The European Commission has made a formal antitrust complaint against Google and its ad business. In a preliminary opinion, the regulator says Google has abused its dominant position in the digital advertising market. It says that forcing Google to sell off parts of its business may be the only remedy, if the company is found guilty of the charges.
This would be a significant move targeting the main source of the search giant’s revenue, and a rare example of the EU recommending divestiture at this stage in an investigation. The Commission has already fined Google over three prior antitrust cases, but has only previously imposed “behavioral” remedies — changes to its business practices.
Music to my ears. Companies exist to serve society, and if they no longer serve society by becoming too large, too powerful, and too wealthy, thereby massively restricting competition, they must be chopped up into smaller parts to create breathing room in the market. Google, Amazon, Apple, Microsoft – and that’s just the tech sector – all need to be broken up to allow newcomers to fairly compete.
The US has taken similar actions with railroads, oil, airplanes, and telecommunications, and the technology market should be no different.
Thom Holwerda,
I really wish we would be more proactive – the goal should be for fair competition to remain in a steady state rather than breaking up companies after decades of abusive practices. Breakups are not only extremely messy but also there’s no undoing the damage that has already been done.
Those cases are so old you may as well be talking about ancient greece, haha. Today corporations have US politicians eating out of their hands. Corruption is so rampant that as someone living in the US, I look to the EU to keep our corporations in check
Alfman,
Unfortunately for Google the ad businesses are very strictly tied. Like many other online services, without ad revenue, it can’t stay afloat. (This would be similar to telling New York Times to spin off their subscription services, or Coca-Cola their bottling plants). That makes any “Google to sell off parts of its business” very unlikely.
(Unlike say Android, YouTube, or others, that are still tied, but not 100% essential).
Given Google’s global ad revenue dwarfs their EU income, if worse come worst, they can choose to close shop in the EU instead. That probably is less than ideal, since Android, Chrome and several other platforms are now essential to many EU businesses and governments.
sukru,
I agree, it’s messy. And this is the reason why I am in favor of proactive measures that keep us on a reasonable path rather than trying to tear everything apart after the fact.
As a consumer, I really despise the global consolidation that’s taken hold over my lifetime. So to me it wouldn’t be the worst outcome for google to pull out and reverse some of this consolidation. Also, I think the companies at the top get way too much credit anyways, because in reality there would be somebody else to take their place. Monopolies and duopoly stifle innovation and impedes other platforms on grounds of sheer dominance of influence rather than merit. Breaking them up opens up great new opportunities for others to compete on merit.
I’m not a fan of breaking up companies, but my god I hate how we subsidize these corporate giants using public funds to build them up into these monsters in the first place. These corporate giants are insanely wealthy, they’re the last entities on earth to deserve public handouts, and yet because our politicians have their priorities ass backwards, they’re competing who can give these corporations the most free perks at taxpayer expense. Meanwhile those of us competing with them are literally helping them foot their bills. It’s complete and utter BS,
https://www.theguardian.com/cities/2018/jul/02/us-cities-and-states-give-big-tech-93bn-in-subsidies-in-five-years-tax-breaks
https://goodjobsfirst.org/money-lost-cloud-how-data-centers-benefit-state-and-local-government-subsidies/
https://www.datacenterdynamics.com/en/news/research-us-state-subsidies-pay-2-million-per-data-center-job/
Clearly I’m annoyed because it’s unfair, but also the opportunity cost to small & medium businesses, who employ more employees and are more focused on keeping jobs local. As much as I dislike the situation we’re in, it’s no wonder why we’ve ended up here, our policies virtually guaranty the success of giant corporations at the expense of others.
Alfman,
I think this is a problem, but for other other reasons.
The corporations come with a deal: “give us tax breaks, and we will bring many highly paid professionals which will spend in your cities”. At the face value, this is a good bargain.
However, many times they don’t bring that much value, or they could even pull out as soon as they get a better deal. And cities only give permits to businesses, not housing, which means locals will be priced out (called fancy names like gentrification, but that is not the fault of those workers).
