Should digital monopolies be broken up?
economist.com
economist.com
You might not be a google fan, but let me tell you, you dont want to support Axel Springer over google.
The german hacker scene has spend years and years fighing against all the laws Axel Springer tries to push threw governemnt that would hurt the internet.
The lates one, "Leistungsschutzrecht", actually passed, but now instead of google paying them money, google kicked them out and everything happend as hackers said it would, the websides lost a lot of views.
Now that they have (finally) figured out that was a unbelivably stupid idea, they are moving forward to the next part of government that they can manipulate and target against google. My last information was that the antitrust people to told them that they should better calme them, or they would be investigated.
Now they probebly just do what everybody does when they cant pass a law in germany. They move up to EU level, force the EU to it, and then the EU forced germany to do it. The same allready happend with the "Vorratsdatenspeicherung" (mass surveillance).
They generally have a hard time passing these idiotic laws because the german hacker community is very, very politcal but the managed it with the "Leistungsschutzrecht" but not with the "Vorratsdatenspeicherung".
I for one thing, that even if google had some unfair market position, its well deserved. I dont use them because they force me, or I dont have any other choice. I use them because they are far better then the competition. Based on the same idea on could block any tech company that has a technical advantage or a unique product. You might also want to arrest Brad Pitt because he has a monopoly on beeing Brad Pitt. Google is in competition with lots of alternative search engines that are more or less specialised, and even if they were not, I dont see why one should go after a company that is so good that nobody wants to compete with them.
If everybody was complaining how terrible google is and how much they hate it, but they cant find a alternative, then we might strick up a conversation again.
I don't complain that google uses it search to improve it's own products, it's awesome actually. From knowing what kind of food I prefer to show me recommendations, to targeting me with ads that actually interest me. I'd rather pay 10$ for a gadget I saw on an ad than for a penis enlargement pill or give my credit card number because I am a millionth visitor.
What do you believe could be hidden motives behind Axel Springer trying to push google out? More money for them from ads?
AS reports that their traffic went down so much due to that shorter format that they project a 7-digits loss a year per site. (at first they gave permission only for some sites to get directly comparable data)
So AS gave Google a revocable free license to show snippets and complains that they were pressured into doing so because "Google has a monopoly".
So they want to get Google to show full snippets (so AS gets their usual traffic and ad revenue), but to also pay for them (because there is that new law that allows AS to demand it).
Im not sure how google 'monopoly' has any effect on AS. Its not like google is the only site that scraps media sites for news overviews and things like that.
As far as I know google does not give them lower priority in searches, so how would there search monopoly matter?
Thanks to the trifecta of ubiquitous smartphones, pervasive Internet and no-holds-barred data mining, I'd argue that the tech landscape we inhabit today is very different from anything we've ever encountered.
Say a startup does create a better product than Google or Facebook, it can't charge for it, because everything is free. It certainly can't monetize it better than Google or Facebook because they have infinitely more data on users than any startup can even fathom. It has to go through Google's and Facebook's "gates" to find and retain customers.
Those precious few that do manage to pull off the impossible, like Whatsapp, will be quickly bought over by Google or Facebook. Thus closing off any gaps that existed in their defense and reducing the possibility of independent competition even more.
Any meaningful analysis of digital monopolies needs to understand this instead of just relying on past examples.
Edit: I'm not saying the EU is right, or that their motives are kosher. Merely that we need to do a comprehensive forward-looking analysis of Google's dominance, extrapolating from present data and trends. Using past data alone strikes me as lazy or self-serving.
Say a startup does create a better product than Google or Facebook, it can't charge for it, because everything is free. It certainly can't monetize it better than Google or Facebook because they have infinitely more data on users than any startup can even fathom. It has to go through Google's and Facebook's "gates" to find and retain customers.
Those precious few that do manage to pull off the impossible, like Whatsapp, will be quickly bought over by Google or Facebook. Thus closing off any gaps that existed in their defense and reducing the possibility of independent competition even more.
