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Comment by gumby | Hacker News Reader

> ...their monopoly, which is why Google should be broken up.

Not denying their monopoly position, but how could Google meaningfully be broken up? It's really just a single business (advertising) with a gaggle of loss leaders adding up to less than 20% of revenue. Even pushing advertising down to 80% took a huge amount of effort.

It's not like Standard Oil which was a vertically integrated trust of several points in the value chain, or the bell system which could be broken up geographically (and manufacturing spun out). Or FB which could divest business units like Instagram and WhatsApp.

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> It's really just a single business (advertising) with a gaggle of loss leaders adding up to less than 20% of revenue

A better way of looking at it is that Google is a collection of traffic drivers (YouTube, Gmail, etc) and monetizers (ads).

If you break the monetization into a separate company, the traffic drivers aren't profitless: because a large part of the ad profit was created from their traffic.

If Google Ads had to buy space / share ad revenue from Google YouTube, Google Gmail, etc then economics would look a lot more reasonable.

And I'd frankly be shocked if that isn't what they do internally, albeit more in the sense of "How much ad traffic do you drive, from your corner of the company?"

I think it could be done depending on how you slice it. For example you could definitely put YouTube as its own separate entity YouTube and google play together, as an entertainment company. Gmail plus drive and calendar as a productivivity company, web search as it’s own company. One thing that could make this easy would be to remove the google identity as a single company for SSO into all types of services. Then all the other companies could have sign in with FB Microsoft LinkedIn etc. google maps could be a standalone company. Nest/google home could easily be its own company. Especially if they spin off google identity as a separate product. Oh and google shopping could be it’s own company. Lastly all these things could still feed into google search results using APIs from all those services. I think we could benefit from a break up.

Maybe we shouldn't be letting this gaggle of loss leaders distort the market in their respective verticals.

Exactly, this should be absolutely obvious.

If an oil compnay gave away cars for free and became a car monopolist, people would be up in arms, vut Google's BS is somehow acceptable

I think the suggestion is breaking up alphabet, which is quite literally loads of companies.

YouTube, Google search, deep mind, Google fiber, waymo, Fitbit etc

Seems pretty easy to break up if you want to.

The parent's point was that breaking up Alphabet in any way that leaves Google Ads contiguous is insignificant. When you go to the barbershop and get a haircut, you've broken up your person into 100,001 individual pieces, but that hasn't solved your weight loss problem, because the 100,000 bits of hair are only a few hundred micrograms each and the one piece that is your body still weighs 90 kg.

Google Cloud is big enough to be significant in terms of revenue, but AFAIK is only maybe breaking even in terms of profit. If you break up Alphabet into 26 or more different companies, you haven't broken up the monolith into non-problematic small companies 1/26th the size of the original, you've got 25 irrelevant companies and then one subsidiary that gets Ads which is almost as big as the original. Google even says as much in their financial statements, most of those listed companies are listed as 'other bets' and are a tiny fraction of the main line item that represents ads.

> Google Cloud is big enough to be significant in terms of revenue, but AFAIK is only maybe breaking even in terms of profit.

Google cloud gotten profitable enough that they only spent $5B to earn $4B in revenue last quarter. After a dozen years that's the best ever (classic case of monopoly leverage to get into a different market).

Advertising is "only" 81% of revenue but almost 100% of profit.

Some other commenters have proposed that properties like YT and Android drive ad traffic but when I looked at the last 10Q it looked like YT was about 10% of ad revenues. I believe Android is a net loss but worth it in that it's an offset to reduce payments to Apple. But I just skimmed the filing because this is just an HN comment.

Isn’t the problem also that they use the massive profit in search to go into other areas and distort the market there by being able to subsidise losses with search income?

It would also stop them favouring their own products in search results

> I think the suggestion is breaking up alphabet, which is quite literally loads of companies.

Few, if any of those companies would be viable on their own. They require monopoly support. For example Google Cloud loses a billion a quarter (they spent $5B last quarter total in $4B).

As far as the cloud market goes there's really only one player, the profitable, pure play AWS. Everybody else is losing money, and mostly fudging the numbers (Google "cloud" includes Gmail, Google Workspace etc; MS's cloud includes running Windows for big customers, Office 360 etc etc).

Nest is marginally profitable.

Otherwise it's pretty thin gruel.

That’s kind of the point though isn’t it?

Which accomplishes what, exactly?

Perhaps Google Search, Chrome, and the advertising business could be split. Or Google Search could be split into Google Search 1 and Google Search 2.

If an advertising company didn't have access to your search history, there would be a more level playing field

Breaks it up into smaller business models, each of which makes it easier for companies with a more narrow, yet aligned, focus to compete with.