Also, ultimately, it hurts the workers most. When I was interviewing, I realized companies want to fill in their remote offices, most likely due to this reason. Getting something close to home was not easy. And if they close the office in the future, you are completely left out.
sukru,
Did you read my links though? “Research: US state subsidies pay $2 million per data center job”
I consider such deals bad for tax payers, especially considering that corporations would have paid those expenses themselves anyways. Having tax payers subsidize them just means they get to use our money to grow their corporate wealth for no other reason than because they can.
I’m thankful the public united against amazon and public outcry managed to stop the NY amazon deal. But what happens is they start up a bidding war between local governments to put as many subsidies as possible on the table. Does amazon need government handouts? No. Was amazon going to move in anyways without government handouts? Yes. Rummer was that amazon had already decided to host their new headquaters in new york before NY’s winning bid. As a result of this insanely unfair process that rewards giants and punishes smaller companies, new yorkers were going to be on the hook to pay amazon billions even as they take away net jobs. This crap needs to stop!!!
The idea that these corporations create jobs needs to stop too. When you look at net jobs, corporations like google and amazon can end up displacing millions of people working for companies that become redundant when these giants grow their market share. Say amazon comes in and hires 10k employees but displaces 20k employees who had been working for smaller competitors. The headlines may credit amazon with “creating 10k jobs” while ignoring all the jobs they actually killed. Sorry if I take this personally, but amazon specifically is responsible for eliminating most of the ecommerce companies in my area. These local companies are struggling to compete with amazon.
Maybe it’s inescapable and the natural order of things is for the big fish to eat the little ones – no point in complaining about it. But the fact that my taxes pay to subsidize the giants that are killing off work for smaller businesses pisses me off to no end. If I could, I’d go as far as to officially ban taxpayer money being used to subsidize big business at the federal level. If they want to open shop anywhere in the US, let them pay for it themselves and take public benefits off the table!
I’m not against local governments creating jobs, but spend the money on local companies that produce more jobs and competition than the giants will.
Couldn’t agree more. Gentrification is such a huge problem, and silicon valley may be the epitome of it.
Yes, I sympathize. It’s the same here. You’ve got winners and losers, but on the whole massive consolidation is taking away local companies/jobs.
Alfman,
I’d say it is a bit more nuanced topic.
Yes, Amazon displaces a lot of old businesses, but it also opens up more opportunities for others. I have personally seen friends build online commerce from nothing using Amazon’s marketplace.
They have also made many mom and pop web hosting, and virtual machine host leasers obsolete (to be fair though many still survived). At the same time, they made it virtually frictionless for startups to build their infrastructure. Starting from S3, EC2 all the way to high level “no server” deployments today.
The key is keeping things in moderation. Allowing small startups to foster and grow, or even disrupt existing behemoths. Remember Walmart and Circuit City were a thing when Amazon was but a small online book store. (Talking too much about Amazon, I know). But even with their size, they could not enter the mobile market, nor made inroads to gaming. (Though I disagree for the approval of their iRobot purchase. There is clearly conflict in there).
Same with the larger economy. Small business and large ones both serve a purpose, and should stay in relative equilibrium. However small business share of the GDP dropped from about 50% to below 45%: https://advocacy.sba.gov/2019/01/30/small-businesses-generate-44-percent-of-u-s-economic-activity/
And this is not a good sign.
sukru,
IMHO we’re effectively recreating the robber baron era when we give into the giants and throw local companies under the bus. It’s a long term social disaster in the making. Obviously it destroys local jobs (including mine as I am directly impacted by these amazon fueled job losses). Am I the only one who cares about this? Like your friends, many businesses have become completely dependent on the companies at the very top including amazon. They hold all the cards and have all the leverage to do as they please, nobody else can touch them. They charge high fees that slowly drain resources out of local communities. It’s true that the techs hub benefit (ignoring the harmful effects of gentrification you mentioned), but it’s a net loss for average businesses and communities throughout the country as a whole. Amazon vendors do complain loudly about amazon fees and treatment and dependency, but realistically competing with amazon is just not a viable business path any more. As much as I despise this sort of monopolization, even I’m hard pressed to come up with a real alternative solution. It’s to the point where nearly all businesses trying to compete will inevitably fail and will be forced to join amazon while agreeing to whatever one sided terms they make. I am disappointed that we let things come to this, but I have to accept that it’s our reality
Yeah, it’s a different market that has the same problems. I’ve given up in this market too.
