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Matthew Schruers President & CEO at Computer & Communications Industry Association | Official website

Google breakup may raise consumer costs, warns economist

As the antitrust trial against Google Search progresses to its remedy phase, discussions have emerged about the potential costs of proposed remedies by the Department of Justice. Trevor Wagener, Chief Economist and Director of the Research Center at CCIA, has highlighted concerns in an article regarding these potential outcomes.

One suggested remedy involves restricting Google from forming distribution agreements with browser developers, device manufacturers, and wireless carriers. Wagener notes that this could lead to increased consumer prices during a period of elevated inflation. Companies currently benefiting from Google's distribution agreements might transfer some or all costs to consumers, potentially raising prices by up to $87 per device. Additionally, free-to-use software providers like Mozilla may face challenges in maintaining their services without these agreements. According to Wagener, they would have to “either cease offering many of its free software services or reduce the quality of its offerings going forward," resulting in fewer choices or reduced service quality for consumers.

Another possible remedy is the structural separation of Google into multiple companies. This approach marks a significant shift from historical precedents in Section 2 cases, as such a "breakup" was last awarded following a case initiated in 1974. Wagener warns that dividing Google could increase operating costs by $64 to $80 per user across the United States and Canada. These increased costs would likely be passed on to consumers.

Wagener expressed his concerns: “Splitting Google services across a larger number of companies would make the operating cost increases worse while also reducing the potential for cross-subsidization of many currently free-to-use services. A ‘break Google into many pieces’ scenario would increase both the size of new costs and the expected share of those cost increases passed on to consumers, harming consumer welfare considerably.”