While a US judge ruled last week that Google is a monopoly, and hat it has abused its monopoly position, potential remedies were not part of the case up until this point. Now, though, the US Department of Justice is mulling over potential remedies, and it seems everything is on the table – down to breaking Google up.
Justice Department officials are considering what remedies to ask a federal judge to order against the search giant, said three people with knowledge of the deliberations involving the agency and state attorneys general who helped to bring the case. They are discussing various proposals, including breaking off parts of Google, such as its Chrome browser or Android smartphone operating system, two of the people said.
Other scenarios under consideration include forcing Google to make its data available to rivals, or mandating that it abandon deals that made its search engine the default option on devices like the iPhone, said the people, who declined to be identified because the process is confidential. The government is meeting with other companies and experts to discuss their proposals for limiting Google’s power, the people said.
↫ David McCabe and Nico Grant
The United States has a long history of breaking companies up, but the real question here is how, exactly, you would break Google up. Google makes virtually all of its money using its advertising business, and products like Chrome or Android in an of themselves make little to no money – they probably only cost Google money. Their real purpose is to direct people to using Google Search, which is where the various ads are Google’s real money maker. In other words, what would happen if you were to split off Chrome or Android? How are these products supposed to make money and survive, financially?
I don’t understand entirely how Google’s advertising business spaghetti is organised, but it seems like to me that’s where any talk of splitting Google up to create breathing room in the market should be focusing on. Breaking that core business up into several independent online advertising companies, which would suddenly have to compete with each other as well as with others on a more equal footing, would be much better for consumer than turning Chrome or Android into unsustainable businesses. In an advertising market not dominated by one giant player, there’s far more room and opportunity for smaller, perhaps more ethical companies to spring up and survive.
Perhaps I’m wrong, and maybe there is life in a business that contains everything Google does except for online advertising, but I feel like said new company would not survive in a market where it has to contend with other abusive heavyweights like Facebook and Apple.
Treating the symptoms…
Did it ever happen, though? For a company like Microsoft, to separate Office, Gaming, Cloud … or Apple to separate iOS or iCloud … AFAIK no. So it’s hard to believe they will actually end up doing it, although if they will then likely Chrome will be separated into its own company and other browser companies will likely be entitled to compete with Chrome. To secure a part of available money under the same terms. As for the claim in article, on how Android only costs Google money. Quick search on the internet refutes that statement easily as Android brings in tens of billions annually. But if Google would be made to separate Android into its own company, then Apple would in my opinion need to do the same, to separate the whole iPhone branch into its own company. Somehow i doubt anything like that to happen, at best the ecosystem will be opened up for other players in the market to compete under the same terms, some area.
Bell Labs was split from AT&T.
> Their real purpose is to direct people to using Google Search, which is where the various ads are Google’s real money maker. In other words, what would happen if you were to split off Chrome or Android? How are these products supposed to make money and survive, financially?
Um. The old-fashioned way, by selling it?
Now that android has established its market-share, even a few bucks per device would be enough to fully fund its development and still leave a tidy profit margin.
On top of that, the breakup could assign the play store to the new android company.
What a let down! Google created alphabet for this very purpose, each unit operates without the other. Why would breaking up the other non monopoly pieces help? Break up search and Ads. Or ads into two competing pieces, none of that makes sense to address a monopoly. I don’t see how anything is going to help, a fine is insignificant going by the modus operandi of governing corporate Americans, because companies/corporations are people here.
“forcing Google to make its data available to rivals, or mandating that it abandon deals that made its search engine the default option”
This sounds perfectly reasonable. Splitting company is not the only way of dealing with monopoly position.
All of these choices have drawbacks, not only on Google and their users, but also on other companies as well.
I’ll just put the downsides here, of course the upside is another discussion.
1. Making data available to rivals
The main issue is ensuring privacy. The internal controls inside Google are top notch, but won’t be possible with third parties (how can they ensure NN minutes wipeout of all derived data when user deleted an item from their history)?
The secondary one is cost. There is literally tens of PBs of data generated every day. At wholesale $0.05 / GB egress rates it will really cost multiple million dollars per day per a single dataset. The value added would be even more. Assume at least $10 million per day if you want everything.
2. Abandoning search deals
This will kill Firefox.
3. Splitting into multiple companies by high level product groups
Some of them can survive on their own, but will not become better. Like YouTube or Android. It won’t be an easy project as these depend on the internal cloud structure. However let’s say they spend a billion dollars and two years. It is possible.
YouTube will have sever data links, or have to pay for them, and will make up for it with more ads or more push for subscriptions.
Android will have to become fully commercial, possibly ending the AOSP entirely, which was on their last legs.
