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I would assess Google (& FB's) "crown jewel" as, ultimately, their market share, which is related to your points... and causation runs both ways. The user data

I would assess Google (& FB's) "crown jewel" as, ultimately, their market share, which is related to your points... and causation runs both ways. The user data helps/ed Google create the superior UX, as you say. The reach is what makes Google & FB valuable to advertisers. A search engine with 0.1% of Google's user volume cannot charge advertisers 0.1% of Google's as revenue. Returns to scale/reach/market-share are very substantial in online advertising. I'm glad we're talking though. Those tech giants are too powerful. Ultimately, the old antitrust toolkit is near useless today, for dealing with tech monopolies. It's not obvious what "break up Google" even means. There are strong network effects and other returns-to-scale. It's a zero-marginal cost business, which was rare enough in the past that economists a ignored it. We need fresh thinking, a new vocabulary, new tools, but we do need to deal with it.

jorvi 7y ago
'Break Google up' would mean you'd have: * an Office suite / enterprise company (Google Cloud + Docs + Gmail + Business) * a phone company (Android) * a search company (Google Search + Advertisement) * and a media company (Google Play Movies, Music, Books and YouTube) The names would probably become different in time, but you get the gist. Amazon and Microsoft could be broken up much the same way, in neat categorical 'silos'. Facebook should be trisected into Facebook, WhatsApp and Instagram again. I have no idea how you would break Apple up without utterly destroying their core principle, vertical integration. There is no way to do what Apple does with MacBooks or iPhones if they don't control the entire stack. I'm not saying they shouldn't be, I just see no way.
- Ericson2314 7y ago
  I rather cleave them all vertically anyways, rather than be left with a bunch of mini horizontal monopolies. Granted most of your examples wouldn't be, except for search, but it still seems more interesting to me to just have a bunch of mini googles made from cleaving teams. Certainly that would make for some crazier competition.
- muro 7y ago
  For Google, you missed the part that makes most money.
  - jorvi 7y ago
    Thanks, I completely glossed over that since to me their advertisement division is inextricably linked to their search division. Added!
  - beatgammit 7y ago
    Most of those products don't make money by themselves, they exist to keep people in the ecosystem, providing more data for the real moneymaker. The biggest blow to Google wouldn't be to break it up into lots of small companies, you just need to separate the advertising business from everything else and you've effectively neutered the monopoly. Google's genius isn't in hiring the best engineers to providing a ton of services, it's in convincing people that they're not an advertising company, and that is where Facebook has been falling out of favor recently (I'm guessing that's why they bought Instagram, and why Google bought YouTube).
    - jorvi 7y ago
      That's an interesting thought. I agree with you that most of those products are loss leaders for data mining and thus advertisement. But my thinking was that if you simply cut off advertising all the products still have massive marketshares and could lean on each other, as long as some succeed. Not to mention investors probably willing to prop up such a massive aggregate marketshare (one only has to look at Uber). If you 'silo' them, success of one division of previously-Google won't lead to all of them dominating.
    - ryanobjc 7y ago
      “... provide more data for the real moneymaker.” This is a supposition - while perhaps it seems to makes sense, seems true, “must be true”, it doesn’t mean it is true! Unless you worked on search quality at google you really aren’t in a position to know if, say, google cloud, or android provides useful signals to search (outside of the signals they’d collect anyways if they were different companies). One thing people are obscuring is just how crazily effective AdWords are. They work for the advertisers, and they earn google like 70+% of the revenue. Confirmed via sec filings which does break that out. Go play with creating an AdWords campaign and try to infer just how much data google really needs to deliver those ads - it’s less than you’d think. In short: this overall move is more wishful thinking than solidly reasoned. Surveying the field of streaming video, given the amount of studio driven consolidation, is there really a tons of competitors being held down and will spring up? I am skeptical.
- dalbasal 7y ago
  So... I think there are two issues with this. (1) This doesn't actually reduce market share, since each of these are basically different market categories. (2) Almost all the revenue is from search. That company is the revenue generating arm for the other ones.
  - jorvi 7y ago
