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Comment by hn_throwaway_99 | Hacker News Reader

I have a big problem when people talk about Google only having "a third of the market", and counting total digital ad spend as that market. For example, I bet that if you looked at certain industries of people selling things online (for example, plumbers, attorneys, hotels, etc.) you'd find that nearly 100% of businesses spend money on Google. Sure, they may spread ad spend around (e.g. lots of businesses uses Facebook for brand awareness and Google for targeted search marketing), but these businesses don't see not spending on Google as an option. If there were real competition, these businesses would have a choice to spend these dollars somewhere else, but the fact is that Google is so dominant in search that for most companies the options are "pay the Google tax" and "go out of business". That doesn't feel like a market with healthy competition.

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If you cut any industry finely enough, you will find a monopoly. The pizza restaurant next door is a monopolist in the pizza category on my street.

So if you don’t want policy to be completely arbitrary, you’ll need some principles to follow when drawing industry boundaries.

> The pizza restaurant next door is a monopolist in the pizza category on my street.

That's ridiculous. Sure, it may be easiest to order from the guy next door, but if you don't like the pizza next door, you can easily call the guy 3 blocks down the street.

My point is you have options when it comes to pizza. There are many types of businesses that simply do not have any options besides Google. Don't believe me? Ask literally anyone who works in digital advertising. If you were planning any kind of digital ad campaign that relied on search, and you said you weren't going to spend on Google, they'd think you were insane. "Oh yeah, I've decided to put all my search ad spend on Bing." It sounds ridiculously laughable just writing it out.

I work for Bing. Awwww, man. ;-)

By this logic Apple is a monopoly in the mobile space since nobody can afford to ignore them when building apps.

People absolutely can afford to ignore Apple in the mobile space, except if your app is 100% reliant on the US market. iOS is only about 20-25% of the global market.

We're talking about US antitrust law and its enforcement in this thread. And in the US market iOS is the priority for app developers.

Very few US companies operate only in the US as far as app development, and none of the statistics I've seen so far concern solely the US.

In any case, if you're making a social media app or other international app, an Android version is likely more important.

You're kind of completely missing the point you're responding to.

There is no such thing as international anti-trust. In this conversation the US market is the only thing that matters since we are talking about US law. Hence, android does not really matter much for revenue.

That is not entirely true, because the internet is inherently international. It is a different kind of anti-trust, though I recognize that laws haven't caught up to it.

Even in the US, Apple does not have even close to a monopoly over Android, anyways. At best they have 50% of the marketshare.

iOS has 58.54% market share in the US according to https://gs.statcounter.com/os-market-share/mobile/united-sta...

And yet iOS generates 80% more revenue than Android does[0]. If you want to make money, you can't ignore Apple.

[0] https://appleinsider.com/articles/19/07/03/apples-app-store-...

If you monetize mainly by charging people for your app, sure. If you sell mandatory subscriptions or make your money from ads, Android is more important.

This makes sense on paper but iOS users also tend to have higher disposable income[0] which would make them spend more on subscriptions and be more valuable ad targets.

[0] https://www.mobilemarketer.com/news/survey-iphone-owners-spe...

That study is US-only, too. If you're making a solely US-based ad-servicing service (which makes very little sense, and if you are you should spend time on internationalization before spending time on your iOS app), otherwise if you are making a subscription service only in the US that does make sense.

And even if the trends did hold up internationally, and I really suspect they don't, Android would still be better for ads and subscriptions internationally due to nearly three times the market share, despite a bit more than half the disposable income.

I don’t see why the trends wouldn’t hold up internationally. Android is more popular than iOS internationally because the vast majority of the world has a lower PPP than the US. Android is popular in places like India which pale in comparison to US revenues per customer simply based on PPP alone.

I really don't believe that is true. Even in countries with high GDP iPhones can be much less popular than Android, for example Germany, or Italy, or Japan, or Finland, by pretty massive margins.

People don't really buy iPhones as soon as they have money unless it is a status symbol in their culture, which it really is the more the country is Americanized/anglophone. I think that correlation holds up much better than GDP PPP. There is no real reason for money to predict iOS market share except for that.

