4 ms·

This is very well written. If antitrust laws do not define google as a monopoly, it's obviously the antitrust laws that are wrong. Google is obviously a monopo

by netcan 6y ago

This is very well written. If antitrust laws do not define google as a monopoly, it's obviously the antitrust laws that are wrong. Google is obviously a monopoly. The 2018 case against Google in the EU (€1.5bn fine) made very similar points and won. The real problem is what comes next. If recent history is a guide, it will be a cost-of-doing-business fine. This does nothing. At best, they'll adapt practices slightly. Maybe they've adapted enough post 2018 to make this case difficult. We need a new approach. There is no way antitrust courts can act as regulators effectively. They find that a monopoly exists, but... the goal is not regulated monopolies. The whole premise of antitrust is that monopolies are harmful in lots of systemic ways. We must assume that most are unknown. A prosecutor & court can't track down every monopolistic mechanism or dynamic and fine google for it. We need to avoid and void monopolies. This is why there are mechanisms to void mergers. Adwords could IPO independently. They'd be a great, profitable company. So would Google search, youtube, android... All these could be financially viable companies independently. Total share price would be lower. This reflects the fact that monopolies are more profitable. OTOH, the Google monopoly is an easy one to solve. It's so profitable that financial viability is easily achieved.

jldugger 6y ago
> Google is obviously a monopoly. Of which market though? Search: maybe. Ads: no.
- netcan 6y ago
  First, I think that once a strong monopoly exists monopolistic dynamics persist throughout the integrated layers. This is a premise of anti monopoly legislation. Search, mobile, adwords, "advertiser tools" like google analytics, play store, youtube. Google have huge market share in each layer. These reenforce each other, amplifying the monopoly dynamics. Second, I think adwords could qualify as a monopoly on its own. Online ad markets have grown a lot recently, but circa 2008 (I think) adwords market share peaked pretty high even if you define "market" as "all online ads". The market can be defined more narrowly too. Third, EU courts have already found against Google for monopsonistic behaviour in their adwords market. Competing search engines monetizing via adwords faced some dirty tricks, but adwords was the only buyer.
- threeseed 6y ago
  People also need to remember that being a monopoly isn't as big of a deal as what you do with that monopoly. If you try to extinguish competition like Microsoft did then you're going to be in trouble. Google Search for example has been routinely expanding to favour Google properties e.g. shopping, travel, news over third parties. With shopping being particular egregious where they are now starting to bypass third party ecommerce checkout flows entirely.
jeffbee 6y ago
There is no chance whatsoever that YouTube would be a profitable stand-alone business. The only reason it works at all is because it gets a free ride on the infrastructure that Google builds for serving products with better margins. Network transit alone would completely destroy YouTube, nevermind all the storage and compute they need for transcoding etc.
- netcan 6y ago
  What makes you say that? Google report Youtube's revenue as $15bn, and profits to be really high. Maybe they underaccount infrastructure costs, but it's definitely not billions. Google could be broken up into very logical units.
  - acituan 6y ago
    Google doesn't report anything but revenue on Youtube, so we don't know the margin. Most of the revenue is dispersed to content creators, and infrastructure costs must be huge, so more likely than not it is a loss leader.
    - nerfhammer 6y ago
      the purpose of a loss leader is to bring you into a store to buy other presumably more profitable stuff. what is youtube leading people into?
      - 6AA4FD 6y ago
        My (naive?) assumption is that user data is what is being "led into the store" aka being collected and fed into the rest of the ecosystem.
      - acituan 6y ago
        YouTube is mainly a 3-way market; the content producer, the content consumer and the ad seller. All of which benefit from network effects. In addition to that, a high 7 day active user count is a very attractive goal in itself as you can upsell them almost anything adjacent. Eg. Premium subscription, music service, movies, tv channels...
scarface74 6y ago
According to numbers that came out during the Oracle trial, Google only made $23 billion in profit from Android from inception through 2016 (https://www.theverge.com/2016/1/21/10810834/android-generated-31-billion-revenue-google-oracle https://www.theverge.com/2016/1/21/10810834/android-generate...). Google pays Apple a reported $8 billion a year to be the default search engine for iOS. Apple has made much more on mobile from Google than Google has made on Android. Youtube is still just barely profitable according to most accounts even with $15 billion in revenue.
- dannyw 6y ago
  Perhaps we'd see more innovation in mobile OSes and video delivery platforms if they had to operate as viable independent financial entities.
  - scarface74 6y ago
    Anyone can deliver video. It is just cost prohibitive unless someone else - in this case Google - is willing to subsidize it as basically a break even business. Is anyone really clamoring for another mobile OS? Manufacturers can already basically bastardized Android anyway they wish.
    - dannyw 6y ago
      That's like saying "Do we really need another browser? Anyone can fork Chromium".
      - scarface74 6y ago
        And the vast majority of users aren’t clamoring for another browser.
- zucker42 6y ago
  Huh, without taking a position, I get a lot different impression of those numbers than you. 23 billion profit against 31 billion dollars in revenue implies a 190% profit margin. And I wonder if those numbers even fully account for the effect of Android on their dominance in other areas. I think most companies would love such a generous profit margin.
cageface 6y ago
How would Android be a profitable independent entity? By becoming a new vertically integrated vendor like Apple? I doubt they could charge enough just selling per handset OS licenses to make this a viable business without recouping any of the service revenue.
- sutterbomb 6y ago
  How much does google pay Apple for search priority on iOS safari? Assume they would likewise need to pay android similar amounts
  - cageface 6y ago
    I don't have the numbers but it seems very likely to me that Google spends a lot more than this on maintaining and improving Android and this alone would not be enough to put them in the black.
  - thebean11 6y ago
    Sure, but also assume any other player that wanted to be the default search engine on Android to also pay Android a similar amount..
  - threeseed 6y ago
    Goldman Sachs seems to think Google is paying Apple nearly $10 billion. https://www.thestreet.com/investing/google-pays-apple-billions-to-be-default-search-engine-14865683 https://www.thestreet.com/investing/google-pays-apple-billio... Google could easily support Android with $100m a year if that.
logicchains 6y ago
>The whole premise of antitrust is that monopolies are harmful in lots of systemic ways. We must assume that most are unknown. This is completely untrue. There's a clear economic reason for why a monopoly, defined a certain way, is bad (reduces overall utility, worst outcomes for consumers, and everyone's a consumer). That's why we have antitrust. If the definition of a monopoly is changed arbitrarily, then the original arguments about why it's bad don't necessarily apply, so the concept becomes meaningless. Making arbitrary, unprincipled decisions based on what people not educated in economics feel might be bad is a great way to drive an economy into the ground.

