Progress is being made in several proceedings in the USA that could lead to a break-up of big tech companies. In addition to a possible sale of Google’s powerful advertising platforms, a sale of the Chrome browser is also on the table in the Google search proceedings. And proceedings are also underway regarding Meta, which could end in the sale of Instagram and WhatsApp. Where do the proceedings stand, what could happen next and what does this mean for digital markets?

The US ruling on advertising platforms and why the EU should finally follow suit

The verdict was handed down on April 17: Google has a monopoly position for relevant parts of online advertising. The judge found that it had exploited its monopoly power to the detriment of publishers as customers, competition and ultimately consumers as users of information. It has demanded excessive fees for the placement of online advertising, granted itself special rights and hindered other market participants.

Google has such a monopoly position in two of the three markets examined. In the next step, Google must present how it plans to eliminate this, and will do so in the coming weeks. The obvious solution is to sell the two monopoly platforms, namely DFP (short for DoubleClick for Publishers, i.e. the platform for providers of advertising space) and AdX (the platform on which providers and buyers come together in auctions). This would significantly weaken Google’s position in the advertising markets and make it easier for other companies to establish themselves as competitors.

In the EU, too, the decision in the European Commission’s investigation into advertising markets is still pending, although it was expected at the beginning of the year. It stands to reason that uncertainties surrounding the behavior of the US government are contributing to the delay in the decision. However, as Nobel Prize winner Daron Acemoglu demands, the US ruling is an ideal template for the EU to follow suit. Rebalance Now CEO Uli Müller is also in favor of the sale of the two advertising platforms and Tech Economy Lead Aline Blankertz comments on the current events in a short article on Deutschlandfunk.

The Google search process continues

The other major US case concerns Google search. The court has already established that Google also has a monopoly there. Last week’s hearings also revealed that Google paid smartphone manufacturer Samsung for the default use of Gemini. This means that the controversial practice of Google paying other companies to preset Google search has also shifted in parallel with the shift towards search with language models.

In the next step, the court could prescribe various interventions, such as the sale of Chrome and the sharing of search result data. The former is a core demand of the plaintiff Ministry of Justice. A decision will only be made in the coming months.

Meta could also have to look for buyers soon

Hearings are also currently underway regarding Meta and its purchases of Instagram and WhatsApp. In doing so, it is said to have deliberately eliminated up-and-coming competitors. Today, of course, the platforms are not in competition with each other, but are closely interlinked and share data with each other.

Could things have been different if, for example, Google, Apple or Twitter had bought Instagram, as is presented in the hearings? Regulation is essential in the social media sector in particular, in addition to limiting power through unbundling. Aline Blankertz explained last week on Deutschlandfunk radio how digital platforms need to be fundamentally rethought in order to address certain problems such as hate and hate speech on social networks.

Decision: Spin-off – and then?

Unbundling is an important element in controlling the power of tech companies. There are also a number of things to consider in order for them to have the desired effect.

An important point is who takes control. Of course, it is important to avoid creating new conflicts of interest or strengthening power in the process. For example, Amazon has expressed an interest in buying Tiktok if it is separated from its Chinese parent company Bytedance (the process is currently up in the air again because the Chinese government is objecting to the terms of the sale). OpenAI is also interested in Chrome, should it be put up for sale. In order to avoid such takeovers, which in any case are unlikely to be conducive to competition, courts would also have to order who should be excluded from a potential sale (which would also be reviewed in merger control proceedings if necessary) or which requirements buyers would have to meet. Restricting the group of buyers may reduce the purchase value, but this is in the interests of competition. This is because anti-competitive practices are often particularly profitable.

In addition, regulation is still necessary in order to contain the remaining power and its effects. For example, there is also talk in the US search proceedings that Google would be obliged to share search engine data. That still makes sense. Such a requirement is already part of the EU’s Digital Markets Act, but has not yet had any significant effect there because, according to market participants, the data is too aggregated to be of use to potential competitors. It is therefore always important to rule out circumvention strategies or lax implementation as far as possible.

Much is still open: Could Trump intervene in the US proceedings after all? Could Google or Meta propose weaker measures in order to reach an out-of-court settlement? But one thing is clear: the proceedings are currently moving in a welcome direction. As a first step, a lot would change for publishers in particular, who are hoping for a larger share of advertising revenue. For users, for example, there could be more choice of search engines that work on a similarly broad database as Google, and social networks that at least share a little less data with each other.

Photo by Maciej Karoń on Unsplash