That's not universal - anecdotally I've seen Android versions that end up generating 80-120% more than the iOS version (per user). It depends a lot on the market and your product. Also, in other situations I can't help but wonder if it could be put down to Android's 2nd class citizen status in many companies. If you're going to give your iOS users a native experience (with no expense spared) while doing the bare minimum for Android (or not at all) then yes - you will earn substantially more per user on iOS.

I really didn't think about that one. Yes, it's entirely true, a ton of Android apps are so broken that I would have no reason to buy the app or service.

This doesn’t really make any sense. If there were overwhelming riches to be had in the Android market, companies would allocate greater resources to making Android apps good. But there aren’t — at least not compared to iOS — so the resource allocation is commensurate. Companies want money first and foremost; they don’t care which platform allows for a prettier UI if it gets in the way of $$$.

I don't think that is true. Even when app development is a very small share of total cost, and certainly insignificant compared to benefits especially re: other makets, such as Snapchat, the Android app might be horribly lacking.

There aren't overwhelming riches to be had on either platform (unless you're Apple or Google of course).

The point I'm trying to make here is that people will use that figure (often without much thought) to justify giving Android users a sub-par experience - which only serves to reinforce it. I've worked for several companies that have given parity to iOS and Android, and one that did not. For the former we did not observe a disparity that large. YMMV by region and industry of course.

Yes.

That would be closer to a monopsony (single buyer), though the details get a bit fuzzy when talking about platforms rather than straight customer-seller relationships.

Yes, it is. Not in defanged US antitrust law, but in reality.

I think there are lots of monopolies, yeah

That's because Apple is a monopoly, or at least Google and apple form a duoopoly. And if you make mobile apps you have to pay the google tax, apple tax, or more likely both.And play by their rules.

This raises and interesting point:

Would consumers be better served if app developers had to pay the Google tax, the Apple tax aaaaaand the Microsoft tax, the Samsung tax, the HTC tax, etc etc etc?

Yes, because if there was competition, that "tax" would likely be lower. For instance, Microsoft's fees for one-off purchases are just half of what Apple/Google are charging.

On android, you can publish yourself which Fortnite did [0]. iOS you cannot though and in fact they are getting sued for their "abusive monopoly in iOS app/in-app distribution services" [1].

[0]: https://www.bbc.com/news/technology-45063002#:~:text=The%20d....

[1]: https://www.hbsslaw.com/uploads/case_downloads/apple-dev/201...

Yes, it is technically possible. But good luck getting your users to do that if you aren't as big as fortnite.

https://www.google.com/amp/s/www.theverge.com/platform/amp/2...

NO AMP: https://www.theverge.com/2019/6/4/18652460/apple-class-actio...

Doesn't that mean spending on Google is profitable? You can simply set a bid limit at less than your customer lifetime value (multiplied by conversion rate) on all channels. If someone outbids you systematically, then your spend in that channel drops to zero. Who cares whether it's Google or anyone else. The right move is to spend on all profitable channels, and if you run out of money, borrow more. Why pass up profit when capital is so cheap?

>If you cut any industry finely enough, you will find a monopoly

And inversely, if you cut any industry coarsely enough, you will never find any monopolies.

"Don't break us up! Sure, we may own the entire telephone service, but we do not have a monopoly. See, you should be looking at total human communications. People talk in person, send letters, etc. We own a teeny tiny slice of total human communications."

"Don't break us up! Sure, we may own the entire rail network, but we do not have a monopoly. See, you should be looking at entire human travel. People walk, ride horses, travel by ships, etc. We own a teeny tiny slice of total travel industry."

The only monopoly is the government granted monopoly, ma bell was one.

So if Verizon manages to, through mergers and acquisitions and like, get a 100% market share in the US, it would still not be a monopoly, because it is not government granted?

Of course not. If you don't like paying the monopoly prices, you can just, uh... you can just start your own backyard wireless telecommunications service provider.

