
Should digital monopolies be broken up? - lcuff
http://www.economist.com/news/leaders/21635000-european-moves-against-google-are-about-protecting-companies-not-consumers-should-digital?fsrc=nlw|hig|27-11-2014|NA
======
nickik
Google has commited the evil crime that of not playing nice with the big
german media companys and they have spend the last 5 years going after google.

You might not be a google fan, but let me tell you, you dont want to support
Axel Springer over google.

The german hacker scene has spend years and years fighing against all the laws
Axel Springer tries to push threw governemnt that would hurt the internet.

The lates one, "Leistungsschutzrecht", actually passed, but now instead of
google paying them money, google kicked them out and everything happend as
hackers said it would, the websides lost a lot of views.

Now that they have (finally) figured out that was a unbelivably stupid idea,
they are moving forward to the next part of government that they can
manipulate and target against google. My last information was that the
antitrust people to told them that they should better calme them, or they
would be investigated.

Now they probebly just do what everybody does when they cant pass a law in
germany. They move up to EU level, force the EU to it, and then the EU forced
germany to do it. The same allready happend with the "Vorratsdatenspeicherung"
(mass surveillance).

They generally have a hard time passing these idiotic laws because the german
hacker community is very, very politcal but the managed it with the
"Leistungsschutzrecht" but not with the "Vorratsdatenspeicherung".

I for one thing, that even if google had some unfair market position, its well
deserved. I dont use them because they force me, or I dont have any other
choice. I use them because they are far better then the competition. Based on
the same idea on could block any tech company that has a technical advantage
or a unique product. You might also want to arrest Brad Pitt because he has a
monopoly on beeing Brad Pitt. Google is in competition with lots of
alternative search engines that are more or less specialised, and even if they
were not, I dont see why one should go after a company that is so good that
nobody wants to compete with them.

If everybody was complaining how terrible google is and how much they hate it,
but they cant find a alternative, then we might strick up a conversation
again.

~~~
onesongonesong
This is just dirty playing at it's finest, trying to dissolve a company that
actually does work and instil it with even more bureaucracy.

I don't complain that google uses it search to improve it's own products, it's
awesome actually. From knowing what kind of food I prefer to show me
recommendations, to targeting me with ads that actually interest me. I'd
rather pay 10$ for a gadget I saw on an ad than for a penis enlargement pill
or give my credit card number because I am a millionth visitor.

What do you believe could be hidden motives behind Axel Springer trying to
push google out? More money for them from ads?

~~~
pgeorgi
That law allows AS to get money for "snippets". Google then decided not to
show snippets for any site for which it had to pay up (but just link with
title).

AS reports that their traffic went down so much due to that shorter format
that they project a 7-digits loss a year per site. (at first they gave
permission only for some sites to get directly comparable data)

So AS gave Google a revocable free license to show snippets and complains that
they were pressured into doing so because "Google has a monopoly".

So they want to get Google to show full snippets (so AS gets their usual
traffic and ad revenue), but to also pay for them (because there is that new
law that allows AS to demand it).

~~~
nickik
Thats exactly it.

Im not sure how google 'monopoly' has any effect on AS. Its not like google is
the only site that scraps media sites for news overviews and things like that.

As far as I know google does not give them lower priority in searches, so how
would there search monopoly matter?

------
r0h1n
One drawback in most analyses of digital monopolies I've read, including this
one, is that they use a lot of past examples (IBM, Microsoft, MySpace or even
Orkut) that do not capture the dramatically different tech landscape we're
part of today.

Thanks to the trifecta of ubiquitous smartphones, pervasive Internet and no-
holds-barred data mining, I'd argue that the tech landscape we inhabit today
is very different from anything we've ever encountered.

Say a startup does create a better product than Google or Facebook, it can't
charge for it, because everything is free. It certainly can't monetize it
better than Google or Facebook because they have infinitely more data on users
than any startup can even fathom. It has to go through Google's and Facebook's
"gates" to find and retain customers.

Those precious few that do manage to pull off the impossible, like Whatsapp,
will be quickly bought over by Google or Facebook. Thus closing off any gaps
that existed in their defense and reducing the possibility of independent
competition even more.

Any meaningful analysis of digital monopolies needs to understand this instead
of just relying on past examples.

Edit: I'm not saying the EU is right, or that their motives are kosher. Merely
that we need to do a comprehensive forward-looking analysis of Google's
dominance, extrapolating from present data and trends. Using past data alone
strikes me as lazy or self-serving.

~~~
nickik
Past examples also such because they are bad examples. The Antitrust case
against IBM was dropped because it dragged on so long and by the end IBM had
lost the monopoly allready. The real story is the guy who was going after IBM
died and nobody else was perticularly intrested in keeping it going.

