Y Combinator Accuses Google of Monopolistic Practices

Renowned startup investor and accelerator, Y Combinator, has submitted a strong amicus brief in the U.S. government’s antitrust case against Google, leveling accusations of monopolistic behavior.

Impact on the Startup Ecosystem

YC asserts that Google’s dominance has actively “stunted” the growth of the U.S. startup landscape. This is due to a perceived hesitation among venture capital firms, including YC itself, to invest in web search and artificial intelligence startups operating within what they term a “kill zone” surrounding Google’s influence.

The filing details that Google’s actions have discouraged independent investment in innovative startups that could potentially challenge Google’s market position. Consequently, the resulting environment is described as artificially limited and lacking dynamism.

Focus on AI Development

Currently, Y Combinator is actively seeking to fund startups focused on developing question-based and agentic AI technologies. These tools have the potential to fundamentally alter how individuals access and interact with information online.

However, YC expresses concern that Google may leverage its monopolistic power to impede the advancement of these emerging markets, creating a “clear risk” to future innovation.

A Decade of Market Stagnation

According to YC, Google has effectively maintained a frozen state within the web search and text advertising sectors for over a decade.

Proposed Solutions, Not Immediate Breakup

The amicus brief, initially highlighted on X by venture capitalist Sheel Mohnot, does not advocate for an immediate dismantling of Google.

Instead, YC proposes that Google modify practices deemed anti-competitive. This includes the substantial payments made to Apple to ensure Google remains the default search engine on iPhones.

Furthermore, YC suggests Google should facilitate startup growth by opening its search index, allowing others to utilize it for training large language models (LLMs).

A Significant Request

YC’s request to open Google’s search algorithms is a substantial one. It’s likened to demanding Microsoft open-source Windows or requiring Amazon to provide free delivery services for its competitors, given the algorithms’ long-held status as a core competitive advantage.

The "Spinoff Hammer"

If Google fails to implement these changes within a five-year timeframe, YC recommends the government compel Google to divest or spin off portions of its business. YC CEO Garry Tan referred to this possibility as a “spinoff hammer” in a post on X.

Tan also emphasized YC’s positive relationship with Google while simultaneously expressing a desire for the success of smaller technology companies.

Antitrust Case Background

Last year, Google faced a significant defeat in an antitrust case concerning its dominance in the search market. While Google is appealing the decision, the U.S. government is currently evaluating potential remedies, potentially including the spin-off of Chrome.

These remedies are anticipated to be announced by August 2025.

Complex Relationship with Google

YC’s position may appear surprising considering its recent collaborations with Google. Notably, Google Cloud provided YC startups with access to dedicated Nvidia GPUs last year.

Additionally, Google co-founder Larry Page made a rare public appearance to speak at a YC event in December.

Acquisitions and Investments

Google has acquired at least two YC-backed startups: Flutter in 2014 and Fridge in 2011. Furthermore, Google’s Gradient fund invested in YC startup Infisical in 2023.

Ties to OpenAI

However, YC maintains a strong connection with OpenAI, a direct competitor to Google in the search market. Sam Altman, OpenAI’s CEO, previously led Y Combinator, and OpenAI originated as a project affiliated with YC Research.

Beneficiary Concerns

Sheel Mohnot pointed out on X that OpenAI stands to benefit the most from YC’s proposed remedies, rather than the early-stage startups typically supported by YC. He also suggested the amicus brief overstates Google’s power.

Seeking Further Clarification

TechCrunch reached out to YC for a response to this critique and for specific examples of startups that might have received funding absent Google’s influence. As of now, YC has not responded to the inquiry.

Google also declined to comment on YC’s amicus brief, but previously argued that the DOJ’s proposals are “radical and sweeping” and would negatively impact consumers, businesses, and developers.