- Calls to break up Big Tech have never been more intense – but what would it actually mean for Google?
- Insider asked experts how lawmakers could dramatically change the tech giant.
- Divesting from divisions such as Fitbit and Nest could be among the initial moves.
- See more stories on Insider’s business page.
Is any company so ubiquitous as Google?
For the majority of internet users in most developed economies, it leads the way in the internet search, web browser, email, and mobile phone industries. In recent years, it’s also crept into areas like fitness bands, speakers, and fiber internet.
But Google’s all-encompassing presence online has alarmed lawmakers on both sides of the Atlantic, who are moving to counter what they see as a monopolistic dominance of search, ads, and app stores.
Last week, US legislators unveiled five bipartisan bills to rein in the powers of big tech companies, marking an important milestone for a booming but historically unregulated industry.
Dozens of US states have signed antitrust complaints highlighting Google’s online advertising practices, and bemoaning its control of the Android app store. Across the pond, European legislators have fined the company more than $10 billion for anticompetitive breaches in the space of three years.
Under Europe’s upcoming Digital Markets Act, Google could already have faced an enforced breakup or “structural remedies.”
But what would a breakup look like in practice?
1. Lawmakers could unwind specific acquisitions rather than break Google into chunks
While reports of antitrust actions against Google and other big tech entities often refer to potential “breakups”, it’s rarely clear what such actions would actually entail.
In the case of Google, would it mean literally slicing the firm up into a collection of competing search engine companies? Or just stripping away specific divisions of the existing firm?
“The popular press tends to talk about a company being ‘broken up’, whereas academics and lawmakers are more likely to use the term ‘divestiture,'” said professor Fiona Scott Morton, an economist and antitrust expert at the Yale School of Management. The point of divestment, Scott Morton explained, is specifically to “restore competition or end an anticompetitive practice.”
“The idea of taking something that’s ‘Size 10’ and breaking it up into ten ‘Size 1’ chunks … That doesn’t make a lot of sense compared to: ‘Google has obtained a disproportionate amount of market power through this particular acquisition, and we want to unwind that specific anticompetitive advantage.”
Professor Konstantinos Stylianou, an expert in competition law and regulation at the University of Leeds, said the process entirely “depends on what anticompetitive conduct they’re trying to remedy.”
“If regulators are concerned about Google exploiting user data or undermining privacy, it could be its acquisitions of Fitbit or Nest,” he said, referring to Google’s buyouts of the fitness hardware company, and the smart thermostat firm. “If they think comparison shopping services represent a distinct market that deserves special protection, it could be Google Shopping.”
For others, it’s not so obvious, and that’s why antitrust officials tend to avoid specific breakup blueprints.
The University of California’s Christopher Leslie notes that “instead, the Department of Justice and state Attorneys General ask for undefined ‘structural relief.”
2. You can’t just say Google is too big
Anyone genuinely trying to take an axe to Google’s businesses needs to come up with a coherent case.
“Simply being big is not a cognizable offense under current US antitrust law,” said Manesh Patel, law professor at the University of California.
Regulators always have the option of imposing conditions on the company’s behavior, rather than trying to prise it apart.
For example, when competitors complained about Google’s role as the default search engine available on Android phones, the company worked with EU regulators on a new process to allow the likes of
and Ecosia to bid for space on a new “choice screen” on users’ phones.
Even then, however, the EU’s remedy attracted some criticism.
3. Decide whether or not Google is really a ‘public utility’
Earlier in July, Ohio’s attorney general filed a lawsuit against Google arguing that the company should be treated and regulated as a public utility, owing to its dominance in the search market.
“Google uses its dominance of internet search to steer Ohioans to Google’s own products — that’s discriminatory and anti-competitive,” Ohio Attorney General Dave Yost said in a press release. “When you own the railroad or the electric company or the cellphone tower, you have to treat everyone the same and give everybody access.”
Public utilities are entities deemed to provide essential goods and services to people, like water, telephone, gas, and transportation companies.
The Ohio lawsuit argues that residents are left in the dark since they don’t have the full breadth of information available when Google prioritizes its own products, like Google Flights, ahead of competitors like Orbitz or Travelocity.
Ex-Googler Sridhar Ramaswamy, who was at the company for 15 years before leaving to set up rival search engine firm Neeva agreed, telling Insider there were “a lot of parallels” with the railroad barons of 100 years ago.
“There is a strong need to ensure that this one player doesn’t stifle nascent competition by unfair means like exclusionary arrangements, hidden defaults and deceptive software practices that entice users to switch back,” he said.
“We need to have a level playing field so that competition can survive and hopefully, thrive and create better products for all of us.”
But professor Stylianou and others dispute this framing.
“Since there are multiple web-search providers, and each one uses a different algorithm to return results, web search is evidently not a public utility,” he told Insider.
“What people mean when they use the term ‘public utility’ is that they want Google to be neutral in returning search results and not engage in self-preferencing. There is merit in that request, but it’s extremely difficult to define what ‘neutral’ search results are, or if consumers would even want them.”
4. Tighter regulation may be more effective than a full-scale break-up
Obsessing over the possibility of a full-scale restructure “distracts from other remedies that are easier to implement and could be effective,” according to professor Leslie, like targeting very specific anticompetitive conduct.
Under the proposed terms of the EU’s incoming Digital Markets Act, companies that have been fined for anti-competitive practices three times in the space of five years – as Google already has – could be subject to enforced “structural remedies”, with different parts of their businesses being forcibly separated.
“It would be great if the DMA had some stronger and more robust means of actually carrying out these threats of a breakup,” said professor Scott Morton. “Why is it ‘three in five years’? I have no idea. I worry about companies’ ability to endlessly delay action, for example by making sure their third fine comes through every sixth year.”
Ultimately, lawmakers must wrestle with the fact that Google may be huge because consumers love it.
“Those who argue in favour of breaking up Google have the difficult task of proving that milder remedies – such as a no self-preferencing requirement – would not work, and that spinning off a part of Google is likely to benefit consumers,” said professor Stylianou, adding that consumers constantly pick Google even where there are alternatives.
“Maybe Google’s size and reach is what allows it to create popular products and services.”
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