I feel like you just described the exact circumstances in which Google and Facebook came up in the world. Competing against huge entrenched interests, couldn't charge for their products, and remember that Brin and Page tried to get acquired and Zuckerberg refused many offers. If history had gone a little differently and had Zuckerberg changed his mind, both companies would be little more than footnotes today, absorbed into some existing behemoth. Meanwhile computing infrastructure today is far far cheaper at gigantic scales.
I don't think we can conclude much from the fact that very few companies become hugely successful these days; that's always been true.
> Merely that we need to do a comprehensive forward-looking analysis of Google's dominance, extrapolating from present data and trends. Using past data alone strikes me as lazy or self-serving
present data and trends are a direct result of the past, and while things do change, it's not clear that today is fundamentally different than 10 years ago and those aren't all still instructive examples (while remembering we're hopelessly under the foot of biased sampling here)
The same goes for microsoft, I dont think the antitrust laws led to the weaker market position it now has. There product sucked, people moved on, and forced microsoft to up there game.
Also how would people go about downloading the other browser if there was not internet explorer?
When apple had much of the smartphone market, there was not antitrust against them, but there was a browser on that phone. Also if you cant put any software on a computer you sell, then the logical conclusion is that we should only be allowed to sell pre installed kernals, everything else would be abusing monopoly position (assuming there is a high market share in the OS). Microsoft probebly had 99% market share in defragmentation tools back then as well.
The faulty assumition is that the product is the operating system, in reality the product is more then just the operating system its a hole bundle of diffrent software.
The case was in the days when browsers were much less interoperable. There was a real concern that bundling IE would make it easy for MS to make everyone buy IIS, because that would be the best server to use to serve sites for IE.
It didn't turn out that way for a variety of reasons (among them the rise of Mozilla, impossible to predict at the time, and the amazing growth of Apache), but that doesn't mean the lawsuit was wrong, knowing what we did at the time.
> Also how would people go about downloading the other browser if there was not internet explorer?
ftp.mozilla.org or similar; BSD FTP ships with pretty much any computer.
Is it your opinion that whenever something might happen, befor it actually happens the state should stop it? Thats kind like the movie minority report.
Even if that had happened, they could have forced the competition to be more like IE but they could still have added features.
It was the same with IBM, everybody was afraid they would take over the world and explained why they need to be stopped, but things happend and they didn't. Thats pretty much the story of every single case, were some tech company seams like its talking over the world. Knowdays facebook seams to be the big baddy that need to be stopped. People are just afraid because the dont have the imagination to draw up alternatives.
All I see its companys growing and shriking and in 99.99% of the cases it not because of some antitrust laws.
> ftp.mozilla.org or similar; BSD FTP ships with pretty much any computer.
How many people, non nerds, know what FTP is? How many know that the have a FTP programm on there computer and how many would have known were and how to look for other browsers?
No, it is my opinion that when a company deliberately tries to break the law, it should be prosecuted for breaking the law, even if what it was trying to do was actually futile. Just like it's still a crime to mug someone even if it turns out they don't have any money in their pockets.
> How many people, non nerds, know what FTP is? How many know that the have a FTP programm[sic] on there[sic] computer and how many would have known were[sic] and how to look for other browsers?
So you give them a friendly interface, like the browser choice screen that MS actually implemented.
> So you give them a friendly interface, like the browser choice screen that MS actually implemented.
So Microsoft should give you a featrue to download from the competition. If anything the would just not tell anybody were the alternatives are and give people a easy way to download IE. So you would end up with the same problem, everybody would just be downloading IE.
It was enougth to give people access to the internet and everybody went and download the alternatives.
Every company tries to gain market share, but society, which creates the markets in the first place, suffers if they gain too much. That's one of the structural problems of capitalism.
If we are in favor of healthy free markets, we can't stand by as they decay into monopolies, which are not markets at all.
Trying to exploit your OS monopoly to improve sales of your web server is breaking the law.
I tried to get people other things but usually they just prefered windows in the end. Sure part is familiarity but not all of it.
I'm pretty skeptical of all government antitrust infrastructure for precisely this reason. Why should I expect a government to use its antitrust authority only against actual trusts that threaten consumers or industry (assuming for the moment that those routinely exist), rather than use it to help certain corporations gain market power?
That said, most of my armchair research has centered on the history of antitrust in the USA (I recommend reading Gabriel Kolko for some distilled revisionist history on the topic), and I know little about how it works in Europe and elsewhere.