Google Suite / Apps / Drive, whatever is called today is similar to Office. It can survive as a small project like Zoho slowly being replaced by Microsoft Office, enterprise customers having less choice.
Photos will just die.
Others similarly.
4. Separate Advertising
As Thom mentioned so many things have direct relationships with it, this will probably break the entire structure and end Google as we know it.
The bottom line is, any action is harmful to either users or partners or both. Unfortunately fixing Google is not easy, and I wish there was a way, so that we could push for it.
sukru,
IMHO it depends on the kind of data. Web Indexing data could be very useful while not publishing anything that wasn’t already on the web.
I think that’s a possibility. It was slowly happening anyway, but a sudden loss of google funds would be widely felt.
I’d kind of like for things to break up into much smaller more manageable entities. We could have more diversity and specialization than giant one-size fits all providers.
It isn’t easy. Unfortunately the fact that we wait so long before taking even the slightest corrective actions ends up forcing us to contemplate much more draconian intervention down the line. There just doesn’t seem to be a will to course correct until it’s far to late.
Alfman,
What is your estimate on the size of the Google web corpus?
Yes, this could have worked… maybe 5-10 years ago before everything was deeply integrated. I’m not sure what the current state is, but many products do need each other.
For example, YouTube has a News section.
I agree. I would not want Google to be broken apart for various reasons. But they could have worked as more independent parts.
sukru,
Well, this is a new topic. My point was really in response to the privacy issue you brought up, Still, it’s an interesting question. The whole index will be very substantial, but that’s not to say the whole index is all that useful. The majority of data will be in the long tail data that will never see the light of day on google or anywhere else.
Anyway, it could be hugely beneficial for alternative search engines to have access. Hypothetically google could offer access to index data via some API. But I have to concede that google would be incurring large operational overhead for the benefit of competitors. Maybe they could be compelled to sell bulk index access for some fair price kind of the way ATT was forced to open up access to their networks to competitors.
I think Youtube has sufficient merit on it’s own without needing any other google dependencies. However if google were providing financial subsidies to services that costs more to operate than they bring in (ie a loss leader), then it’s not hard to see how & why a break up would negatively impact them. But on the other hand it would force them to compete more fairly alongside the competitors who lost to google because they couldn’t compete with free. I kind of like the idea of competition coming back, but the end of free service subsidies would probably annoy a lot of consumers at the same time.
1. data they should not be collecting anyway?
2. search deals… Firefox is killing itself, other browsers are fine.
3. Youtube and Android stand a high chance of becoming better separate. They are severely poisoned by anti competitive practices.
4. Ad company should be an ad company and nothing more… in fact there should probably be some laws instituted around data collection such that companies that use big data like this have restrictions put on them so they cannot abuse the users. I should never see a targeted ad nor my data be collected or inferred unless I opt in.
cb88,
So, they should not index the Web? Or they should purge emails as soon as you receive them on POP3, and don’t offer storage? Should there be no purchase history? What about server logs to improve processes and detect faults?
Which of the datasets that use you want to drop?
(Yes, these are the ones that feed the AI, as each one of them are directly benefiting that very same product).
Chrome has 65% market share, followed by 18% Safari and then we have Edge at 5%. Firefox only comes at 2.7% and everything else is below that.
How are they fine?
Once again, yes, you can separate them. But, they will also cause no benefits to competition, and harm to users (things will get more expensive)
Unfortunately we are way past companies doing a single thing.
Why is Costco able to offer Kirkland brand to compete with others? Why can Walmart do Great Value, Target up and up, and others like that.
Why can CVS offer clinic services? Forget that why can the largest pharmacy can also offer groceries?
Worst offenders?
The Telecoms
Why would Viacom-CBS-WarnerBros-DC-Time-ParamountPlus-Comcast is allowed as a single entity? They would produce the shows (like NCIS or Batman), offer them on their channel (CBS), distribute with their cable (Comcast), distribute online (Paramount+) on the Internet, sell that very same internet service (Comcast), and also have license to print media (DC comics) and possibly 50 other things as well?
The good thing is if you don’t log in, you don’t see targeted ads on many networks. And you can log in an opt-out for more control.
(You’d still get targeted based on your location, and a few other things. And yes, they might also get your “profile” from 3rd parties…)
The profile I mentioned, and the “creepy” ads that you see? They are coming from 3rd party information brokers that will buy your data from your cell phone, credit card, and internet companies, and will join with tables from Target purchases.
Much harder to suppress, or opt out, even if it were possible.
It is easy to attack Google, especially right now with all their fumbling and mishandling of employees. But we have a systemic problem, much worse than what they have ever done.
What does that even mean. What would a pure ad company look like? Most website outsource the ads on their website because it makes sense to do so. Why would Google want to outsource ads on their own properties.