Society rewards companies simply for being giants. It’s not fair, but I don’t think this will ever change. The consolidation of market power is typically permanent for established markets, at least without some kind of market intervention.
This may be because growing a small businesses has become increasingly dependent on giving large platforms a cut in exchange for access to markets. Obviously Amazon applies again, but also mobile app developers paying 30% of sales to apple and google.
Alfman,
I think I should not touch Amazon anymore
I would say that is a minor inconvenience compared to the major blocker: regulations (and maybe also taxes). (One can still build their own, completely independent ecommerce site).
But: Patents, copyrights, excessive rules, etc.
(I am not universally against those. Without copyright, we would not have copyleft. Without patents, we would not have Biontech develop the mRNA vaccines, without regulation houses would burn down all the time).
But take patents. It is no longer one innovation = one product. You sometimes need tens, hundreds, or even thousands of patents distributed across companies to make a single product. (Remember the MP3? Worse HEVC using scare tactics against VP9?). Can you build a phone today from scratch without paying hefty fees?
Copyrights? Yes, let’s reward authors and promote arts. Yet, a few seconds of background music on your own YouTube video could get your channel blocked for a while.
Regulations? Open(!) AI is all for those. As soon as open source alternatives became actually useful (I would highly recommend checking that scene), they went to the “big brother” to enact regulations. How can a small lab compete with a billion dollar company? (Case in point: Have you realized all those smaller independent clinics are now part of larger medical chains? The same idea).
(Again, I would recommend checking the local llm / local llama communities).
Alfman,
That’s true and that business actually used to be good, but that market’s been circling the drain. Small businesses are shrinking as more and more customers move to giant platforms. It is what it is though. If you want access to the market, there’s little choice but to partner up with the incumbents who control it, thereby reinforcing their control. Ecommerce is doing well for those at the top but the long tail is a bad place to be if your income depends on it.
Oh my, this is quite a big topic to introduce at this stage of discussion, haha.
Generally software developers find copyrights to be reasonable and important. It protects their work automatically like any artist’s or writer’s work would be protected. What you write is yours to license how you want, which makes sense. No complaints here as a software developer, although you’re right that youtube’s copyright strike system is overzealous and punitive to content producers by denying them fair use rights.
The case for patents is far more complicated. Software patents in particular are extremely problematic. My philosophy is that I should be free to implement whatever math & algorithms I can come up without having to worry about the software patent minefields. Algorithms and logic are derivable and most of us don’t really feel these deserve exclusive protection. In the software space the harm of granting monopolies on mathematical algorithms and logic is far greater than the need to encourage software developers to write software as part of their job.
Now that we’ve got millions of developers, the odds of us stepping on each other’s algorithms are virtually 100%, overlap is inevitable. and yet in principal the patent system grants an invention monopoly to only one developer and denies all other developers the rights to the fruit of their labor, The legal costs for filing fees, patent attorneys and maintenance fees are too high for normal people to bear and even once a small developer owns a patent, what then? They have zero practical applications outside of court. And you still don’t even know if your patent is valid since these days validity is tested in court. Normal software developers don’t aspire to go to court as patent trolls so IMHO the best thing to do after having paid tens of thousands of dollars for their software patent monopoly is to sell it to a bigger fish. But I even frown on this too because it’s value is ultimately derived from being able to enforce software algorithm monopolies in court.