by netcan 6y ago

jldugger 6y ago

> Google is obviously a monopoly. Of which market though? Search: maybe. Ads: no.

netcan 6y ago
First, I think that once a strong monopoly exists monopolistic dynamics persist throughout the integrated layers. This is a premise of anti monopoly legislation. Search, mobile, adwords, "advertiser tools" like google analytics, play store, youtube. Google have huge market share in each layer. These reenforce each other, amplifying the monopoly dynamics. Second, I think adwords could qualify as a monopoly on its own. Online ad markets have grown a lot recently, but circa 2008 (I think) adwords market share peaked pretty high even if you define "market" as "all online ads". The market can be defined more narrowly too. Third, EU courts have already found against Google for monopsonistic behaviour in their adwords market. Competing search engines monetizing via adwords faced some dirty tricks, but adwords was the only buyer.
threeseed 6y ago
People also need to remember that being a monopoly isn't as big of a deal as what you do with that monopoly. If you try to extinguish competition like Microsoft did then you're going to be in trouble. Google Search for example has been routinely expanding to favour Google properties e.g. shopping, travel, news over third parties. With shopping being particular egregious where they are now starting to bypass third party ecommerce checkout flows entirely.

jeffbee 6y ago

There is no chance whatsoever that YouTube would be a profitable stand-alone business. The only reason it works at all is because it gets a free ride on the infrastructure that Google builds for serving products with better margins. Network transit alone would completely destroy YouTube, nevermind all the storage and compute they need for transcoding etc.

