Google Redefines Disruption: The “Less Than Free” Business Model | Hacker News Reader

Google Redefines Disruption: The “Less Than Free” Business Model

abovethecrowd.com

111 pointsypavan49 comments

So when MS bundled Internet Explorer, that was bad because it was using its profits from selling Windows and Office to subsidize its entry into a new market. Now that Google is using its ad revenue to build a mobile operating system (not its core business) and bundle really good value-add, that's good?

Details: http://en.wikipedia.org/wiki/United_States_v._Microsoft

Is our memory really that bad?

When Windows bundled IE, it had 90+% OS market share. Google currently accounts for about 3% of the smart phone market.

It's okay to fight dirty when you're coming from behind.

You have to compare like with like.

At the time MS decided to bundle IE, what was its percentage of browsers?

Anti-trust is an interesting area of law and I recommend studying it if given the opportunity.

In the 90s Microsoft abused its desktop OS monopoly to destroy another companies product.

Right now, Google is leveraging its map data to help its smart phone OS. This could be a legal problem in the future if:

Google becomes the dominate provider of such data.

Android dominates smart phones and they change the license.

I think that people have forgotten that Netscape also gave their browser away for free.

Google is not leveraging its data in this case so much as it it leveraging its pile of cash made from its dominance in search. The situations are analogous.

So Google has a monopoly in cash?

As I said this is an area to study, not to find 'analogous' situations. The first thing to define in a case is what is the relevant market.

You could make the case, and its probably true, that Google has a monopoly in internet text advertising. However, it would be hard to argue that this market is not part of the larger internet advertising market.

Microsoft had a straight up desktop monopoly. It was not legal for them to leverage that against another company.

I don't know how it matters in the context, but since you brought it up, Netscape didn't give their browser away until 1998. http://en.wikipedia.org/wiki/Netscape

This doesn't remind me of the 90s so much as the 80s when Microsoft was paying developers to write software for DOS. When the dust cleared in the OS war, Microsoft had a tipping point of software written for DOS, so whenever someone was choosing an OS, they chose DOS/Windows because nothing else had the variety of software available for it. They built their monopoly /then/ abused it. Google's just in the building stage, though they're interesting because they're constantly pushing the boundary of their monopoly.

Any history students see comparisons between Google and Carnegie Steel in terms of vertical integration throughout their industry? I do, though I don't know enough to describe it in great detail...

Google is closing in on a monopoly in certain segments of the advertising market. That's where they get all their money to undercut everybody else.

Similarly, Microsoft had a huge percentage of the operating system market, and they leveraged that to take over the browser market.

Microsoft had a monopoly on desktop operating system sales. The question at issue wasn't whether bundling unrelated products is bad in principle, but whether it amounted to an anticompetitive practice because of Micorsoft's complete control of the market.

Our memories are fine, you just picked a poor analogy.

I'd be really curious if anyone has figures on percentage of desktops that were Windows then vs percentage of searches that are Google now.

being a mononpoly is not illegal or even necessarily bad. It's what you do with that monopoly status that is important. Until someone shows that Google is abusing it's power they will be fine. Up to know everything Google has done falls under the category of improving customer experience and generally making the internet and world a better place. Google was on the wrong end of the stick with regards to a duopoly in map data so they fixed the problem. In fixing the problem they made a duopoly a "triopoly" (is that even a word?). This in my mind is an improvement.

Monopolies are like monarchies. There may be a good one now and then but the system itself is faulty and prone to badness. A good monopoly will generally turn into a bad monopoly over time, because there are no competitive forces keeping it honest. Though there are rare exceptions. A competitive market tends to be long-term stable, resulting in better sustained, long-term results for customers.

Google is very dominant but nothing it does could really be considered a monopoly, even search. Very few google products have significant "lock-in" the way most monopolistic products do.

You only feel this way because you like Google. MS including a browser so people didn't have to FTP one or get one from friends made the world better too. It's probably that decision that helped the web grow to what it is today.

I remember what it was like trying to get on the internet before IE was included. It was a pain.

Also, consumerism's arguably bad for the world, due to over consumption, etc, so advertising isn't really good for the world, thus google is bad for the world.

Didn't the anti-trust case have more to do with the fact that it was impossible to uninstall IE, and that various actions would cause IE to be reset as the default browser?

I wasn't commenting on MS and it's policies. However I believe the issue with MS was less the browser bundling and more the difficulty in removing it. And strong arm tactics keeping alternate browsers from being installed by manufacturers. My point still stands. Google is not making it difficult to use a different gps system or using strong arm tactics. This sets them apart from MS.

Actually, during that period, I was often vexed that very few separated the good idea (bundling a web browser free) from the bad (anticompetitive OEM deals) -- at least in the national papers. It all got lumped into Microhate.

sorry, i downvoted you by mistake :)

MS wasn't penalized for using their desktop profits to subsidize entry to a new market. They did that with the XBOX without antitrust issues.

Some of us out there are starting to get worried, yes, and thinking about how we can pull out of the google monopoly. I've started trying out other searches and I'm trying to find a good way to transfer my email right now.

Android being an open source project negates most of the scary anti-competitive possibilities. A handset maker could ship an Android device that was completely independent of Google services. It's a fair playing field for Google's competitors. If Microsoft wanted to they goto a handset maker like HTC and offer the same revenue sharing model via Bing and other Microsoft services bundled with an Android handset. Inversely you could build a handset not running Android and still use Google services on your own OS. If Microsoft had adopted a similar level of openness and equal access they could have saved themselves a lot of trouble and probably got the same exact results in the end. IE was a better browser than Netscape at this time. It would have won on its own technical merits. ActiveX and these other Microsoft proprietary schemes failed on their own merits despite IE having enormous browser market share. Even with IE being bundled on Windows it hasn't stopped Firefox and WebKit based browsers from growing in popularity. Microsoft gained nothing from their anti-competitive moves. I don't think Google will repeat the same mistake.

The problem with Microsoft wasn't really that they were trying to be a monopolist. It was that they were using their leverage to do harm. So far I have not seen Google ever try to force a purchase by tying parts of their system together, ever try to break the web to protect their business model, ever try to lock out the competition by means other than being better and cheaper, or ever sell users out contemptuously as soon as they had control.

Thought it was a rather insightful read, even if it gives new names to old things. It also makes me wonder what the next thing will be to marginalize the internet, just as the internet marginalized the OS.

A lot of this strategy hinges on people using google as a default search, and advertisers using it to perform targeted advertising. I think when you see another way that people find out about things they want to use (and pay for), that'll be a time when the tides turn. (saying it now, it sounds obvious)

"Less than free" sounds a lot like what i would normally just call "revenue share".

As easy as it is to be cynical about this sort of thing, coining a new phrase brings a fresh perspective, and additional abstraction.

Whereas before I thought of service pricing and revenue share as two separate things, now I see them as part of a coherent strategy.

Naysayers to these assertions will likely have the same retort – quality is key. They will argue that Google’s turn-by-turn apps are inferior to their well honed market leading products. ...

I don't think this is credible just from watching the demo. The GPS devices aren't connected to the internet. Satellite data, street view, and maps search with voice are pretty killer. They're ahead of my Garmin on features.