Is Google really a monopoly?

In a judgement delivered two weeks ago, a federal judge found that Google has a monopoly over the online search market. Now, news reports are surfacing that the US Department of Justice (DoJ) may be seeking to "split up" the company, to remedy the situation.

Investors in Google may be wondering what a possible "split up" means for them. Here's my short answer: it does not mean much because it is not likely to happen, and even if it did, we will be fine. Hang on to your Google shares.

Let me explain in a little more detail. Google dominates web search, because it's the best way to find things on the internet, by far. They pay a lot of money to Apple to be the default search engine on iPhones. They also pay other smartphone makers to do that, and they hard code the feature into Android phones. They use their highly sophisticated Google Ads platform to sell advertisers the right to feature prominently when people search on words like "car insurance" and "flights to Vegas", etcetera.

Why am I being so sanguine about these threats? Firstly, Google will appeal the finding by the federal judge. Secondly, the leadership of the DoJ may change after the next US election. So this whole thing may lose momentum and go away by itself.

If it does not go away, the DoJ is most likely to seek a ban on deals like the big one with Apple. To be honest, that will save Google over $20 billion a year, and most iPhone owners will still use Google search. I don't know about you, but the actual Google Search app is on my iPhone home page, and it's what I use for all searches.

If the DoJ gets aggressive and pushes ahead with a breakup plan, the most likely units for divestment are the Android operating system and Google's web browser Chrome. Honestly, who cares? Let them do that. Google can spin them off or sell them to someone else and pocket the proceeds. Current Google shareholders may even be better off.

The least likely DoJ action would be trying to force a sale of AdWords. It's unlikely because it is impossible. It would be like obliging car companies to sell vehicles without engines. It's much more likely that they will require Google Ads to be served seamlessly on other search engines.

So, in summary, let's assume that nothing happens, and if something does happen, trust that the outcome would be neutral for shareholders, not bad.