The US federal judge presiding over a trial in which the government seeks to break up Google yesterday quizzed expert witnesses for the tech giant on the intricacies of divesting the Chrome browser and the infrastructure requirements of the split entity.* US District Judge Amit Mehta heard from two experts, both of whom warned that a forced sale of Chrome would likely degrade the product as well as other Google and third-party products and hurt revenue of the divested entity.
The US federal judge presiding over a trial in which the government seeks to break up Google yesterday quizzed expert witnesses for the tech giant on the intricacies of divesting the Chrome browser and the infrastructure requirements of the split entity.*US District Judge Amit Mehta heard from two experts, both of whom warned that a forced sale of Chrome would likely degrade the product as well as other Google and third-party products and hurt revenue of the divested entity.
Earlier in the day, Google Chief Executive Officer Sundar Pichai appeared as a witness for the tech giant (see here). Before Pichai was summoned to the witness stand and sworn in, Mehta muttered to court staff, “Can't believe we did nine weeks of this last time."
Mehta was referring to the 10-week-long liability trial that began in September 2023, after which Google was found to have illegally monopolized the markets for Internet search and search text ads (see here).
Now, the Department of Justice, or DOJ, and a multistate group are asking the judge to enter an order that would spin off the Chrome browser and impose remedies requiring Google to share user search data and ad syndication with rivals (see here and here).
— Infrastructure for divested Chrome —
Addressing Google expert Jason Nieh, Mehta asked whether, if Chrome were spun off, the infrastructure requirements would be less complicated.
“In other words, we're now talking about a single product, albeit [with] some number of hundreds of millions of users, potentially. But wouldn't the infrastructure requirements be less complicated as well?” Mehta asked.
Nieh, a professor of computer science and co-director of the Software Systems Laboratory at Columbia University, replied that if the judge were to order a spin-off of Chrome and its functionality, recreating the Google infrastructure would be "hard, if not impossible.”
The expert said there is also a question of what to do about the accounts of billions of users.
“You need something for the accounts, you need to produce some amount of functionality, and you still have to do it at scale. So, there's still an enormous amount of complexity that would be involved in order to do that. And unfortunately, outside Google, you don't have these services to build on,” Nieh said.
Should Mehta decide to order the divestiture of Chrome along with the team of roughly 1,250 employees working on it, “then I don't know who's left to make all these contributions to Chromium at Google.”
Chromium is an open-source web browser project primarily developed by Google. It has served as the foundation for many popular browsers, including Google Chrome, Microsoft Edge and Opera.
“So, without Google's support, given that it's doing the vast majority of work to make Chromium possible, it seems like the viability of Chromium would potentially be an issue. All the other third-party browsers depend on Chromium, and that would potentially be an issue as well,” Nieh said.
Earlier in the day, Pichai testified that Google accounts for over 90 percent of all the potential code committed to the Chromium. In the last year alone, Google’s contribution was around 94 percent, he said (see here).
Nieh was tasked by Google to evaluate the technical feasibility of divesting Chrome, the Android operating system, Google Play and Google Play Services.
The DOJ and a multistate group are seeking a further contingent remedy that would force the sale of the Android operating system if Google doesn’t comply with remedy obligations. Google has previously said it would appeal Mehta’s liability decision as well as any adverse remedy ruling.
Nieh’s findings stated that divesting Chrome would be “highly challenging” due to Chrome's complex dependencies on Google's bespoke infrastructure. Divesting Google Play Store would also be highly challenging due to Android's complex dependencies on Google’s specific infrastructure, he said.
“I think any divestiture would be really unprecedented and have uncertain timelines and entail an unknown probability of success,” the expert said.
— Divested Chrome and revenue generation —
Mehta also heard from another Google expert, Marc Zenner, an independent advisor who obtained a PhD in financial economics from Purdue University.
Mehta asked the expert whether a divested entity would have to essentially invent a business model that doesn't exist in the marketplace today. “Because, why, for example, wouldn't the operation of Safari or Firefox provide a model for monetization?”
Google’s expert replied that Safari is a part of Apple and he isn’t aware of how Apple monetizes Safari.
“To my knowledge, there's not an independent browser out there that is really revenue generating in a way that would be anywhere comparable to Chrome and their massive amount of revenue,” Zenner said.
He compared the potential divestiture of Google to selling a retail store.
“You're selling that asset. You already know they make money,” Zenner said. But with Chrome, the new buyer can't simply transport it as if there were direct revenue; the buyer would essentially have to construct Chrome’s revenue stream, he said.
“Let me ask a follow up for that: if the owner of divested Chrome partners with a general search engine through some sort of revenue share arrangement, would that be the same or less or more revenue than Google gets?” Mehta asked.
Zenner replied that Chrome was developed to work with Google and its other products and is deeply integrated.
“I'm not a technical expert, but from a business perspective, I assume that it's not going to fit in a new entity quite the same way. It will take some time to develop anywhere close to the same type of integration, if it's at all possible.”
— Cost of divestiture, capital gains tax —
Zenner testified that divestiture of Chrome would be “extremely costly” and involve both direct and indirect costs. These include legal bills, advisory and consulting expenses and potentially “very meaningful” capital gains taxes.
The expert said he didn’t know Chrome’s tax base.
Then there are other costs in a more intangible form. If the divestiture takes a long time and the business is very integrated, there are human resources, engineers and senior managers who will all be “busy preparing Chrome for its next life in terms of ‘how do we disintegrate this?’” Zenner said.
Mehta asked Zenner for his view on Google having to pay an actual capital gains tax. “How would that, in your view, affect the value of the sale?”
Zenner said that when a company analyzes a transaction and decides to sell an asset, one of the factors it will take into account is “tax leakage.”
“If I'm selling something for $100 but my tax basis in it is also $100, I don't have a capital gains issue,” he said.
“Because Chrome was started in Google and developed there, it's not something that was purchased, so I'm going to assume [the tax base is] very, very low. So, they will have to probably pay the full or close to the full amount in capital gains taxes,” he said.
Zenner cited the testimony of another witness who was an investment banker and oversaw several large technology company M&A transactions. Companies don't like to pay taxes, the expert said, citing DOJ witness David Locala. Typically for transactions, it's very hard to find buyers because the larger the deal is, the smaller the pool of buyers.
“But if it's [a transaction] large enough to be an independent company, then most companies prefer to spin off because the spin-off can be tax free. So, most companies would not do something like that if they didn't have to,” Zenner said.
*Corrected May 1, 2025, at 04:26 GMT; clarifies that the experts testified April 30.
Please e-mail editors@mlex.com to contact the editorial staff regarding this story, or to submit the names of lawyers and advisers.