I can see how patents might be beneficial in other industries like medicine and cover very high development costs. But software patents have not created value for society that would not have otherwise been developed anyways.
Do you think AI should be regulated? I’ve heard a lot of media outlets talking about this, but I’m not really convinced about the case for regulating AI. I think we need to have a serious look at what AI means long term for the future of jobs under capitalism where a few entities will end up owning all the means of production, but this is not the case for regulation being made in the media, which seems to be following scifi tropes.
There is a solution to that: Force Google to sell the non-core businesses that it uses to prop up its ad business. For example, if Google is using Android to give Google Search, YouTube and Gmail a prominent position compared to competitors (which in turn props up Google’s ad business), then the Android (and GMS) branch gets sold off. Theoretically, even Google search, Gmail, and YouTube could be sold off, because it helps Google’s ad business sell more ads and collect more data.
This of course could have profound implications for open-source. Let’s not kid ourselves here, Google is not developing AOSP and Chrome out of the goodness of their hearts. And while AOSP has lost some userland apps (which you can still build from older sources btw), it’s still a well-engineered OS that Google makes available as open-source. Let’s be real, the only kind-of-successful business models for FOSS on the client side is are helping someone sell ads (Android) or sell proprietary software (Android and SteamOS) by keeping the part of the OS that delivers the ads or the proprietary software closed-source. And we could lose the “ads” part.
Most of Google’s revenue is from their core properties e.g. Search and Youtube. There is next to no legitimate way that the EU can force Google to open up their online real estate to third party competition. The bit that they might be able to force Google to give up is the network advertising (this bit where Google runs ads on other non-Google websites, and where Google has muscled in (e.g. by buying DoubleClick many moons ago). In this space, I can see the argument against Google using its dominant position (ability to sell ads on google.com) to dominate a separate market (the market for placing ads on other websites).
Google will probably be quite happy not to have to fund Android – they can just let others pay to develop it anyway. Android has done its job which was really to ensure that Microsoft (or someone else) didn’t construct a moat around mobile operating systems and keep Google out. Google is probably OK to just pay specific carriers to keep its search engine as default (as it does with Apple).
I suspect that Google might well happily give that up in Europe (and in the US, assuming that the US will demand similar). But the EU is unlikely to be able to demand that Google allow third parties advertise on their properties (such as Google Search or Youtube). Or at the very least, they would probably not win that argument.
kurkosdr,
Without going into much detail, some of those you mentioned would be much harder to separate from the core, nor they necessarily has connections to advertising data.
Anyway, in terms of open source, this is another issue tied to overall monetization. RedHat used to sell service contracts, which later merged into IBM’s. Ubuntu leans more on selling business services (like online subscriptions, maybe closer to Google’s model). Others try dual license modes (AFPL/GPL, etc), again that is similar to what Google does with Android (AOSP/GMS).
Any other entity that “takes over” Android will have the same dilemma. Maybe they will not have Google services built in explicitly, but they will still have two versions, one of which still tied to commercial services. Given 3rd party (Firefox, Samsung, or even Apple to a point) choose to make deals with Google, I don’t think this will change the end result, except for maybe they could have even tighter integrations in some markets now. (Which were previously prevented by competition authorities).
sukru,
Yeah, while I’m a huge fan of openness and FOSS for the sake of freedoms (contrary to proprietary/closed hardware and software), I’ve never had a good answer for this particular criticism. Most FOSS projects need to be subsidized in some way (ie redhat, google, etc). In the case of hardware vendors, sales could easily subsidize FOSS software driver support, but many hardware vendors won’t even do that, unfortunately.
While I don’t think google does enough to promote openness, I agree with you that things could easily end up being worse off in other hands. There is a risk of unintended consequences…it could be another IOS, We’ve got to be careful what we wish for!
Alfman,
It is a “tragedy of the commons” issue. Even Google suffered from this.