The same goes for microsoft, I dont think the antitrust laws led to the weaker
market position it now has. There product sucked, people moved on, and forced
microsoft to up there game.

~~~
wpietri
Internet Explorer had greater than 90% market share at the peak, and Microsoft
was vigorously arguing that it was such an integrated part of the operating
system that having a choice was impossible. The whole problem with monopolies
is that it doesn't matter if their product sucks because you don't really have
any other options. People can only move on if they have a choice.

~~~
nickik
The hole court case was about bundling, nowdays everybody does that. Can you
imagen any operating system beeing sold without preinstalled browser?

Also how would people go about downloading the other browser if there was not
internet explorer?

When apple had much of the smartphone market, there was not antitrust against
them, but there was a browser on that phone. Also if you cant put any software
on a computer you sell, then the logical conclusion is that we should only be
allowed to sell pre installed kernals, everything else would be abusing
monopoly position (assuming there is a high market share in the OS). Microsoft
probebly had 99% market share in defragmentation tools back then as well.

The faulty assumition is that the product is the operating system, in reality
the product is more then just the operating system its a hole bundle of
diffrent software.

~~~
lmm
> The hole[sic] court case was about bundling, nowdays[sic] everybody does
> that. Can you imagen[sic] any operating system beeing[sic] sold without
> preinstalled browser?

The case was in the days when browsers were much less interoperable. There was
a real concern that bundling IE would make it easy for MS to make everyone buy
IIS, because that would be the best server to use to serve sites for IE.

It didn't turn out that way for a variety of reasons (among them the rise of
Mozilla, impossible to predict at the time, and the amazing growth of Apache),
but that doesn't mean the lawsuit was wrong, knowing what we did at the time.

> Also how would people go about downloading the other browser if there was
> not internet explorer?

ftp.mozilla.org or similar; BSD FTP ships with pretty much any computer.

~~~
nickik
Its the nature of markets and competition that you dont always know whats
going to happen.

Is it your opinion that whenever something might happen, befor it actually
happens the state should stop it? Thats kind like the movie minority report.

Even if that had happened, they could have forced the competition to be more
like IE but they could still have added features.

It was the same with IBM, everybody was afraid they would take over the world
and explained why they need to be stopped, but things happend and they didn't.
Thats pretty much the story of every single case, were some tech company seams
like its talking over the world. Knowdays facebook seams to be the big baddy
that need to be stopped. People are just afraid because the dont have the
imagination to draw up alternatives.

All I see its companys growing and shriking and in 99.99% of the cases it not
because of some antitrust laws.

> ftp.mozilla.org or similar; BSD FTP ships with pretty much any computer.

How many people, non nerds, know what FTP is? How many know that the have a
FTP programm on there computer and how many would have known were and how to
look for other browsers?

~~~
lmm
> Is it your opinion that whenever something might happen, befor[sic] it
> actually happens the state should stop it?

No, it is my opinion that when a company deliberately tries to break the law,
it should be prosecuted for breaking the law, even if what it was trying to do
was actually futile. Just like it's still a crime to mug someone even if it
turns out they don't have any money in their pockets.

> How many people, non nerds, know what FTP is? How many know that the have a
> FTP programm[sic] on there[sic] computer and how many would have known
> were[sic] and how to look for other browsers?

So you give them a friendly interface, _like the browser choice screen that MS
actually implemented_.

~~~
nickik
Binding two of your products to gather is not breaking the law. Trying to
achive suggess is not breaking the law. Every company is trying to break the
law, because every company tries to get 100% market share. Every company tries
to integrate there products with each others.

> So you give them a friendly interface, like the browser choice screen that
> MS actually implemented.

So Microsoft should give you a featrue to download from the competition. If
anything the would just not tell anybody were the alternatives are and give
people a easy way to download IE. So you would end up with the same problem,
everybody would just be downloading IE.

It was enougth to give people access to the internet and everybody went and
download the alternatives.

~~~
wpietri
It turns out that anticompetitive, monopoly-maintaining behavior _is_ breaking
the law. It didn't used to be, which is why we got antitrust law in the first
place.

Every company tries to gain market share, but society, which creates the
markets in the first place, suffers if they gain too much. That's one of the
structural problems of capitalism.

If we are in favor of healthy free markets, we can't stand by as they decay
into monopolies, which are not markets at all.

------
baddox
> European moves against Google are about protecting companies, not consumers

I'm pretty skeptical of all government antitrust infrastructure for precisely
this reason. Why should I expect a government to use its antitrust authority
_only_ against actual trusts that threaten consumers or industry (assuming for
the moment that those routinely exist), rather than use it to _help_ certain
corporations gain market power?

That said, most of my armchair research has centered on the history of
antitrust in the USA (I recommend reading Gabriel Kolko for some distilled
revisionist history on the topic), and I know little about how it works in
Europe and elsewhere.

