What happens to digital advertising if Google sells Chrome?

Google is not just considered to be a company, it’s a verb. To ‘Google’ something is to search the internet, this in itself highlights the tech giant's dominance in the search engine market. Its rise has left other competitors struggling to make a dent in its overwhelming market share. This control on search was the crux of the U.S. government's case against Google, which led to U.S. District Judge Amit Mehta declaring the company a monopoly in August 2024.

Judge Mehta ruled that Google violated Section 2 of the Sherman Act, a U.S. antitrust law, claiming that the company unlawfully maintained its dominance in the search and digital advertising markets. At the heart of the case were revelations about Google’s tactics to secure its position. Internal documents showed that in 2021 alone, the company paid $26.3 billion to make sure its search engine was the default choice on mobile and desktop browsers. This practice helped the company secure its dominance in the search market.

In light of the ruling, the DOJ has proposed remedies to dismantle Google’s control. Among them, the DOJ has suggested that the company be forced to sell Google Chrome, the web browser with an estimated 3.45 billion users as of March 2024. Chrome's user base has reportedly grown by 44.35% since 2018. 

The DOJ has also recommended that Google be barred from re-entering the search market for five years if Chrome is sold. Other proposed measures include spinning off the Android operating system and prohibiting exclusive agreements with third parties like Apple. Additionally, Google may be required to license its search and ad-click data to rivals, giving other players a chance to compete on a more level playing field.

If Google loses Chrome, the impact on digital advertising would be profound. Without control over Chrome’s browser data, Google’s ability to target ads effectively could diminish, disrupting the core of its advertising empire.

Its primary advertising business alone generated $65.9 billion in Q3 2024, with its revenue from Google Search & other rising to $49 billion year-on-year, up from $44 billion in Q3 FY23. According to reports, search advertising and other related segments contribute to 55.9% of Google’s income.

While the DOJ will begin the penalty phase of the trial in the coming year if Chrome is sold, how will it affect the search market and digital advertisers?

Google's data monopoly & impact on advertising

Google Chrome is reportedly valued upwards of $20 billion and deeply integrated within Google’s ecosystem. If sold, Naresh Gupta, Co-Founder & CSO at Bang In The Middle, emphasises the impact Chrome’s user data could have on Google’s advertising dominance. He explains, “Currently, the user data sits with Google and allows it to constantly use the data to sell its advertising services. Once Chrome moves out, that data becomes third-party and Google will struggle to build contextual search buckets.”

This shift could be central to the growing scrutiny of big tech. 

Gupta also predicts that Google's ad revenue would shrink with the weakened control over search data.

“Browser data will be there, but its use to build advertising campaigns will come down dramatically. The world will see many players in the search market and brands will have to navigate multiple players, much like they deal with multiple options in traditional media.”

Gupta notes that with the possible changes, YouTube could get a bigger play in the entire advertising market. Google CEO Sundar Pichai has recently suggested that YouTube’s combined ad and subscription revenue over the past four quarters has surpassed $50 billion. Even if Google's search dominance diminishes, the video-sharing platform could serve as a key revenue driver.

With this, agencies will need to rethink how they access and utilise data according to Aditya Jangid, Managing Director, AdCounty Media.

“Agencies must proactively adjust by broadening their approaches, utilising underutilised platforms like Edge, Safari, and privacy-conscious browsers, and investigating cutting-edge ad tech solutions. Ad pricing and targeting accuracy may change, necessitating more flexible media planning and purchasing strategies from agencies.”

Selling off Chrome could disrupt the data flow that fuels personalised advertising, forcing advertisers to rely more on third-party platforms and diversified data. Naresh Gupta also believes, in the case that Chrome will be sold, the new buyer will not want to keep the primacy of Chrome. 

“Chrome’s ability to access search history and behaviour is the reason why anyone will invest in Chrome. We will see a new ad model emerge, maybe a mix of Amazon ads and Google search.”

However, this could also lead to increased competition.

Competitive and fragmented landscape

Revathi Batola, Associate Director at TheSmallBigIdea, foresees a competitive market and highlights how selling Chrome could democratise the search market. She states, “Chrome’s close integration with Google’s ecosystem has been a game-changer for data-driven ad targeting and efficiency. If it were to be divested, it could open the door for rival search engines and browsers to gain traction, creating a more competitive and dynamic market.”

This increased competition may shift default search agreements, affecting ad pricing.

“Shifts in default search agreements and browser integrations could shake up pricing, potentially driving up costs for advertisers. At the same time, it might help level the playing field, giving competitors a fairer shot in the market.”

