Google stock hammered after DOJ calls for Chrome sale
The Justice Department is looking to break up one of America’s most powerful companies following a court ruling in September that found Google violated antitrust law. Shares of Google-parent Alphabet plunged over 5% Thursday after prosecutors outlined proposed remedies that would significantly alter how the search giant conducts its business.
In September, U.S. District Judge Amit Mehta ruled Google had illegally monopolized the search market with tens of billions of dollars in payments to ensure it remained the default search engine on smartphones and web browsers. Beyond calling for a stop to those practices, the DOJ also wants to stop Google from making itself the default search option on its line of Pixel smartphones. Most notably, however, the agency also called on the judge to force the company to sell its flagship Chrome browser.
Alphabet’s Class C shares closed the day down 4.5% and then dropped further in after-hours trading.
In response, chief legal officer Kent Walker said the proposed remedies would endanger Americans’ security and privacy, as well as chill the company’s investments in artificial intelligence.
“DOJ’s approach would result in unprecedented government overreach that would harm American consumers, developers, and small businesses—and jeopardize America’s global economic and technological leadership at precisely the moment it’s needed most,” he said in a statement posted on the company’s website.
Ironically, the ruling on the anticompetitive payments, which Google terms “traffic acquisition costs,” could potentially help the company’s bottom line. Those expenses totaled $40 billion in the first nine months of 2024, according to Baron’s, or nearly 40% of the company’s cost of revenue. Taking those off the table would immediately boost gross margins.
But owning Chrome, the world’s most popular web browser, helps power Google’s ads business, the company’s largest source of revenue. It’s also how the company has introduced many consumers to its main AI offering, Gemini, which currently summarizes results to queries and may eventually follow users around the web.
However, a theoretical sale could prove difficult to execute. As Bloomberg noted, most of the companies who could afford the potential deal, including the likes of Amazon, are already under antirust scrutiny themselves.
Regardless of whether Judge Mehta approves the remedies—a judgement is expected in August 2025—Google says it plans to appeal. It’s unclear how the incoming Trump administration will view the case, given that it started during the President-elect’s first term and then continued under Biden.