    Yes, my thought was that by breaking everything off from everything else, these silo'd services would suddenly have to compete with the rest of their market at fair terms, instead of being propped up massively by other division(s), and thus would lose marketshare to a multitude of fresh and established competitors. You are right though, it doesn't deal with the dominance of the search directly. My hope is a complimentary effect to the above also happens: Google no longer gets gobs of personal data from its other services, allowing other search engines to approach its efficacy. As is clear I'm not really a fan of direct intervention in a single market, I see it as more of a problem when these giants muscle their way and control more and more markets, creating a vicious feedback loop.
    - naravara 7y ago
      >You are right though, it doesn't deal with the dominance of the search directly. My hope is a complimentary effect to the above also happens: Google no longer gets gobs of personal data from its other services, allowing other search engines to approach its efficacy. I'm still not sure how this would work on Apple though, since their main differentiator is their design sensibilities and integration rather than their platform monopolies. I guess iMessage and the App Store do rely on monopoly rents, but I can't think of any way to sever those links without making the iOS platform less secure.
    - jldugger 7y ago
      > Yes, my thought was that by breaking everything off from everything else, these silo'd services would suddenly have to compete with the rest of their market at fair terms I think it's instructive to look at the rest of the market. How is Mozilla funded? Basically a single gigantic contract with Google. Even Apple accepts payment from google to become the default, and it's not cheap: https://fortune.com/2018/09/29/google-apple-safari-search-engine/ https://fortune.com/2018/09/29/google-apple-safari-search-en... The same logic applies to pretty much anything Alphabet spins off -- there's little difference between ownership and those contract. About the only competition this setup produces is the ability for Mozilla to walk away to a competitor bid, which they did for like a year before bailing out at the first opportunity. There's a huge incumbency bias in these contracts. The first parallel that comes to mind is employer provided health insurance. Everyone gets to bid, but the incumbent knows the claims history far better than the competition and we'd only expect them to lose bids to companies overly optimistic about that history. Google knows how valuable various traffic sources are, but their competitors have to guess, and only when their guess is higher than Google's does it pay off. Does anyone think Yahoo winning Firefox was a good deal? I haven't seen any analysis to support that. > My hope is a complimentary effect to the above also happens: Google no longer gets gobs of personal data from its other services, allowing other search engines to approach its efficacy. Wouldn't the most profitable thing for these broken up companies be to sell their slice of the personal data pie as many parties as possible? This seems like a net loss for privacy. How much extra would it be worth to set up an exclusive arrangement?
- dmix 7y ago
  Almost all of those businesses tie back into their main business which is advertising. Who is going to sell those ‘neat silos’ cheap advertising to survive with no other business model? Google?
  - lallysingh 7y ago
    Search advertising is different from web display advertising is different from streaming video advertising. The cloud services (Enterprise apps, hosting, etc) don't need it. I think we'd probably see a worse Gmail (worse ads or aggressive upsells).
- lallysingh 7y ago
  Apple's already on it's descent, and at most you'd break off their cloud services, which would immediately die without the support line from the hardware.
- hiram112 7y ago
  Breaking up companies like Google, Amazon, and Microsoft are just not gonna happen in 2019 where huge, global mega-corps are the only way to compete outside of small local markets. Even though a lot of these corporations build offices, hire non-Americans, and pay tons of foreign taxes in countries in which they do business, the main executives and talent still live in the US, the IP is developed here, and the majority of profits end up back in the home country. It's better for everyone who actually matters - shareholders, intel agencies, government officials, associated businesses, etc - that these companies remain large and globally dominant, even if it screws over US citizens by having to pay the monopoly taxes and suffer the privacy invasions. We're an insignificant sacrifice in the decision-makers' minds.
- jhunter1016 7y ago
  I'm not sure how much an impact breaking Google up would have, and I say this as someone who has built a product that competes with Google's G-Suite. I want there to be a more level playing field, sure. But each of these siloed businesses would still be a monopoly in its own right.

