I just read the US antitrust “Complaint” against Google. This is obviously just the first chapter of a very long story, but here are early observations.
Don’t get upset that this is going to take years to work through. Figuring out how to unclench Google’s stranglehold on the Internet wouldn’t be easy even without their army of excellent lawyers fighting tooth and claw every step of the way, which they will be. It’s still worth doing.
I found the Complaint document to be well-written and well-argued. You don’t need to be an antitrust attorney, or any kind of lawyer at all, to understand its argument. I recommend reading it; It’s not that long and I certainly learned a few things about the shape of the search and advertising business, and you probably would too.
To my surprise, a few members of my tribe were pushing back against this lawsuit. The first argument was “This is an operation of the corrupt and malevolent Trump administration, whose real target is their dorky notion that social media is biased against conservatives.” Well, no. Even granted the cosmic awfulness of the current administration, the complaint is still coherent and sensible, and none of the anticonservative-bias fantasyland makes an appearance. Sometimes bad organizations do good things; deal with it.
The second pushback is along the lines of “It may be a monopoly but Google is a damn good search engine, and it’s free. So how can that be bad?” Which raises a very sensible question…
Who is harmed? · I agree: It’s not obvious that end-users are hurt directly. Google provides, at the end of the day, a pretty awesome search service. It meets my needs well, and they seem to fix breakages when they’re reported.
The problem is (to steal a phrase from the Complaint) “monopoly rents from advertisers”. Search advertising is a context where you know exactly what the user is looking for, and it’s amazingly effective, and Google enjoys a monopoly, which means they can charge what the market will bear, and they do. Here’s ¶168:
Google’s exclusionary conduct also substantially forecloses competition in the search advertising and general search text advertising markets, harming advertisers. By suppressing competition, Google has more power to manipulate the quantity of ad inventory and auction dynamics in ways that allow it to charge advertisers more than it could in a competitive market. Google can also reduce the quality of the services it provides to advertisers, including by restricting the information it offers to advertisers about their marketing campaigns.
While the Complaint doesn’t mention it, Google has used the insanely-effective AdTech machinery they’ve built around Search to go after the rest of the online advertising market. They and Facebook now enjoy an effective duopoly, which they’re using to ingest a larcenous proportion of the money flowing through the system, thereby wreaking devastation on the publishing industry. Which is to say, intellectually impoverishing our civilization.
The phone builders · The investigators did a really good job digging into the tools Google uses to wrangle the companies who make Android phones. There’s a carrot and a stick. The carrot is that if you play nice and give Google all the search business, they’ll pay a you a commission on the billions they get in revenue.
The stick is the Google Android apps, in particular Google Play Services. Android may claim to be open-source but that’s smelling increasingly like a big fat lie, since apparently more and more essential features have migrated into Play Services, including notification capabilities and OAuth.
I was actually in the Android group when we shipped Play Services, and I thought it was a brilliant idea because we could add value to the platform without having to convince phonemakers to adopt a whole new release of Android, something they were famously bad at. I feel clueless for having missed the lock-in angle.
The Apple Angle · The Complaint says that mobile traffic in the US is 60% iOS vs 40% Android, which I hadn’t known. Apple routes all the search traffic to Google, which in return routes billions of dollars to Apple. The arrangement works great for both of them. As for the advertisers and publications, they’re just roadkill.
Disappointment · Section VIII, at the end of the Complaint, is entitled “Request for Relief”. It doesn’t even fill one of the 64 pages. It asks the court to (a) agree that Google is behaving illegally, (b) “Enter structural relief as needed to cure any anticompetitive harm”, (c) force Google to stop doing these bad things, (d) do what it takes to restore competitive conditions, (e) do whatever else the Court finds just and proper, and (f) cover the plaintiffs’ expenses.
I’m disappointed. Maybe this is a symptom of me not being an antitrust lawyer, but I’d have hoped for some specific, creative ideas on how to accomplish these good things.
Since the plaintiffs didn’t bother, let’s look at what they could do.
Regulation · If we don’t like what Google’s doing to the advertisers and the phone builders, we can pass new regulations to forbid them, or enter a Consent decree whereby Google agrees to stop doing those things. This is how the big Microsoft monopoly litigation was settled in 2001.
I hate it. You need to write these things carefully and the second the ink is dry the company will start working to game the system. Then there’s the risk of regulatory capture, where the people who are supposed to enforce the new rules start sharing Google’s worldview and basically just don’t. Finally, if new regulations apply to everyone not just Google (which they should) they can be turned into an advantage if they’re so cumbersome that only a giant company can afford to comply with them.
Breakup · One big problem with monopolies is that they use their locked-in profits to invade other business sectors and compete unfairly because they can afford to forego profit. The classic solution is just to break the monopolist the hell up.
I’m pretty sympathetic to this approach and wrote a whole blog piece talking through this in detail. While I stand by every word, reading the Complaint raised my consciousness on the mobile front, which probably affects important details of the breakup.
Utility-style regulation · So if you want to break the company up but you still want excellent search and you want to restore sanity to the advertising business, what else could you do?
You can make a case that Web search is a natural monopoly. Running the crawlers and indexers and servers is freaking expensive, requiring monster capex and operational expenditure. It’s not obvious to me that the world needs more than one.
The counter-argument would be that competition drives innovation. Speaking as a person who spent some years of his career working on full-text search, I doubt that there’s much left in the way of low-hanging fruit. But I might be wrong.
How about declaring that some parts of search implementation are monopolies, and that’s OK, and they should be regulated as such, in exactly the same way we regulate power and water and other natural-monopoly utilities.
You’d require that the monopoly offer a straightforward full-text-based document retrieval API that implements several different ranking algorithms and charges per search. You’d forbid it from engaging in any advertising businesses. Then you’d free up people to build consumer-facing search interfaces and compete to sell advertising on them. They could also compete on enriched search, the kind of thing Google does where it converts units and currencies, does arithmetic, knows timezones and populations and capital cities, and branches to the right Wikipedia article while you’re still typing.
You could have one of these things that runs no advertising at all, just charges you a (pretty damn low) fee per search. On top of which it’d be faster. I could see myself paying for such a thing.
It’d be tricky to work out. But it might give us a much, much nicer Internet. And a richer intellectual landscape.