Now, if the remedy is to force Google to divest its third party ad operations (the bit where they place ads on others’ websites, then I can see some logic in that. But most of Google’s ad revenue is from their own properties (Google search and Youtube). In fact, the ratio of ad revenue break down roughly as 57:10:10 between Search:Youtube:Network, where network is the third party stuff. So divesting that proportion would result in a reduction of approximately 13% of the ad revenue. If that was spun off into an independent company, that might produce a potential competitor. But we have to remember Google is not the only game in town. There is Facebook too, and they could take on more of that third-party action. But I guess the Justice department is not looking to strengthen Facebook.
Breaking up Youtube and Google search will also not really rebalance the ad equation that much. I guess Google could spin off Youtube and earn a fair bit.
The data sharing is interesting. I don’t think the indexing costs are the issue – the real data rivals would be after knowing what folks click on after searching. But I am not sure that will really help Bing, or Duckduckgo, or any other rival. The problem is that folks go to google.com and search there. And that is where Google earns its money really.
If I were Google, I would maybe not worry too much about that remedy and trust that the brand is strong enough to see off competition. I think Google still has the best search, but even if Duckduckgo managed to improve on Google in that regard massively, they will not suddenly overtake Google. Also, as long as they stick to their privacy mantra, they are not going to earn as much on those ads as Google can by targeting their advertising.
Pretty much the only thing that would stop Google is if the judgement demanded that google.com (the site) effectively had to be a shared resource, which can randomly redirect to different search engines.
Being a large company that has a lot of money to burn on projects that might not bring a return on investment does have benefits. I’m not sure what other place will remain that will have a chance of producing a commercially succesful open source operating system. Or giving a fighting chance to royalty free codecs. Unfortunately this will be similar to the breakup of AT&T and the downfall of Bell Labs, that brought about Unix, C and so many advancements in information theory. The consiracy theorist in me fears that the groups that invested in spreading a bad image of Google may have succeeded (even though part of it may have been warranted). But whatever it may have been in the past, I really shouldn’t defend the company that laid off Chris DiBona (and so many others).
I would agree it’s questionable whether Android and Chrome would be viable as standalone businesses, but another approach might be to require Google to turn over governance of AOSP and Chromium to independent entities, such as the Linux or Apache Foundations. In the case of Chromium specifically, this would make it more difficult to push through technologies such as V3 Manifests or the Web Integrity API. More generally, it would weaken Google’s ability to use these platforms to gatekeep competitors.
Handing over AOSP and Chromium to independent entities is all well and good. But who will fund them?
I honestly don’t care how this affects search, chrome, Android, ads or how any of them make money. The world would be a better place. The internet would be a better place.
Break it up. You get what you pay for and now people arn’t paying money, they are paying with loss of privacy, free speech and we’re all worse off for it.
More regulation will not help make us more free, but removing the power that corrupts will. That power is size, and the solution to size in a corporation that has become corrosive is anti-trust.
As long as Youtube regains its independence, I don’t really care. The selling of Youtube to Google is the worst mistake Jawed ever made. His second worst mistake was filming the first Youtube video at a freaking zoo, instead of somewhere, you know, actually cool.
Judge: we are going to split off the browser and add business as separate.
Google: But our business model won’t work anymore….
Judge…. exactly.
What does splitting off the ad business mean? Are you suggesting a judge could demand that Google not put advertising on its own website?
mkone,
I cannot speak to what anyone else is proposing, but I think the advertising must be broken up by platform. Youtube, search, play store,, gmail, etc. They’d all still have ads but it wouldn’t be as monolithic.
You could still have a meta advertising service that spans all google properties using APIs, but the key to doing this in an antitrust appropriate manor would be that “google” (the meta advertising service) wouldn’t have an absolute monopoly over the former google properties. Other 3rd party ad brokers would be able to sell ads and google’s own ad service would have to compete with them. In short, advertisers would be free to use google for advertising, but they wouldn’t be so dependent on google’s own advertising service to reach users.
A lot of my clients have been complaining about bad service from google for years but are trapped in the google monopoly. Obviously whoever controls the users wins the ad business. Having more competition that can reach users could end up forcing google to finally do something about it’s awful customer service, something it hasn’t had to contend with before because of it’s monopoly.
Looking at macroscopic scale, suspect that there are not enough resources in the system to keep all the services provided by Google as a set of hypothetical separates entities. And with resources I mean: a big enough advertising economical space, users willing to/capable to start paying for now-free services and even available CPUs cycles, storage and terawatts of energy of keep all this stuff up and running. If we want to break the monopoly we need to scale down the entire system first. Reducing the usage of those incredibly resource demanding services like Youtube, those AI abuses for very stupid outcomes, social networks maniac and so on is the only cure….