a new search engine to emerge as we think of it today?” he asked. “Do you think somebody is going to come off the sidelines and build a new general search engine in light of what we are now seeing happen in the AI space?”

“The short answer is yes, your honor,” Justice Department lawyer David Dahlquist responded. “We do believe that these remedies that will be proposed will allow that opportunity to occur. The reason we are so focused on gen AI, and the reason you heard a lot of evidence about it, is because that is the new search access point.”

The questions focused on the Justice Department’s proposal for forward-looking, long-term measures to resolve Google’s conduct in the market, which Mehta ruled last year was an illegal monopoly of the online search market. Antitrust regulators have argued that Google’s dominance in traditional search could extend to generative AI, which is becoming a key gateway for how users access information online.

Exclusive agreements

Central to the case are agreements with Apple Inc. and others in which Google pays billions of dollars annually to be the default search engine on the iPhone maker’s devices. The DOJ is seeking a bar on those payments, which would also apply to Google’s artificial intelligence products, including its flagship AI model, Gemini. Google’s counterproposal would still allow for the company to split revenue with competing browsers.

The company’s lawyers have said that banning Google from competing for search distribution contracts only serves to help large rivals like Microsoft at the expense of consumers, browser companies and device makers.

Mehta told the DOJ that if he were to cut off Google’s payments to Apple, Mozilla and others to distribute its search engine, it would cause widespread market harm.

“Every single distribution partner said, ‘This would harm us.’ Some have gone so far to suggest this would put them out of business,” Mehta said. “Is that an acceptable outcome, to fix one market and harm others?” he asked, referring to the browser and device maker industries.

“That’s a fair question,” Dahlquist replied. But “that is asking the court to put private interests ahead of the public interest.” He added that the government does not “dispute the possibility of some private impact.”

Mehta asked if it would work to create any exceptions to the payment ban, a possibility Dahlquist rejected, saying that even Apple’s Eddy Cue wasn’t fully opposed to the government’s proposals. Apple stands to lose tens of billions of dollars in annual payments from Google if the DOJ’s proposals are to be adopted and revenue sharing is paused for the next 10 years.

“I think you’re right that Mr. Cue wants more choice and he may be willing to be paid less money” for more choice, Mehta responded. “I just don’t know whether he wants to live in a world where he can’t get paid anything for no choice.”

The company’s lead lawyer John Schmidtlein objected to any payment ban. “Banning the payments here would not be addressing the unlawful conduct,” he said. “It would not be connected to the violation in this case.”

Existential threat

AI chatbots are already seen as an existential threat to traditional search engines, as they can address users’ questions directly with AI-drafted responses — replacing the need to present people with a long list of search results pointing across the web.

Google has argued that the government’s proposals are too extreme, saying they would hurt American consumers and the economy, as well as weaken U.S. technological leadership. Google argues that it is the market leader in search because of more than 20 years of innovation. It says people use its service because it is the best.

Schmidtlein asserted on Friday that the court should focus on addressing the specific conduct found to be illegal, rather than imposing extensive remedies — including on Google’s generative AI products — that he said could fundamentally restructure the market.

But Mehta also appeared skeptical of the tech giant’s argument for more limited remedies, indicating he is seriously considering including AI-related measures in his decision.

“It seems to me that to simply say, ‘look, just open up the avenues of distribution,’ without providing any further remedies that are forward-looking and that would allow competitors to actually be rivals here, sells the remedy portion of this short,” Mehta commented.

Schmidtlein countered that gen AI products are not in the relevant market for search. “There is no evidence that gen AI products have been harmed by any of the conduct issue in this case,” he said. “They couldn’t have been, they weren’t around, right?”

Perplexity, OpenAI

As the trial unfolded in April and May, some representatives from AI companies told the court they are already being stymied by Google. Perplexity’s Dmitry Shevelenko testified that Google’s contract with Lenovo Group Ltd.’s Motorola blocked the smartphone maker from setting Perplexity as the default assistant on its new devices. Motorola “can’t get out of their Google obligations and so they are unable to change the default assistant on the device,” the Perplexity executive said.

Representatives of two prominent AI startups — OpenAI and Perplexity AI — also testified their companies would be interested in buying Chrome if Google were forced to divest it.

Much of the discussion in the first part of the day focused on what data, and how much of it Google would be forced to syndicate to rivals so they can build their own search engines.

Alphabet CEO Sundar Pichai testified in April that the Justice Department’s proposal to share search data with rivals constituted a “de facto” divestiture of the company’s search engine.

On Friday, Mehta told government lawyer Dahlquist that he is “not looking to kneecap Google” but to instead bolster potential competitors. “We are trying to kickstart competitors, we are not trying to put them on equal footing on day one.”

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