U.S. Considers Breaking Up Google as Antitrust Remedy
David McCabe and Nico Grant, reporting for The New York Times:
Justice Department officials are considering what remedies to ask
a federal judge to order against the search giant, said three
people with knowledge of the deliberations involving the agency
and state attorneys general who helped to bring the case. They are
discussing various proposals, including breaking off parts of
Google, such as its Chrome browser or Android smartphone operating
system, two of the people said.
Other scenarios under consideration include forcing Google to make
its data available to rivals, or mandating that it abandon deals
that made its search engine the default option on devices like the
iPhone, said the people, who declined to be identified because the
process is confidential. The government is meeting with other
companies and experts to discuss their proposals for limiting
Google’s power, the people said.
The deliberations are in their early stages. Judge Amit P. Mehta
of U.S. District Court for the District of Columbia, who is
overseeing the case, has asked the Justice Department and Google
to come up with a process for determining a fix by Sept. 4. He has
scheduled a hearing on Sept. 6 to discuss next steps.
After winning the U.S.-v.-Microsoft case in 2001, the U.S. pursued breaking up Microsoft. It didn’t happen. But at least that made some sort of business sense — the idea at the time was to break the OS business (Windows) off from the app business (Office). Windows was profitable on its own. Office was profitable on its own. In theory they could have been separated and operated as independent businesses.
At a product level, you can see why it might be tempting to say Chrome and/or Android ought to be broken off from Google. But at a business level it doesn’t make any sense at all. Chrome makes no money at all on its own. It’s just a funnel for Google Search. Android maybe sort of kind of makes a little money for Google on its own, through the sale of Pixel devices, but it’s negligible. Like Chrome, Android really only exists as a funnel to keep users using Google search and within the broader Google digital ecosystem.
I mean, let’s say Google was forced to spin Chrome off. How would Chrome Inc. make money? Clearly, they’d make money through TAC fee payments from Google search. Also, if they split off Chrome they’d almost have to split off Android. If Google is disallowed from making its own web browser how in the world can they make an OS? I mean in theory they could make an OS that only offered third-party browsers but that would mean no system-level webview for apps to embed. Some people laughed at Microsoft’s late-1990s argument that Windows needed a built-in browser but that’s obviously true today. It’s no different than including a TCP/IP networking stack or printer drivers.
I don’t know what the remedy ought to be for this case, but I don’t think a breakup is it.
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David McCabe and Nico Grant, reporting for The New York Times:
Justice Department officials are considering what remedies to ask
a federal judge to order against the search giant, said three
people with knowledge of the deliberations involving the agency
and state attorneys general who helped to bring the case. They are
discussing various proposals, including breaking off parts of
Google, such as its Chrome browser or Android smartphone operating
system, two of the people said.
Other scenarios under consideration include forcing Google to make
its data available to rivals, or mandating that it abandon deals
that made its search engine the default option on devices like the
iPhone, said the people, who declined to be identified because the
process is confidential. The government is meeting with other
companies and experts to discuss their proposals for limiting
Google’s power, the people said.
The deliberations are in their early stages. Judge Amit P. Mehta
of U.S. District Court for the District of Columbia, who is
overseeing the case, has asked the Justice Department and Google
to come up with a process for determining a fix by Sept. 4. He has
scheduled a hearing on Sept. 6 to discuss next steps.
After winning the U.S.-v.-Microsoft case in 2001, the U.S. pursued breaking up Microsoft. It didn’t happen. But at least that made some sort of business sense — the idea at the time was to break the OS business (Windows) off from the app business (Office). Windows was profitable on its own. Office was profitable on its own. In theory they could have been separated and operated as independent businesses.
At a product level, you can see why it might be tempting to say Chrome and/or Android ought to be broken off from Google. But at a business level it doesn’t make any sense at all. Chrome makes no money at all on its own. It’s just a funnel for Google Search. Android maybe sort of kind of makes a little money for Google on its own, through the sale of Pixel devices, but it’s negligible. Like Chrome, Android really only exists as a funnel to keep users using Google search and within the broader Google digital ecosystem.
I mean, let’s say Google was forced to spin Chrome off. How would Chrome Inc. make money? Clearly, they’d make money through TAC fee payments from Google search. Also, if they split off Chrome they’d almost have to split off Android. If Google is disallowed from making its own web browser how in the world can they make an OS? I mean in theory they could make an OS that only offered third-party browsers but that would mean no system-level webview for apps to embed. Some people laughed at Microsoft’s late-1990s argument that Windows needed a built-in browser but that’s obviously true today. It’s no different than including a TCP/IP networking stack or printer drivers.
I don’t know what the remedy ought to be for this case, but I don’t think a breakup is it.