*

Limited proposals contrast sharply with government's broad

push

*

Agreements could be shortened, made non-exclusive, Google

says

*

Google still plans to appeal once the case is finished

(Adds filing details in paragraphs 3-4, 9, Google competitor

reaction in paragraphs 13-14 and trial details in paragraph 16)

By Jody Godoy

Dec 20 (Reuters) - Alphabet's Google proposed

on Friday a loosening of its agreements with Apple ( AAPL ) and

others to set Google as the default search engine on new

devices, in a bid to address a U.S. ruling that it unlawfully

dominates online search.

The proposal is much narrower than the government's push to

make Google sell its Chrome browser, which Google called a

drastic attempt to intervene in the search market.

Google urged U.S. District Judge Amit Mehta in Washington to

move cautiously in deciding what the company must do to restore

competition, after his ruling that the company holds an illegal

monopoly in online search and related advertising. Courts have

cautioned against imposing antitrust remedies that chill

innovation, Google said in court papers.

That is especially true "in an environment where remarkable

artificial intelligence innovations are rapidly changing how

people interact with many online products and services,

including search engines," Google said.

While Google plans to appeal that ruling at the end of the

case, it says the upcoming "remedies" phase should focus on its

distribution agreements with browser developers, mobile device

manufacturers, and wireless carriers.

The judge found the agreements give Google a "major, largely

unseen advantage over its rivals" and result in most devices in

the U.S. coming pre-loaded with Google's search engine.

The agreements are hard to exit, the judge said, especially

for Android manufacturers, which must agree to install Google

search in order to include Google's Play Store on their devices.

To fix that, Google could make them non-exclusive and, for

Android phone manufacturers, unbundle its Play Store from Chrome

and search, the company said in its proposal.

Google would allow browser developers that agree to set its

search engine as the default to revisit that decision annually

under the proposal.

REVENUE SHARING

Unlike the government's proposal, Google's would not end

revenue sharing agreements, which pass a portion of ad revenue

Google makes from search to the device and software companies

that present it as the default search engine.

Independent browser developers including Mozilla, which

makes Firefox, have said the funds are crucial to their

operations. Apple ( AAPL ) received an estimated $20 billion from its

agreement with Google in 2022 alone.

Kamyl Bazbaz, spokesperson for search engine competitor

DuckDuckGo, said the proposal attempts to maintain the status

quo.

"Once a court finds a violation of competition laws, the

remedy must not only stop the illegal conduct and prevent its

recurrence, but restore competition in the affected markets," he

said.

Google's proposal sets the stage for a trial Mehta will hold

in April, where the U.S. Department of Justice and a coalition

of states will seek to show the need for wide-ranging remedies,

including making Google sell off Chrome and potentially its

Android mobile operating system.

The government plans to call witnesses from OpenAI, AI

search startup Perplexity, and Microsoft ( MSFT ), according to

court papers.

Prosecutors also want Google to stop paying to be the

default search engine, and cease investments in search rivals

and query-based AI products, and license its search results and

technology to rivals.

The proposals aim to spur innovation in online search, where

Mehta found Google's overwhelming market share keeps competitors

from gathering the search data needed to improve their products,

and prevent Google from extending its dominance in search to AI.

(Reporting by Jody Godoy in New York; Editing by Muralikumar

Anantharaman)