MCI was created to compete with Ma Bell and did so.

In Verizon's specific case it would be a government granted monopoly either way. Between infrastructure easements to wireless spectrum to state laws banning municipal competition, that industry is government granted through and through.

Peter Thiel said you can tell if a company is a monopoly by the way they talk about themselves:

“Anyone that has a monopoly will pretend that they're in incredible competition. If you're a non-monopolist, you will rhetorically describe your market as super small, you're the only person in that market.If you have a monopoly, you will describe it as super big, and there is lots of competition in it"

This has been a point of contention all the time. Regulators want to shrink the market size as much as possible, and companies want to expand it as much as possible. This is not a way to determine monopoly.

The quote was referring to the way the company describes themselves in e.g. 10Q briefings.

We already have a framework to define markets, called hypothetical monopolist test. It's conceptually simple; given a market definition, can a hypothetical monopolist impose significant increases in price without customers turning away? If not, it means there's competitors so it's not monopoly.

In this definition, Google's not going to be a monopolist as advertisers can easily reallocate their budget to alternative options (FB, Amazon, etc) to improve their ROI if Google decides to increase their fee significantly. Publishers don't have much options other than AdSense to sell their ad slots so it's monopsony(=single buyer controls the market). Not sure if the US antitrust law can handle this situation. If so, then this is going to be a landmark case.

> In this definition, Google's not going to be a monopolist as advertisers can easily reallocate their budget to alternative options (FB, Amazon, etc) to improve their ROI if Google decides to increase their fee significantly.

That is the point I 100% absolutely disagree with. Ask any digital marketer, most of them see FB and Amazon as serving different purposes than what targeted search ads do. If you put 'Bing' or 'DuckDuckGo' I would agree with you, but in that case you'll find that the way Adwords bidding work that Google pretty much already takes a huge portion of potential margin - in many areas with deep-pocketed investors who think they'll eventually turn profitable Google actually takes more than 100% of potential margin.

> Ask any digital marketer, most of them see FB and Amazon as serving different purposes than what targeted search ads do.

I'm very well aware of this, but this doesn't necessarily mean that budget planning will be done completely independent across multiple different channels. We already have observed a significant fraction of search advertisements budget has been moved from Google to Amazon as Amazon becomes a more effective ads platform. In fact, nowaway this becomes a much more attractive option since Amazon now owns literally everything from advertisements, auction, optimization and measurements in a single platform.

> in many areas with deep-pocketed investors who think they'll eventually turn profitable Google actually takes more than 100% of potential margin.

Most of the Google's largest advertisers are big, conventional companies with a strong cash flow, not those burning the money from investors. They really care about incrementality, efficacy, measurement and performance. Sure, you can probably burn a few million dollars without a good reason but you cannot spend x100 like that.

You can make similar arguments for many other industry titans too. If you don't cater to Apple you will lose out on major chunk of high paying people, if you don't cater to Amazon you will miss out on a lot of e-commerce sales, if you don't cater to Instagram you will miss out younger audience.

This is the worst of all possible market definitions. That the market is the thing which only this company does. Most of the companies are choosing google (or forced to choose google) because of the reach and the traffic it gets you. They are free not to spend on Google, use Facebook, Amazon, or any other network (many exist but people arent so aware), the returns are very very low. Its a moat for Google given that their targeted marketing is very very accurate compared to other networks. Same goes with Facebook.

If you limit them, you are not improving your ROAS or even efficiency. For most of the companies, they would end up spending higher per qualified lead compared to what they get from Google. This is very hard to break and side by side ensure that the advertisers (and publishers) are not harmed in the process.

Facebook has its own audience Network, but that is really bad in terms of returns. There are others like Taboola, Smarty Ad and so on, but all of them end up not delivering enough returns, and as a publisher, you end up going to google.

It has been mentioned before on topics like this one, but lots of people commenting in here are directly financially involved in this type of discussion (i.e. breaking up Google or FB), as in they're probably employees of those companies and as such their relatively big compensations depend on these companies' operations remaining pretty much the same.

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