Samsung famously wanted to switch their “Galaxy” line from Android to Tizen: https://www.eyerys.com/articles/news/samsung-bet-tizen-counterstrike-against-google
They would take Android, skin it to their own UI, prepare their own os in the background until it is ready, and the next version of Samsung Galaxy comes with Tizen instead of Android behind the scenes.
(This is a very long story, but somehow they came back. Also in completely unrelated news: https://techcrunch.com/2011/08/15/breaking-google-buys-motorola-for-12-5-billion/)
EU’s action doesn’t come fast enough though. I couldn’t keep wifey from replacing her dying iphone before EU’s USB-C/lightning rule went into effect
Yeah I don’t think all these companies are a problem as Microsoft, Amazon and Apple are not in as a dominant position as say the railroads, oil or Telecommunications companies were.
When standard oil was in place you couldn’t name another oil company, same with ATT etc.
Googles ad business is so dominant though there is no competition at all. That’s a problem that needs to be fixed.
The part that’s dumb is that they wouldn’t have gotten this big if the EU and others didn’t let Google buy up everything.
Windows Sucks,
Well, prior to the antitrust acts, the concentration of power was unlimited. I’m very glad we have antitrust at least for the most egregious cases. if it weren’t for the antitrust cases against microsoft, the technology landscape would look very different today. Like ’em or hate ’em, microsoft were very proficient at exploiting their monopoly power to crush competition.
My gripe with antitrust is that it’s too reactive as opposed to proactive. We have a lot of duopolies and oligopolies that do not trigger an antitrust case, but still reach levels of market consolidation that are quite harmful to competition. Take the android/ios, duopoly, I feel consumers should be entitled to more competition yet both google and apple use monopoly tactics that impede competition. So IMHO antitrust needs to take corrective measures early before markets become hugely imbalanced but through reasonable steps that protect competition and are much less draconian than full on corporate breakups.
The funny thing is, Apple would very likely had joined Atari and Commodore during the 90s if it hadn’t been for Microsoft being under antitrust apeals at the time. They used Apple as an example of another vendor you could buy an operating system from. Then lent them money to keep them afloat. With a regime change in politics, it all mysteriously went away…
I agree with Alfman, there should be a greater watching of anticompetitive practices and things done much sooner to protect innovation. Look how long the computer space has stagnated. Even when some manufacturers attempt to do something new (like adding power throughput on the motherboard to clean up the ‘hack’ of feeding more power straight to the power hungry GPUs, and instead of being brought out as a new standard, most tech sites are blasting it as proprietary. It really should be the new standard, kind of like AGP had become.)
leech,
Innovation in hardware is hard, not because “anti-competitive” practices, but arguable because of competition itself.
Take a look at this: https://linustechtips.com/topic/1509866-new-asus-gpu-600w-motherboard-power-connector/
ASUS is introducing exactly what you want. (Or at least what I understood you want). However how many manufacturers have the incentive to use that particular PCIe alternate design? ASUS unilaterally cannot enforce it, and given competition, it is unlikely others will follow.
(If we were in the “good ol’ days” of IBM dominating the market, they could have easily forced this update).
Anyway, I might be wrong, but we will probably have some other design, since cards are literally melting trying to move upwards of 500W over tiny connectors.
No they way more dominant, and much richer than any other monopoly in history.
Agreed,
First, they don’t even have an army. Unlike the older monopolies, some of which literally had armies and fought wars over “market space”. (East Indian companies).
And the richest person? Mansa Musa, an African king which literally bankrupted many countries on a pilgrimage journey, by giving away gold to people during this travel.
Rather than breakup their advertising business, I think they should consider making Google sell gmail and stop making chromium instead. This would kill a big data source they use for their advertising platform and open competition again. Chromium has a near monopoly on the browsing market and a significant influence on how email works on the internet.
If google doesn’t control the browsing market, we might get more privacy protection, ad blockers, etc in web browsers.
lets break up microsoft, they are HUGE and only getting bigger, activision is in their sights next
split them into..
advertising (to get this out of the OS core)
hardware
software
gaming