jorvi 7y ago

'Break Google up' would mean you'd have: * an Office suite / enterprise company (Google Cloud + Docs + Gmail + Business) * a phone company (Android) * a search company (Google Search + Advertisement) * and a media company (Google Play Movies, Music, Books and YouTube) The names would probably become different in time, but you get the gist. Amazon and Microsoft could be broken up much the same way, in neat categorical 'silos'. Facebook should be trisected into Facebook, WhatsApp and Instagram again. I have no idea how you would break Apple up without utterly destroying their core principle, vertical integration. There is no way to do what Apple does with MacBooks or iPhones if they don't control the entire stack. I'm not saying they shouldn't be, I just see no way.

Ericson2314 7y ago
I rather cleave them all vertically anyways, rather than be left with a bunch of mini horizontal monopolies. Granted most of your examples wouldn't be, except for search, but it still seems more interesting to me to just have a bunch of mini googles made from cleaving teams. Certainly that would make for some crazier competition.
muro 7y ago
For Google, you missed the part that makes most money.
- jorvi 7y ago
  Thanks, I completely glossed over that since to me their advertisement division is inextricably linked to their search division. Added!
- beatgammit 7y ago
  Most of those products don't make money by themselves, they exist to keep people in the ecosystem, providing more data for the real moneymaker. The biggest blow to Google wouldn't be to break it up into lots of small companies, you just need to separate the advertising business from everything else and you've effectively neutered the monopoly. Google's genius isn't in hiring the best engineers to providing a ton of services, it's in convincing people that they're not an advertising company, and that is where Facebook has been falling out of favor recently (I'm guessing that's why they bought Instagram, and why Google bought YouTube).
  - jorvi 7y ago
    That's an interesting thought. I agree with you that most of those products are loss leaders for data mining and thus advertisement. But my thinking was that if you simply cut off advertising all the products still have massive marketshares and could lean on each other, as long as some succeed. Not to mention investors probably willing to prop up such a massive aggregate marketshare (one only has to look at Uber). If you 'silo' them, success of one division of previously-Google won't lead to all of them dominating.
  - ryanobjc 7y ago
    “... provide more data for the real moneymaker.” This is a supposition - while perhaps it seems to makes sense, seems true, “must be true”, it doesn’t mean it is true! Unless you worked on search quality at google you really aren’t in a position to know if, say, google cloud, or android provides useful signals to search (outside of the signals they’d collect anyways if they were different companies). One thing people are obscuring is just how crazily effective AdWords are. They work for the advertisers, and they earn google like 70+% of the revenue. Confirmed via sec filings which does break that out. Go play with creating an AdWords campaign and try to infer just how much data google really needs to deliver those ads - it’s less than you’d think. In short: this overall move is more wishful thinking than solidly reasoned. Surveying the field of streaming video, given the amount of studio driven consolidation, is there really a tons of competitors being held down and will spring up? I am skeptical.
dalbasal 7y ago
So... I think there are two issues with this. (1) This doesn't actually reduce market share, since each of these are basically different market categories. (2) Almost all the revenue is from search. That company is the revenue generating arm for the other ones.
- jorvi 7y ago
  Yes, my thought was that by breaking everything off from everything else, these silo'd services would suddenly have to compete with the rest of their market at fair terms, instead of being propped up massively by other division(s), and thus would lose marketshare to a multitude of fresh and established competitors. You are right though, it doesn't deal with the dominance of the search directly. My hope is a complimentary effect to the above also happens: Google no longer gets gobs of personal data from its other services, allowing other search engines to approach its efficacy. As is clear I'm not really a fan of direct intervention in a single market, I see it as more of a problem when these giants muscle their way and control more and more markets, creating a vicious feedback loop.
  - naravara 7y ago
    >You are right though, it doesn't deal with the dominance of the search directly. My hope is a complimentary effect to the above also happens: Google no longer gets gobs of personal data from its other services, allowing other search engines to approach its efficacy. I'm still not sure how this would work on Apple though, since their main differentiator is their design sensibilities and integration rather than their platform monopolies. I guess iMessage and the App Store do rely on monopoly rents, but I can't think of any way to sever those links without making the iOS platform less secure.
  - jldugger 7y ago
    > Yes, my thought was that by breaking everything off from everything else, these silo'd services would suddenly have to compete with the rest of their market at fair terms I think it's instructive to look at the rest of the market. How is Mozilla funded? Basically a single gigantic contract with Google. Even Apple accepts payment from google to become the default, and it's not cheap: https://fortune.com/2018/09/29/google-apple-safari-search-engine/ https://fortune.com/2018/09/29/google-apple-safari-search-en... The same logic applies to pretty much anything Alphabet spins off -- there's little difference between ownership and those contract. About the only competition this setup produces is the ability for Mozilla to walk away to a competitor bid, which they did for like a year before bailing out at the first opportunity. There's a huge incumbency bias in these contracts. The first parallel that comes to mind is employer provided health insurance. Everyone gets to bid, but the incumbent knows the claims history far better than the competition and we'd only expect them to lose bids to companies overly optimistic about that history. Google knows how valuable various traffic sources are, but their competitors have to guess, and only when their guess is higher than Google's does it pay off. Does anyone think Yahoo winning Firefox was a good deal? I haven't seen any analysis to support that. > My hope is a complimentary effect to the above also happens: Google no longer gets gobs of personal data from its other services, allowing other search engines to approach its efficacy. Wouldn't the most profitable thing for these broken up companies be to sell their slice of the personal data pie as many parties as possible? This seems like a net loss for privacy. How much extra would it be worth to set up an exclusive arrangement?
dmix 7y ago
Almost all of those businesses tie back into their main business which is advertising. Who is going to sell those ‘neat silos’ cheap advertising to survive with no other business model? Google?
- lallysingh 7y ago
  Search advertising is different from web display advertising is different from streaming video advertising. The cloud services (Enterprise apps, hosting, etc) don't need it. I think we'd probably see a worse Gmail (worse ads or aggressive upsells).
lallysingh 7y ago
Apple's already on it's descent, and at most you'd break off their cloud services, which would immediately die without the support line from the hardware.
hiram112 7y ago
Breaking up companies like Google, Amazon, and Microsoft are just not gonna happen in 2019 where huge, global mega-corps are the only way to compete outside of small local markets. Even though a lot of these corporations build offices, hire non-Americans, and pay tons of foreign taxes in countries in which they do business, the main executives and talent still live in the US, the IP is developed here, and the majority of profits end up back in the home country. It's better for everyone who actually matters - shareholders, intel agencies, government officials, associated businesses, etc - that these companies remain large and globally dominant, even if it screws over US citizens by having to pay the monopoly taxes and suffer the privacy invasions. We're an insignificant sacrifice in the decision-makers' minds.
jhunter1016 7y ago
I'm not sure how much an impact breaking Google up would have, and I say this as someone who has built a product that competes with Google's G-Suite. I want there to be a more level playing field, sure. But each of these siloed businesses would still be a monopoly in its own right.