And it will have literally zero impacts on its business practices. They can simply form a "Google/Alphabet cartel" via preferential treatments, and will be structured and operating effectively in the same way and then eventually get merged together. If you want to attack Google and other big techs' monopoly, you need to design a precise regulation on very specific anti-competitive behaviors.

it'll be 'easy to break up' because that's what Alphabet was created to do - back in 2015 they knew antitrust and a monopoly break-up was going to happen at some point, so they made these companies largely operationally separate so that they have very little hiccup when it is required. The only one that'd be hard is YouTube where they might require spending some millions reworking the ad model, but otherwise they'll have little issues continuing business as usual. YouTube is likely profitable[0], so it's not like their monopoly over free video content is going to cease.

0: https://www.theverge.com/2020/2/3/21121207/youtube-google-al...

The simplest split with potential to start addressing concerns in this particular lawsuit is to break the index that results from google's web crawling out into a utility.

With competing "engines" (defined as a ranking algorithm and frontend to query said algorithm) building from the same, high-quality index competition in the search space could get much better.

Engines such as DuckDuckGo relying on Bing for the majority of their index is a decent example of how this might work.

To break it up effectively, you'd want to separate out at least a few different business units and restrict the businesses the units can enter as well as the relationships between the units.

Big things would be Advertising separate from other things and bound to only advertising, and require it contract with the other units on public and FRAND terms. Web Search would be another unit, and it would be barred from developing its own advertising platform and need to use a mix of advertising platforms based on public criteria, probably with a cap of say 75%? AdWords. You'd have at least one more group for communications (mail, the 7 messengers, etc) which maybe includes the document tools too, and might include G Suite; this group could develop its own ad platform, but not to sell ads on 3rd party sites. Android would need to be a separate unit, it could either require a per device fee or FRAND terms for search etc bundling (similar the what they do in the EU); Chrome maybe fits in this group, or may need its own group. Google Fiber would probably get shut down or sold to an incumbent telco, but maybe just spun out. Waymo and other research stuff would probably need to be spun out, not sure if that can live on its own though.

Cloud services would be its own group, perhaps providing services to the other groups, possibly requiring public pricing, but I don't know if that's really an issue.

I think that's most of it. Lawyers from DOJ and Alphabet could work out the details. Getting a competitive ad market out of the deal would be hard, but at least it could be more transparent, and eliminating cross-subsidization of Google businesses is definitely possible.

Start by cloning the whole source repository for each company, and prune out the things that don't need to stay; if in doubt all successor companies get access to all of it.

> Android would need to be a separate unit

Android is a separate unit, AFAIK.

It's a business unit now, but it would need to be a separate company in my proposed breakup. AFAIK, Google doesn't operate Android as a wholy owned subsidiary, it's just part of Google, Inc which means any separation is at the whim of management; in a wholy owned subsidiary, there would be some structural barriers at least.

Even for Facebook, I don't think forcing them to sell whatsapp or Instagram would stop the fury at them on this forum and others.

Most people are angry at Facebook for reasons like not understanding their business model (they sell my data! is one I hear often) or because Facebook allows a platform where average people can speak their thoughts.

Even just divesting YouTube would be a start.

YouTube is hardly profitable. They would barely be able to afford their own infrastructure under their current revenue.

They would immediately be acquired by a competitor or declare bankruptcy.

That's an argument for the break-up, not one against it. If Google is using their monopoly powers to create wholly unprofitable endeavors, then they are likely choking out competition. There can be no Youtube Killer if Youtube does not have to make money.

You really think someone couldn't build a business out of YouTube independent of Google? Just because it is hardly profitable _now_ as managed by Google in support of ads doesn't mean there isn't another model there.

Well, tough luck. Not all business plans are destined for success.

I'm sure they can figure it out.

Thats exactly the point

Good. This’ll even the playing field for competitors. It’ll be a net win for humanity.

Maybe break ads up into two or three businesses then break the loss leaders up into a dozen different companies. You don't have to own the ad company to sell advertising, let them place ads from google or whomever else just like everybody else on the Internet, alternatively let them start leaning more on paid services instead of customer-as-product.

> It's really just a single business (advertising) with a gaggle of loss leaders adding up to less than 20% of revenue.

I mean, yeah this is exactly the point. They have locked competition out of the loss-leading categories by undercutting them. Breaking them up forces the loss leaders to compete on an even playing field, which will mean more competition.

GSuite/Gmail, YouTube, Search, Android, Google Shopping, Google Maps -- all of these could become separate software companies. Not saying they would enjoy that, of course, but those are some of the divisions that immediately jump to mind.

That doesn't do much to break up the effective monopoly these services have in their respective markets. You split off Google Search into it's own company and they will still have 90% of the search market share when you're done.

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