November 28, 2024
📰 FEATURE STORY
Should Google’s businesses be broken up?
“You get up in the morning, you brush your teeth, and you search on Google.” That’s what Microsoft CEO Satya Nadella said when testifying in the US Justice Department’s case against Google. Google and its Chrome browser are ubiquitous in our everyday lives, and many other than Google aren’t happy about it.
The US Justice Department’s monopoly case against Google remains in the courts. The government’s latest proposition is to ask the company to sell its Chrome and web search division to make the market more competitive and give companies like Microsoft and others a chance. Would this be a good move for everyone involved?
Context
In August, a US District Court ruled that Google acted illegally to remain a monopoly in the online search business. The US Justice Department and several states sued Google, accusing it of illegally cementing its dominance, in part, by paying companies like Apple and Samsung billions of dollars to have Google as the default search engine on their phones.
That was a blow to Google. The search engine is very much its heart and soul. It’s a valuable distribution mechanism and a window into the searching habits of billions of users. All that data is used to create higher-value targeted advertising. It has also tapped Chrome to reach new users with new AI products as it looks to stave off competition from rivals like OpenAI.
During the 10-week trial, the government argued that Google’s search engine conducted nearly 90% of the internet’s web searches. Those exclusive big-money agreements have proven their worth.
Google disputed that ‘90%’ number. Their defence was that the ruling recognised Google had the best search engine but couldn’t make it easily available. The company said people use Google because it offers the best experience. Basically, they’re winning since the product is better.
Others have tried and failed to compete. Neeva, a privacy-focused search engine launched by Google’s former ad boss and other ex-Googlers lasted only four years. Microsoft’s Bing is nowhere near Chrome in terms of users or ad revenues.
So, what can be done? In their latest arguments, the government saw a remedy – tell Google to sell Chrome. The search engine holds a large market share in the US. If it’s for sale, how much does it cost? Putting a dollar value on Chrome is tricky since it’s deeply intertwined with Google. Some analysts have stated Chrome is valued anywhere from $15 to $20 billion. Also, from a financial perspective, it’s unclear how it would operate independently.
Selling Chrome would be no small feat, not just for Google. The entire tech and ad tech landscape could be affected. Would this change anything for the better?
VIEW: Should be forced to sell
Losing billions of Chrome users would be a blow to Google. However, the company has other ways to reach users and farm data, including Gmail, YouTube, the Android ecosystem, etc. There’s also a stand-alone app that could function as a web browser and effectively replace Chrome. Could Chrome be spun off and be financially viable on its own? One way is to let Google financially support it if needed but block the company from exclusive contracts to make it the default.
For many people, Chrome is the gateway into Google’s ecosystem, and Google is their gateway into the broader internet. That’s nice for Google since it collects data that’s sold to advertisers. Last year, that business generated $237.9 billion for the company. Chrome doesn’t give users as many tools to protect their privacy as others, like Safari or Firefox. While it’s not illegal to be a monopoly, it is to leverage the monopoly power to maintain the dominant position.
The Justice Department’s proposal would give advertisers more control by sharing more information with them and more options over where their ads appear. The August ruling was a window into how Google built high walls around its search and ad business and why transparency and control for advertisers are necessary. Given the amount of money to be made in search, this level of government intervention could reshape the marketplace and level the playing field.
COUNTERVIEW: Could have negative ramifications all around
There’s little doubt that Google dominates the search business. But the government’s cure is worse than the perceived disease. The point of an antitrust law is to promote competition. They’re not designed to punish but rather to correct the effects of a monopoly. The test is to see if the market would be more competitive and give users better experiences. The Justice Department hasn’t sufficiently explained this. Splitting up products would lead to higher costs and poorer experiences for users.
The government’s proposal for Google to license its trove of data to rivals for 10 years won’t work. Think of it this way: if you want to promote competition among airlines, having more travel agents is no use. It might result in more ticket sales but won’t make the airlines more competitive. Forcing Google to sell Chrome won’t end the company’s dominance overnight. It’s better to go after the expensive exclusive agreements. That’s what ensures its dominance.
Breaking up Big Tech makes for flashy headlines, but the reality is complicated. There are a couple of unintended consequences. Years of legal wrangling would be bad for consumers and advertisers. The ad market might not even become more competitive; it could just shift toward other giants like Apple and Amazon, who have their own share of regulatory hassles and issues.
Reference Links:
- Google and the DOJ make their final arguments in the ad tech monopoly case – The Verge
- DOJ urges Google to sell Chrome and give advertisers more control – The Current
- Why the Government’s Google Breakup Plan Is Such a Big Deal – Intelligencer
- Here’s why Google without Chrome is still a monopoly – MSNBC
- Why breaking up Google won’t happen (and why it shouldn’t) – The Drum
- Breaking Up Google Would Be a Big Mistake – The New York Times
What is your opinion on this?
(Only subscribers can participate in polls)
a) Google’s businesses should be broken up.
b) Google’s businesses shouldn’t be broken up.
Previous poll’s results:
- The IAF’s partnership with Uber is problematic: 76.5 🏆
- The IAF’s partnership with Uber isn’t problematic: 23.5%
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