netcan 6y ago
What makes you say that? Google report Youtube's revenue as $15bn, and profits to be really high. Maybe they underaccount infrastructure costs, but it's definitely not billions. Google could be broken up into very logical units.
- acituan 6y ago
  Google doesn't report anything but revenue on Youtube, so we don't know the margin. Most of the revenue is dispersed to content creators, and infrastructure costs must be huge, so more likely than not it is a loss leader.
  - nerfhammer 6y ago
    the purpose of a loss leader is to bring you into a store to buy other presumably more profitable stuff. what is youtube leading people into?
    - 6AA4FD 6y ago
      My (naive?) assumption is that user data is what is being "led into the store" aka being collected and fed into the rest of the ecosystem.
    - acituan 6y ago
      YouTube is mainly a 3-way market; the content producer, the content consumer and the ad seller. All of which benefit from network effects. In addition to that, a high 7 day active user count is a very attractive goal in itself as you can upsell them almost anything adjacent. Eg. Premium subscription, music service, movies, tv channels...

scarface74 6y ago

According to numbers that came out during the Oracle trial, Google only made $23 billion in profit from Android from inception through 2016 (https://www.theverge.com/2016/1/21/10810834/android-generated-31-billion-revenue-google-oracle https://www.theverge.com/2016/1/21/10810834/android-generate...). Google pays Apple a reported $8 billion a year to be the default search engine for iOS. Apple has made much more on mobile from Google than Google has made on Android. Youtube is still just barely profitable according to most accounts even with $15 billion in revenue.

dannyw 6y ago
Perhaps we'd see more innovation in mobile OSes and video delivery platforms if they had to operate as viable independent financial entities.
- scarface74 6y ago
  Anyone can deliver video. It is just cost prohibitive unless someone else - in this case Google - is willing to subsidize it as basically a break even business. Is anyone really clamoring for another mobile OS? Manufacturers can already basically bastardized Android anyway they wish.
  - dannyw 6y ago
    That's like saying "Do we really need another browser? Anyone can fork Chromium".
    - scarface74 6y ago
      And the vast majority of users aren’t clamoring for another browser.
zucker42 6y ago
Huh, without taking a position, I get a lot different impression of those numbers than you. 23 billion profit against 31 billion dollars in revenue implies a 190% profit margin. And I wonder if those numbers even fully account for the effect of Android on their dominance in other areas. I think most companies would love such a generous profit margin.

cageface 6y ago

How would Android be a profitable independent entity? By becoming a new vertically integrated vendor like Apple? I doubt they could charge enough just selling per handset OS licenses to make this a viable business without recouping any of the service revenue.

sutterbomb 6y ago
How much does google pay Apple for search priority on iOS safari? Assume they would likewise need to pay android similar amounts
- cageface 6y ago
  I don't have the numbers but it seems very likely to me that Google spends a lot more than this on maintaining and improving Android and this alone would not be enough to put them in the black.
- thebean11 6y ago
  Sure, but also assume any other player that wanted to be the default search engine on Android to also pay Android a similar amount..
- threeseed 6y ago
  Goldman Sachs seems to think Google is paying Apple nearly $10 billion. https://www.thestreet.com/investing/google-pays-apple-billions-to-be-default-search-engine-14865683 https://www.thestreet.com/investing/google-pays-apple-billio... Google could easily support Android with $100m a year if that.

logicchains 6y ago

>The whole premise of antitrust is that monopolies are harmful in lots of systemic ways. We must assume that most are unknown. This is completely untrue. There's a clear economic reason for why a monopoly, defined a certain way, is bad (reduces overall utility, worst outcomes for consumers, and everyone's a consumer). That's why we have antitrust. If the definition of a monopoly is changed arbitrarily, then the original arguments about why it's bad don't necessarily apply, so the concept becomes meaningless. Making arbitrary, unprincipled decisions based on what people not educated in economics feel might be bad is a great way to drive an economy into the ground.