In the time were the evil Standard Oil gained there monopoly the price of oil was falling consistently, and they were beeing accused of doing price gauging while in reality they were just more productive.
There are tons of other examples, one was the company that invented the cooled train cart so that local butcher were pretty usless. Guess who was attacked as beeing a evil monopolist? Well the company that manged to push down prices.
Its really sad that all the research going into that time is ignored by most econoimst, and they just repeat what they learned in collage.
Also, please note that the Germans take up less than 13 percent of the seats in the European Parliament.
I am neither German nor American. I don't hate Google and I use its services regularly.
But German interest in splitting up Google is certainly smaller than American interest in keeping it together. It's not like there is a single German (or European) company ready to take over search (or email or video or smart phones) if Google was split up.
And Google's monopoly in Europe is extreme. All web businesses spend a significant amount of time optimizing for this one gatekeeper. If you are not visible on Google, you are out of business. 90 percent of searches in many European countries are on Google. Not because it's much better than it's competitors any more, but because of habits and that it owns the platforms (Android, Chrome). The only challengers to Google that I have seen in the last 10 years is Apple and Facebook.
As I remember it, Google benefitted when Microsoft was forced to unbundle Internet Explorer from Windows and again when Microsoft was forced to give users a clear choice not to use Microsoft search in Internet Explorer.
The mother of all antitrust cases what that which ended with the breaking up Standard Oil, the Google of its time.
The European parliament doesn't have the authority to break up Google but the EU certainly has the authority to do so, and in general to regulate the businesses that operate in Europe.
Personally, I'd rather have EU force Google and the other digital giants to pay taxes in Europe on their vast European profits.
In a few years Google will likely be less important due to new technological developments, just like Standard Oil probably would have been less of a monopoly after WWI even without being broken up due to new technologies like electricity (instead of kerosene).
The network effect is very clear with Facebook, but it is not clear to me at all when it comes to Google Search. The product doesn't seem to get any better or worse when more people use it.
There are three reasons:
1) The actual search gets more signal. Literally from activity on the search engine, but also from many other places Google gets data.
2) The more popular Google is as a traffic source, the more people pay attention to getting that traffic. Website owners put effort into specifically making Google search results good.
Some of that is bad SEO, but a lot of SEO (i.e. making good websites) delivers lots of value, and it is basically all Google-targeted right now.
As a very simple (negative!) example - think of sites with a robots.txt that allows only a small number of search engines.
3) Advertising. Google's marketplace for ads gets better the more people use it, on both sides of the two sided market. Why's this matter? Because it generates money, more effectively than any competitor. And they use that money to buy engineers to improve the search experience (and, indeed, the ad relevance experience!)
To me, that's a very clear network effect.
I see this a lot and while it's true, it's also true that it's not all that difficult to keep the googlebot happy, you'd still be trying to keep crawlers happy if Google wasn't the most popular search engine, and, in fact, what you have to do for the google crawler is basically exactly the same as what you have to do for everyone else[1] (and not in the sense that everyone else just follows Google's lead in what they require because it's all pretty straightforward and generic advice and is, again, not all that difficult to follow).
[1] http://www.bing.com/webmaster/help/webmaster-guidelines-30fb...
And the fringe engines (YACY and the like) had no idea how to work with SPAs in the first place, so no loss there...
In the beginning SEO was easy but now it is hard, so hard that doing SEO actually forces you to make good websites. I have worked in a startup and we have talked at length with SEO experts and lots of things that you do knowdays to improve your result is actually good stuff, adding good metadata, writting storys that actually capture peoples attention.
Sure with enougth money you can still hire tons of people who spam you all over the internet.
So it seams to me that because google search is so good, it forces people to actually make better websites.
One network effect I am particularly bothered by is that developers are forced to design pages to suit Google's crawler & ranking whims less they be penalised to page 2 oblivion. The more people that use Google, the more important it is to design for Google and the better Google search will be with the side-effect of compromising actual content and the needs of the real audience.
This is why monopolies suck, because in practice, I don't have a choice but do this.
