13 July 2020

ongoing by Tim Bray: “Break Up Google”

Why break it up? · There are specific problems; I list a few below. But here’s the big one: For many years, the astonishing torrent of money thrown off by Google’s Web-search monopoly has fueled invasions of multiple other segments, enabling Google to bat aside rivals who might have brought better experiences to billions of lives.

When? · The best time would have been sometime around 2015. The second best…

Tim Bray

Going back through my archive of blog posts, I was mildly surprised to discover I wrote about this back in 2018. I guess that should not be very surprising, considering the European Commission was already delivering fines against Google on antitrust grounds. As US authorities are finally gearing up for investigations and possible measures aimed at tech giants, Google is still leveraging its market power against less powerful companies – in a recent example, it threatened to cut off European publishers from a lucrative flow of ads if they block Google from harvesting data about their readers (which is, as far as I understand, a GDPR requirement…).

In my view, the case against Google may be the most complicated because the company is acting on several fronts simultaneously that can all be subjects of antitrust inquiries:

  • it operates several advertising platforms around user-generated content (mainly web search and YouTube, potentially Google Maps as well) – similar to Facebook, who has the classic News Feed, Instagram, and to a lesser extent Messenger and WhatsApp;
  • it operates a mobile app store, like Apple, although their controls are not nearly as tight;
  • it aggressively promotes its own products and webservices on its platforms (web search and Chrome), like Amazon does on their shopping pages.

The list can go on much further. It is particularly hard to know from the outside how deep these individual parts are intertwined, how many synergies exist that sustain Google’s current ecosystem to the detriment of competitors. It is unclear how many products could survive outside of this ecosystem because they are subsidized by other business lines – Android in general comes to mind, as does Maps and Chrome and every other ‘free’ Google service.

Google revenues by segment

The opposing dynamic with Apple is interesting as their battleground is to a lesser extent smartphone apps, but rather the web itself. While it has always publicly stated support for the open web, Google has at the same time constantly tried to control the web, or at least chart out a course best suited for its interests – those being advertising revenues. Some examples include the near monopolization of the browser market to protect and expand data collection and advertising, and promoting AMP to capture publisher traffic. On some level, we can regard the web as Google’s app store, and Apple is quietly fighting to keep it constrained its devices, to keep it from competing with its own monopoly.

How does a broken-up Google look like? I could see several independent businesses emerging:

  • Web search as the user facing product coupled with advertising as revenue source;
  • YouTube with revenues from its own advertising space, commissions from video creators, and media subscriptions like YouTube Music and TV;
  • Google Maps could also become and independent business, drawing revenues from local advertising and licensing fees from smartphone manufacturers;
  • Similarly, Android could start collecting licensing fees for Google Play services, including from Google search; Google pays Apple to be the default search engine on iOS, why not pay Android as well?
  • Google Cloud could keep the web services, from Gmail to Docs, and offer them as a corporate office package – although its primary revenue source would probably be… hosting fees for Search and YouTube.

Overall I think a Google broken up in this matter would operate much the same as before; the difference would be better transparency about the cost structures and revenues of the individual companies (including for taxing purposes), better accountability and competition in the market. It could also allow and force these former Google pieces to innovate and evolve faster than inside the Google monolith. YouTube could come up with new mobile-first video apps – a competitor to TikTok or something else entirely; Cloud could make decisions based on the needs of their customers, not on the overarching Google advertising strategy. I sincerely doubt antitrust action would ever go this far, but it’s at least fun to speculate.

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