Ahead of the Curve: Break Up Google?
I’ve given my life to Google. I use Google’s search feature, its browser, its videos, its operating system, its calendar, its contacts, its flight reservations, its news organizer, its step counter, its heart-rate monitor, its note manager, its payment system, and its cloud drive. I’m filling my home with Google-controlled devices: speakers, switches, outlets, bulbs, and maybe someday even blinds. I spend time looking for new ways to integrate myself with the Google ecosystem, because I like the idea that one function can use information from another function to make my life easier. But what I like even more is that, other than the hardware, it’s all free. (Even some of the hardware is free, if you look for deals.)
“But,” I can hear my tech-savvy readers saying, “it’s not really free. You’re paying for it not with cash but with your personal data, which they sell to others. You’ve forfeited your privacy to indulge your laziness.”
Yep, that’s what I’ve done. Consciously. If any reader wants to give me real value in exchange for knowing what park I walked to yesterday or what time I went to bed last night, let’s talk. What you’ll discover, as Google surely has, is that I’m just not that interesting.
So when a headline-hungry presidential candidate starts shouting “Let’s break up Google!” it gets my attention. Unfortunately, for those of us who prefer life to be simple, I think she may be right.
Sen. Elizabeth Warren (D-MA) is the candidate, and she’s backed up her populist rhetoric with a fairly detailed position paper, which explains how and why she wants to break up, not just Google, but Amazon and Facebook as well.
Her plan has two major prongs. First, she wants to undo recent acquisitions by these tech giants and prevent new ones from occurring. I’ve written in the past about why we should be leery of growth by acquisition in the media industry, and that analysis applies here as well. When Amazon decided it wanted to get into the grocery business, it could have rolled up its sleeves and started building some know-how and capacity, for both brick-and-mortar and online sales. That would have created a new competitor in the industry, which would benefit consumers. Instead, it wrote a big check and gobbled up Whole Foods, which did nothing good at all for consumers. The same thing happened when Facebook acquired Instagram and when Google acquired Waze—the possibility of more competition and more innovation benefitting you and me went up in smoke. I think it’s wonderful that Google Maps added the traffic-beating capabilities that Waze provides, but I’d rather we have more practical ways to do that than just one.
When companies get too big and become unchallenged in their marketplaces, they can too easily grow complacent and stodgy. Forty years ago, that’s what happened to IBM. Twenty-five years ago, that’s what happened to Microsoft. Is it happening to Google et al. now? Maybe. I love Google, but the more familiar I become with its products, the more things I notice that they quite easily could do—and should do—but just don’t. An underlying reason, I suspect, is that they’re not being pushed. They’re fat and happy.
Warren points out that “The number of tech startups has slumped, there are fewer high-growth young firms typical of the tech industry, and first financing rounds for tech startups have declined 22 percent since 2012.” This is not the way for the US to maintain its competitive edge in one of the few areas where we still lead the world. I once read that the difference between a huge firm and a startup is like the difference between the dog running for supper and the rabbit running for survival. We need more rabbits.
The second part of Warren’s plan is more profound. She wants to prevent companies with large internet “platforms” from selling their own goods and services on those platforms. Amazon, in other words, can still sell other vendors’ products on the Amazon.com platform, but not its own products (e.g., the Amazon Basics line). Google can still be a search engine, but can’t report its own products (e.g., YouTube videos, maps) as results of the search. As a practical matter, this would mean that Google search would have to become separately owned from the rest of Google.
Some of Warren’s analysis here is flawed. For example, her paper complains that “Amazon has used its immense market power to force smaller competitors like Diapers.com to sell at a discounted rate.” I bet when Warren was in the diaper-buying stage of her life, she was all in favor of discounted rates. Amazon today has no diaper monopoly—it’s quite easy to buy diapers online from Walmart, eBay, Costco, or plenty of other places.
Still, it’s possible that Amazon and Google could use their market power to give their own products an unfair advantage. Google was fined nearly $1.7 billion by the European Union just last month for unfairly steering users toward its own comparison shopping service and away from competitors like Yelp. Steering does consumers no good at all, and can be conducted in sophisticated ways that are hard to detect. Even if Amazon and Google are run by good people, the temptation to give users a little nudge now and then must be overwhelming. Warren’s plan would reduce the need for armies of regulators to scrutinize every tech giant practice for antitrust violations by eliminating the incentive to steer.
Would these changes prevent me from enjoying my free Google services as I do now? I don’t think so, especially if they’re done carefully. In my Google home setup, for example, some of the hardware isn’t made by Google at all, but by third parties who work with it—quite seamlessly. The same is true for Google software products. An administration could say to the tech giants: “Look, we want to break you up into smaller pieces to benefit consumers and American competitiveness, but we’re not trying to be vindictive. If you work with us to devise a clean split-up in a sensible manner, instead of making the lawyers rich by battling every inch of the way, even your stockholders could turn out to be winners.”
The Warren plan doesn’t attempt to rein in every possible Big Tech abuse, but simply takes a carefully measured step in that direction. I hope that the 2020 presidential campaign will produce more valuable ideas like this one.