As soon as you figure that out then it's easy figure out why it's so tough to compete with Google on search. No-one else has a similar set of data.
IMHO the attempt (by several european telcos) to force open messenger networks for interoperability might get more traction than attacking search engines for "network effects". I just hope that (should this ever happen) it will be a poisoned gift in that instead of giving telcos preferential treatment, they (Facebook/WhatsApp, Google, MS) simply provide fully open interfaces - and users continue to route around the failure that is telco messaging.
So if that is true, on what bases do you defend them?
Let me give you a example for another imaganry law. Assume cops are allowed to walk around with full automatic weapons. Now in the majority of cases this causes suffering for people who are not at fault. In a few cases it helped. Now, your argument applies, sometimes you need automatic weapons. My question is does that make it good these laws exist? (Note I know nothing about the this example or what the data is there, its a example).
Also in the antitrust cases there are tons of external cost. Companys spend there money on lobbying and laywers because they think its more effective then improving there product. Good companys getting hurt and also having to spend money on defence. There is also massiv amount of tax dollers spend on these things.
Real monopolies are from government protected industries like taxicabs, which have been making monopoly profits for 50, 60, 70 years.
Anti-trust laws - and he seeming unpredictability of when they might be applied, have a very real effect on business activities. And there is very little evidence they have ever done any good - while real, government created monopolies on many markets continue to injure consumers blatantly, all with the blessing of legislators.
In my country, firms were fined for bundling fuel discounts - so we had the absurd case of a government department fining a company for selling goods cheaply to consumers.
To me, antitrust laws are just a weapon the legislators use when they come across a company they don't like. They add no protection for consumers because there isn't a way to use them against government created or controlled monopolies.
I'm defending them on the basis that the theory is good. For example the theory of cops having fully automatic weapons is good (they stop criminals, the more armed they are the more they can do that), but you're absolutely right about cost/benefits, and I'd always support less-armed police over more-armed police.
My point was that you can argue the negatives outweigh the benefits, but "you can choose not to use them" in the context of a monopolies debate isn't relevant.
I can only tell you my story. I had the same opinion as you do now, and because I became intrested in economics I started reading a lot about it and these tech monopoly cases pushed my attention towards these antitrust laws and my research change my mind.
And its not even the case that these laws were put in place with good intention and then they were abused, but the other way around they were put in place to be abused.
> My point was that you can argue the negatives outweigh the benefits, but "you can choose not to use them" in the context of a monopolies debate isn't relevant.
The question really is, what is a monopoly. Its suprisingly hard to answer. Is the defintion that there are no real alternatives? Or that they have a market share of X%. Is a company that has a techniclly unique product a monoply because nobody else can produce it. If you think about it, everything is a monoply, nobody else can produce the exact thing you do. So there is a question about granularity of monopoly definition. Some might say 'over one market' but that is very vage as well. Take the car as a example, does it only compete with other cars of simular size or does it also compet with airplanes and trains? Does a car sometimes play in the same market as skype, because if I can work remotely I dont need a car.
In economics, price theory is used, when a company can push the price over some equillibrum price its a monopoly but that of course cant really be used in the case of google or the internet explorer case.
Also "you can choose not to use them" is relevant, because thats the last competition even the biggest monoply provider faces. For everything that is not a live or death question you have the option to not use it. Befor some pruduct/service X was invented you could live without X and now a monopoly provides X, you are not forced to buy X now, you can just go on with your live unchanged. This is very relevant in the economic analysis of markets and monopolys.
Im not saying monopolys are not sometimes a problem, im just saying that the issue is far more complicated then it seams.
Because the goal of the government is to improve things for people. Feel free to argue that governments getting involved in this doesn't improve things (and you might be right, I don't know), but the logic of why would they get involved is simple.
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Things like that are about political values and being far more left-leaning than America on average, not about punishing people. I'd personally benefit from having your point of view on taxes (i.e. I'm well off), but I still support higher taxes here in the UK for higher-earning people. I'm someone who plans to start my own company some day (but don't want to yet), who still supports higher tax rates for businesses. I'm someone who has never claimed state benefits (obviously state services, but not unemployment, disability, etc.) and hopefully never will, but still supports increasing those benefits being increased not decreased.