Y Combinator to court: Google's search empire is a 'monopoly by cheque book, not ...'

Startup accelerator Y Combinator (YC) has labeled Google a " monopolist " that has "stunted" the US startup ecosystem in an amicus brief filed May 9 in the government's ongoing antitrust case against the search giant.

YC charged that Google has "chilled independent firms like YC from funding and accelerating innovative startups that could otherwise have challenged Google's dominance," creating what it calls a "kill zone" that deters venture capital investment in potential Google competitors.

"The result is a landscape that has been artificially stunted and stagnant," YC wrote in its filing.


YC proposes remedies, not immediate breakup of Google

Despite the harsh criticism, YC CEO Garry Tan clarified that the organization isn't calling for Google's immediate dismantling.

"We love Google and what it represents as a paragon of US-led tech and innovation . We also want to make sure the excesses of big tech make way for tomorrow's little tech," Tan wrote on social media following the brief's submission.

YC proposes several remedies, including ending Google's practice of paying billions to be the default search engine on devices like iPhones and opening Google's search index for competitors to train large language models.

"We are not calling for a breakup of Google," Tan emphasized. "If anything we hope that a measured and thoughtful remedy between USG and Google from here (5 year term!) means a court-supervised spin-off is contingent, and a last resort."

Google’s has created distribution barriers

YC argues Google's dominance creates nearly insurmountable barriers for startups entering the search market.

"Google's 90% search dominion is a ladder-pull for startups. Exclusive default contracts commandeer >50% of search routes, Chrome grabs another 20%. That's 70% of distribution sealed off before a startup even ships v1," Tan wrote, calling it "Monopoly by checkbook [cheque book], not merit."

The brief comes at a critical time as the government considers potential remedies after Google lost its antitrust case last year. Proposed penalties could include requiring Google to divest parts of its business if it doesn't implement changes within five years.

"VC investment in a sector drops about 40% after a big tech consolidation/acquisition," Tan noted. "Founders aren't asking for a handout or a leg up. They want a level playing field, which we don't have."

YC's stance may surprise some given its recent partnerships with Google, including access to dedicated GPU clusters for YC startups and Google's acquisitions of YC-backed companies Flutter and Fridge.

"We want Google to succeed and we also want the next Google to succeed," Tan concluded.