According to the accelerator, Google has effectively scared off competition and limited innovation.

In a court filing dated 9 May, the firm described Google as a monopolist that has “chilled independent firms like YC from funding and accelerating innovative startups that could otherwise have challenged Google’s dominance.” The document was filed in support of the U.S. government’s antitrust case against Google.

Y Combinator argued that venture capitalists have become more wary of backing emerging companies in search and AI, industries the accelerator describes as being trapped within a “kill zone” created by Google’s overwhelming control. “The result is a landscape that has been artificially stunted and stagnant,” the filing states.

While it is not explicitly calling for a breakup of Google, Y Combinator says change must happen. It wants Google to stop locking up default search agreements, specifically, the multibillion-dollar deal that keeps it the default engine on Apple devices. It also demands access to Google’s search index, so new developers and researchers can train competitive AI tools using the same data Google relies on.

“Google has effectively frozen the web search and text advertising markets for over a decade,” the filing adds. Y Combinator is particularly concerned that without intervention, Google will continue to suppress innovation in agentic and question-based AI systems, tools that have the potential to bolster how users access and interact with online information.

YC CEO Garry Tan later clarified the organisation’s position on social media: “We love Google. But we want little tech to succeed, too.” He also warned that if Google fails to implement reforms within five years, regulators should be ready to “bring the spinoff hammer.”

Google’s legal issues have been increasing recently. Last year, it lost a significant antitrust case tied to its stranglehold on the search market. Remedies are expected by August 2025 and could include forced divestments such as spinning off Chrome.

The timing of YC’s filing is particular, given its recent collaborations with Google. The tech giant previously invested in YC-backed Infisical, acquired Flutter in 2014, and Fridge in 2011. Google Cloud even provided dedicated GPU access to YC startups last year. Co-founder Larry Page made a rare public appearance at a YC event in December.

But there’s another aspect, YC’s deep ties to OpenAI, a direct rival to Google in the AI-powered search arena. OpenAI CEO Sam Altman formerly led Y Combinator, and OpenAI was the first team to emerge from YC Research.

This connection has been noticed. VC Sheel Mohnot, who spotted the brief online, pointed out, “The biggest beneficiary of YC’s proposed remedies, by far, would be OpenAI.”

However, even with the strategic implications, Y Combinator has not offered specific examples of startups it might have funded were it not for Google’s monopoly.

Google, for its part, has remained silent on the brief. It previously defended itself in a blog post, calling the DOJ’s proposed remedies “radical and sweeping” and warning they could harm businesses, consumers, and developers.

Y Combinator believes the growth of tech depends on loosening Google’s hold, and it’s willing to put that on the record.

A U.S. federal appeals court has ruled that the company can be sued in California over how it allegedly tracks and profits from users’ data—despite not being based there.

Brandon Briskin, a resident of California, claims Shopify secretly planted tracking cookies on his iPhone when he shopped online at I Am Becoming, a local retailer using Shopify’s services. Those cookies allegedly harvested his personal data and helped Shopify build a profile it could sell to other businesses.

Shopify didn’t deny placing the tracking software. Instead, the company argued it shouldn’t be dragged into court in California. It insisted that any legal action should happen in places where it has stronger legal ties—like Delaware, New York, or back home in Canada.

But the 9th U.S. Circuit Court of Appeals in San Francisco wasn’t having it. In a strong 10-1 decision, the court said Shopify aimed its data-gathering practices directly at Californians—and that’s enough to be held accountable in the state.

“Shopify deliberately reached out … by knowingly installing tracking software onto unsuspecting Californians’ phones so that it could later sell the data it obtained, in a manner that was neither random, isolated, or fortuitous,” wrote Circuit Judge Kim McLane Wardlaw, siding with the majority.

That statement alone slices through all the legal fog. Shopify’s actions weren’t vague or incidental. The court said they were intentional and targeted—and that has consequences.

A lower court had previously tossed the case, agreeing with Shopify’s argument. Even a three-judge panel from the same appeals court had said the lawsuit didn’t belong in California. But this full bench decision reversed all of that and signalled that courts are now willing to take a harder stance when companies reach across borders through the internet.

Unsurprisingly, Shopify isn’t thrilled. A company spokesperson said the decision “attacks the basics of how the internet works,” suggesting it could force small online businesses to defend themselves in faraway courtrooms just because someone clicked from a different state.

If courts begin to take this position broadly, internet-based companies won’t be able to hide behind the argument that “we operate everywhere, so you can’t sue us anywhere.”

Matt McCrary, Briskin’s lawyer, welcomed the decision. He said the court made it clear that businesses can’t operate in digital marketplaces without also being subject to the laws of those markets. “The idea that a company is jurisdictionally ‘nowhere’ because it does business ‘everywhere’—that argument doesn’t hold up anymore,” he said.

Backing Briskin in this case was a coalition of 30 states and Washington, D.C. Their concern? If companies like Shopify are allowed to operate without being answerable to local laws, consumer protections become meaningless. 

These states want the power to hold internet giants accountable when their residents are targeted, no matter where the company’s headquarters may be.

But not everyone agreed. Judge Consuelo Callahan, the lone dissenter, warned that the majority had opened the floodgates. She criticised what she called a “traveling cookie rule,” which she argued would allow lawsuits to pop up anywhere a user travels, turning jurisdiction into a guessing game.

On a business level, Shopify has been doing well. It reported a 31% revenue increase in Q4 of 2024, hitting $2.81 billion. Full-year revenue was up 26% to $8.88 billion, and subscription income grew by over 9%.

That growth has come with deeper market penetration too. “In the U.S. alone, Shopify is now over 12% of the eCommerce market share,” said President Harley Finkelstein. “And we continue to grow rapidly in places like Europe and Japan.”

Still, these numbers may not shield Shopify from what comes next. The court ruling could influence dozens of pending and future cases. Tech companies handling consumer data across state lines can be held to account where users live, not just where your offices are.

The ruling, delivered by Judge Yvonne Gonzalez Rogers of the U.S. District Court in California, determined that Elon Musk had not met the legal standard required for such an order.

However, the judge showed willingness to fast-track a trial on the issue later this year. “We look forward to a jury confirming that [OpenAI CEO Sam] Altman accepted Musk’s charitable contributions knowing full well they had to be used for the public’s benefit rather than his own enrichment,” said Marc Toberoff, Musk’s attorney.

OpenAI, originally founded as a nonprofit in 2015, has been restructuring to attract the funding necessary to improve its artificial intelligence research. The company welcomed the court’s decision but did not provide further comment. Microsoft, a major backer of OpenAI, also remained silent on the ruling.

Musk, who co-founded OpenAI alongside Altman but left before it gained prominence, filed the lawsuit in March 2024. He claimed the organisation had deviated from its original mission of developing AI for humanity’s benefit and was now prioritising profits.

The billionaire later expanded his case to include federal antitrust accusations, alleging that OpenAI and Microsoft had engaged in unfair competition by restricting investments in rival AI firms, including his own startup, xAI.

The case got worse when Musk, along with a group of investors, proposed a $97.4 billion bid to take control of OpenAI’s nonprofit division. However, OpenAI’s board rejected the offer. In response, Musk indicated he would withdraw his bid if OpenAI abandoned its for-profit goal.

OpenAI, for its part, has defended its decision to seek commercial success, arguing that financial backing is essential to develop cutting-edge AI models. The company maintains that its restructuring aligns with its mission, though Musk continues to challenge this stand.