A rare bid to break up Alphabet Inc.’s Google is one of the options being considered by the Justice Department after a landmark court ruling found that the company monopolized the online search market, according to people with knowledge of the deliberations.
The interesting thing about a possible Google break-up is that there’s only one part of the company that generates revenues.
YouTube, Google Search, Google Maps, Gmail, Android, Chrome, Google Drive, etc. are all money losers. Many of them don’t even offer an option to pay for the service. And, those that do generate tiny revenues compared to the ads machine.
Android is a huge money loser, but it’s worth it because all the things Android’s required to have end up showing people Google ads. If Android were split off, what would happen? Would Samsung etc. have to pay a fee to license the OS? Since it’s an open source project, isn’t it more likely they’d fork the code and just roll their own distribution? Maybe Samsung just buys Android? If so, what happens to Huawei, Lenovo, Xiaomi, etc? Maybe all the Chinese firms band together and support a fork of Android?
With Chrome, Google can afford to spend hundreds of millions a year developing it and then give it away for free because it not only sends people to Google Search, but it also collects all kinds of data on people’s browsing habits that can be used to tailor the ads they’re shown. If it’s spun off then what, do they think that for the first time ever people are going to be willing go spend $79.99 and actually buy a browser? Or a $19.99 monthly browser subscription? Almost certainly not. Which means people would use a free browser. On non-Apple OSes every browser other than Firefox uses the Blink codebase, which is basically Chrome, and developed by engineers working for Google. If Chrome is split off into its own company, what will happen to Blink? The existing codebase is open, but what’s the business model for coders at the new Chrome Inc. to keep working on it? So… does Microsoft now start paying Chrome Inc. to keep working on Blink? Or do they bring the browser back in-house again and we see the return of Internet Explorer? As for Firefox, it spends hundreds of millions per year on developing software, mostly Firefox. But, 90% of that money comes from Google, and that’s almost certain to stop. So, they’ll need to find a new business model too.
This is so different from previous break-ups. When AT&T was broken up, all that really happened was that instead of paying AT&T for their phone service, people now started paying NYNEX or Bell Atlantic or US West. But, now you’re dealing with a company where virtually every service they offer is free, subsidized by the ads they show, which can only exist when that service harvests personal data to feed the ad machine.
My personal suspicion is that this is such new territory that the Justice Department is probably not going to try to break Google up. They’re probably going to forbid things like paying off Apple and Firefox. They may force Google to license key search engine data. They may put restrictions on the ad machine. Breaking it up would be like knocking over a domino without knowing what the chain reaction would be. Also, I personally hope that if they take the win and choose a simple remedy, it will allow them to set a precedent and move on to all the other monopolies.
Only if you view them in isolation. In fact, they are what enables Google’s advertising dominance, by providing detailed insight into people’s lives, thereby powering the targeted advertising of AdWords and making it as valuable as it is.
Have you forgotten about the Play Store?
We used web browsers just fine before Chrome existed, before even Google existed, and nobody was paying $79.99 for them. (In fact, Chrome was originally built upon one of the free engines.)
I would personally be glad to see Chrome disappear, since it is now starting to cause the same problems that Internet Explorer caused more than 20 years ago. Monoculture is bad in this realm. Yes, Google does seem to pour a lot of resources into their browser, but most of that is self-interest; very little of the results are actually needed for a useful, healthy web.
The same fear could have applied to the Bell System. I’m not worried. :)
Consumers spent about $47b in revenue on the Play Store, of that Google keeps about 30% so that’s $14b. Google’s total revenue is $306 billion, so the Play Store generates only 5% of Google’s total revenue.
https://www.businessofapps.com/data/google-play-statistics/
We don’t know how much Android costs Google. They have to develop the OS and maintain it, they have to develop all the android apps. They have to run the servers that handle the traffic from the apps, and so-on.
Between 1999 when Netscape was acquired by AOL and when Chrome was launched in 2008, Internet Explorer absolutely dominated browser user share.
https://en.wikipedia.org/wiki/Browser_wars
No, but Netscape had planned to start charging for their browser, until Microsoft drove them out of business by bundling IE for free with Windows, illegally leveraging their monopoly to drive the company out of business. Microsoft was willing to give away IE for free because they thought it was strategically important to control the Internet, and were willing to take a huge loss on the browser business to do that. They used the money from Office / Windows to subsidize their free browser, which was illegal.
https://en.wikipedia.org/wiki/United_States_v._Microsoft_Corp.
The article you linked actually says, “Consumers spent $47 billion on Google Play apps and games in 2023.” Google’s 30% of that every year can easily fund something like Android. And that doesn’t even count the advertising revenue from free apps on the Play Store, nor the additional reach into people’s lives that it provides, which translates to even more income from their highly targeted advertising platform.
And yet you insist that Android is a huge money loser.
And?
Sigh… I don’t know what point you’re trying to make with all these tangential comments. If it’s to support your notion of a hypothetical “domino effect” making a Google breakup dangerous, I don’t think you’ve succeeded.
You have a lot of details slightly wrong. The Play Store makes money. People already have forked Android.
As for where Google makes and loses money… Don’t assume that we actually know. Large corporations are very good at hiding and shifting revenue for a variety of practical reasons, especially including tax reduction (both legal and illegal).
As for the chain reaction, by your reasoning nothing could ever be done in public policy. We never know exactly how the future will play out. But we have to deal with the damage currently occurring, and address that in a reasonable way, now. That’s how government works. That’s how the law works. There’s no better option.
The Play Store makes a bit of money, but it’s peanuts compared to the ads revenue that the rest of Google generates.
People have forked Android, but those forks have approximately 0% of the userbase.
We do know, it’s ads.
Oh, please. Stop being hyperbolic.