As of November 2024, Google has a search engine market share of 89.98% worldwide according to reports. Its competitors including Bing, YANDEX, Yahoo, Baidu, DuckDuckGo and more have a market share under 4% each. Prady, CEO and Co-Founder, NP Digital India, explains how default search agreements will shift, introducing new challenges and opportunities.

While rival search engines will have more opportunities to carve out their space, he believes that this will reshape competition and benefit advertisers and consumers alike, with added complexity in media-buying strategies.

Agencies will need to navigate a more fragmented landscape, as per Prady, with a focus on deeper insights, stronger data partnerships, and flexibility in media buying.

“As agencies, it's essential to explore and invest in alternative browsers and ad tech platforms now. Diversification is key—embracing platforms that offer data transparency, advanced targeting capabilities, and better control over media planning will be crucial to maintaining competitive advantage in a post-Google dominance era.”

While increased competition may lead to a more fragmented market, necessitating exploring multiple platforms, Sohil Karia, Co-Founder, of Schbang believes that this separation could result in stricter data privacy measures. These stricter measures would require advertisers to pivot toward contextual strategies. 

On the other hand, Karia notes that a competitive landscape is likely to drive innovation, leading to improved services and more diverse advertising opportunities.

"Agencies could benefit from more competitive pricing structures as alternative platforms vie for market share. Furthermore, a diversified ecosystem reduces dependency on any single provider, enhancing resilience and adaptability in the face of regulatory or technological shifts."

Impact on AI innovation and adoption

Google has been integrating AI into search through its Search Generative Experience (SGE), a feature aimed at enhancing search results with AI Overviews. While this experiment has shown the company's innovation, it has not been without controversy. Publishers have reported significant declines in traffic, claiming that Google's AI Overviews reduce the need for users to click on external links. 

One of the proposed measures suggested by the DOJ regarding Google’s penalties in the trial includes allowing publishers to opt out of having their data used by the company to train AI models.

In case there’s a breakup of Chrome, Revathi Batola highlights the potential slowdown in AI development for Google. Batola warns that Google's progress in AI-led features might slow, as it would lose Chrome as a testing ground for innovations.

“Without having direct control over Chrome, it might struggle to test and fine-tune its AI tools, which would likely affect how quickly it can push advancements across its platforms.”

Prady adds that the loss of Chrome as a testing ground could open doors for other players to innovate and integrate AI in unique ways, shifting the digital landscape toward a broader array of technologies.

As Google’s AI development faces hurdles, other tech companies have been working on their own AI-powered search engines. OpenAI, the maker of ChatGPT is exploring the development of a web browser integrated with its chatbot. The company is also eyeing partnerships to enhance search features according to reports. Similarly, conversational search engine, Perplexity AI has been looking into introducing ads in Q4 into its AI-powered search engine. It offers an innovative search experience by blending traditional search with AI-driven summaries. Meanwhile, Microsoft has integrated AI into Bing, using its partnership with OpenAI to enhance Bing’s search capabilities.

Sohil Karia shares that browsers like Microsoft Edge are becoming increasingly significant for advertisers, especially with Microsoft’s integration of AI tools and its focus on user-centric experiences. Its deep integration with Microsoft’s broader ecosystem, including LinkedIn and Azure, provides cross-platform advertising opportunities that agencies can leverage, according to him.

Additionally, Karia comments that platforms like The Trade Desk provide robust tools for advertisers to manage programmatic campaigns across devices and formats in the ad tech space.

"Its advanced audience segmentation capabilities allow for precise targeting, even as data privacy measures grow stricter. InMobi is another standout, offering advertisers a comprehensive suite of mobile advertising solutions with advanced targeting and analytics to reach users across diverse mobile environments." 

These developments allow competitors to capitalise on Google's potential slowdown. Google for its part has argued that ‘hampering its AI tools risks holding back American innovation at a critical moment’. Despite these potential setbacks, Naresh Gupta believes Google’s AI push will continue, however, at a slower pace. 

“Google will not be able to monetise its AI push as quickly, but it can always partner with Bing or the new owners of Chrome,” he continues.

If Google has to sell Chrome, it could be a game-changer for the digital advertising ecosystem. While it could weaken the company's dominance and create opportunities for competitors, it would also introduce complexity for advertisers and agencies. As Gupta puts it, "All advantages are in the zone of possibilities."

Diversification, adaptability, and innovation will decide how the industry fares in a potential post-Google dominance. It's not set in stone yet since the final decision on penalties rests with Judge Amit Mehta and the penalty phase of the trial is slated to begin in 2025.