On Tuesday, September 2nd, U.S. District Judge Amit Mehta delivered what many are calling a slap on the wrist for Google.

After previously finding the tech giant guilty of maintaining an illegal search monopoly in August 2024, Mehta rejected the most severe remedy proposed by the Department of Justice: forcing Google to sell Chrome.

Instead, Google got away with a remedy that changes surprisingly little — and for the ad blocking ecosystem, that means the status quo continues.

Mehta Ruling Highlights

The judge's decision delivered meek results.

What Google must do:

• End “exclusive” search engine distribution contracts (irrevelant, since there can only be one default search engine)

• Stop tying search distribution to the provision other software (e.g. Android)

• Share some (to be defined) search index and user interaction data with competitors

• Submit to six years of technological oversight

What Google gets to keep:

• Chrome browser (no forced divestiture)

• Android operating system (no breakup)

• Google as the default search engine in Chrome

• Advertising data (not required to share)

• Ability to pay for default search status (e.g. Apple)

• No “choice screens” prompting users to select a search engine

The market's reaction was immediate: Alphabet shares jumped 8% in extended trading as investors celebrated what they viewed as minimal consequences for a historic antitrust defeat.

To put this into perspective, this represented $230bn in market cap gain — as adtech investment banker Terence Kawaja pointed out. More than the value of all of the agency holding companies and all of the public adtech sector combined.

If you want to get the lowdown on what this means in a macro context, I recommend checking out this Monopoly Report newsletter and this Marketecture pod episode.

_{Implications for the Ad Blocking Ecosystem}

The Mehta ruling essentially guarantees that existing trends in the ad blocking ecosystem will continue or accelerate rather than deviate:

• Chrome’s preferential treatment for Google-friendly ad blockers. Chrome gives preferential treatment to ad blocking extensions that allow Google’s Search Ads to be displayed, allowing them to acquire more users than ad blockers that do not.

• Manifest V3. A new owner of Chrome may have decided to revert or change the 2024 Manifest V3 update enacted by Google. That won’t happen, meaning ad blocking extensions on Chrome — and later Chromium-dependent browsers like Edge — will be technically weaker at blocking ads for the foreseeable future.

• YouTube’s anti-adblock strategy. With Manifest V3 forcing ad blocking extensions in Chrome to downgrade their technical effectiveness, this will benefit YouTube’s initiative to circumvent them to serve ads.

• Chrome users moving to Brave & Firefox. There has been a trend of Chrome users switching to other browsers — upset that their ad blocker stopped working due to Manifest V3. This represents the minority of ad blocker users on Chrome.

• No ad blocking extensions on mobile Chrome. Google has never allowed an extension ecosystem for Chrome on mobile. That means no ad blocking extensions. A new owner may have changed this. Now, it won’t happen.

• Single purpose rule for extensions continues. As some ad blocker developers have pointed out, the “single purpose policy” for Chrome extension development curtails innovation and competitiveness. This will continue.

• IT Managers deploying ad blockers. With Google’s search engine set to maintain its dominant market share, IT managers will continue to be incentivised to deploy ad blocking within the organisations they manage (Search Ads are considered a threat vector).

• Firefox funded by Google. Firefox, whose primary business model is to receive payments from Google in order to ensure Google is the default search engine, stays alive. This is significant because Firefox is a popular choice amongst the most ardent ad blocker users, though the numbers remain small in absolute terms.

• AI browsers having a competitive edge over Chrome. AI browsers, like Comet, have built-in ad blocking. Even if Chrome becomes an “AI browser” (whatever that means), it will not likely ever have built-in ad blocking. This gives companies like Perplexity (the developer of Comet) and OpenAI (when they release their browser) and edge. That being said, they have lost the opportunity to acquire Chrome — which would have been a HUGE strategic win.

Winners and Losers

Winners:

• Google (obviously) — keeps core business model intact

• YouTube — continue to serve ads to weakened ad blockers

• AI-first browsers like Comet — keeps point of differentiation (ad blocking). This assumes a new owner like OpenAI or Perplexity would have integrated built-in ad blocking, which is highly speculative.

• Privacy-first browsers like Brave — Chrome ad blocker users switching over (though other remedies that addressed monetization would have been much more advantageous)

• Ad blocking vendors for IT managers — benefits from continued demand for enterprise adoption

• Google-friendly ad blockers — will continue to be promoted by Chrome over ad blockers that are not (e.g. Adblock Plus, AdGuard)

• Publishers & advertisers — due to the above, they will benefit (to a much lesser degree) from monetizing and reaching ad blocker users that whitelist ads — mostly through Acceptable Ads

• Mozilla/Firefox — keeps its primary business model

Losers:

• Companies that would’ve strategically benefitted from buying Chrome — it’s now off the table for them (e.g. Perplexity, OpenAi)

• Chromium ad blocker developers — the chance for Manifest V3 to be rolled back or changed favourably have gone. Also: no chance of an extension ecosystem for mobile Chrome or a change to the “single purpose” rule.

• Google unfriendly ad blockers — little chance they will gain more visibility in the Chrome Web Store

• Chrome users — Manifest V3 has downgraded the experience and security of the browser. There is now little chance this will improve.

This is my initial take. Likely more to come, as I think about second order effects!

Adblock Analyst

Analysis on the business of the ad blocking ecosystem.

Don’t miss a beat. Subscribe below.