~~~
nickik
If you go a bit deeper and look at the news article from back in the day, some
of the most well known journalist that were attacking the 'Robber Barrons'
were actually relatives of the companys that were getting crushed.

In the time were the evil Standard Oil gained there monopoly the price of oil
was falling consistently, and they were beeing accused of doing price gauging
while in reality they were just more productive.

There are tons of other examples, one was the company that invented the cooled
train cart so that local butcher were pretty usless. Guess who was attacked as
beeing a evil monopolist? Well the company that manged to push down prices.

Its really sad that all the research going into that time is ignored by most
econoimst, and they just repeat what they learned in collage.

------
flexie
Let's look at things in perspective. Axel Springer with EUR2.8B revenue and
13,000 employees and few million readers is a modest size company, and not
that important to German economy, much less to European. Certainly less
important to Europe than Google is to America ($60B revenue, 50,000 employees,
billions of users, facilitating foreign intelligence etc.). Further, it is
likely to be even less important in the future since it's in a shrinking
industry. Most of the revenue of Springer is still from print media.

Also, please note that the Germans take up less than 13 percent of the seats
in the European Parliament.

I am neither German nor American. I don't hate Google and I use its services
regularly.

But German interest in splitting up Google is certainly smaller than American
interest in keeping it together. It's not like there is a single German (or
European) company ready to take over search (or email or video or smart
phones) if Google was split up.

And Google's monopoly in Europe is extreme. All web businesses spend a
significant amount of time optimizing for this one gatekeeper. If you are not
visible on Google, you are out of business. 90 percent of searches in many
European countries are on Google. Not because it's much better than it's
competitors any more, but because of habits and that it owns the platforms
(Android, Chrome). The only challengers to Google that I have seen in the last
10 years is Apple and Facebook.

As I remember it, Google benefitted when Microsoft was forced to unbundle
Internet Explorer from Windows and again when Microsoft was forced to give
users a clear choice not to use Microsoft search in Internet Explorer.

The mother of all antitrust cases what that which ended with the breaking up
Standard Oil, the Google of its time.

The European parliament doesn't have the authority to break up Google but the
EU certainly has the authority to do so, and in general to regulate the
businesses that operate in Europe.

Personally, I'd rather have EU force Google and the other digital giants to
pay taxes in Europe on their vast European profits.

In a few years Google will likely be less important due to new technological
developments, just like Standard Oil probably would have been less of a
monopoly after WWI even without being broken up due to new technologies like
electricity (instead of kerosene).

------
andrewmutz
"Like Facebook, Amazon and other tech giants, it benefits from the network
effects whereby the popularity of a service attracts more users and thus
becomes self-perpetuating."

The network effect is very clear with Facebook, but it is not clear to me at
all when it comes to Google Search. The product doesn't seem to get any better
or worse when more people use it.

~~~
frabcus
Yes, Google Search does get better the more people use it.

There are three reasons:

1) The actual search gets more signal. Literally from activity on the search
engine, but also from many other places Google gets data.

2) The more popular Google is as a traffic source, the more people pay
attention to getting that traffic. Website owners put effort into specifically
making Google search results good.

Some of that is bad SEO, but a lot of SEO (i.e. making good websites) delivers
lots of value, and it is basically all Google-targeted right now.

As a very simple (negative!) example - think of sites with a robots.txt that
allows only a small number of search engines.

3) Advertising. Google's marketplace for ads gets better the more people use
it, on both sides of the two sided market. Why's this matter? Because it
generates money, more effectively than any competitor. And they use that money
to buy engineers to improve the search experience (and, indeed, the ad
relevance experience!)

To me, that's a very clear network effect.

~~~
magicalist
> _The more popular Google is as a traffic source, the more people pay
> attention to getting that traffic. Website owners put effort into
> specifically making Google search results good_

I see this a lot and while it's true, it's also true that it's not all that
difficult to keep the googlebot happy, you'd still be trying to keep crawlers
happy if Google wasn't the most popular search engine, and, in fact, what you
have to do for the google crawler is basically exactly the same as what you
have to do for everyone else[1] (and not in the sense that everyone else just
follows Google's lead in what they require because it's all pretty
straightforward and generic advice and is, again, not all that difficult to
follow).

[1] [http://www.bing.com/webmaster/help/webmaster-
guidelines-30fb...](http://www.bing.com/webmaster/help/webmaster-
guidelines-30fba23a)

~~~
pgeorgi
even if there are engine specific optimizations (like the #! javascript single
page application path thing they promoted for a while), the major engines
usually converge towards a single format quickly.

And the fringe engines (YACY and the like) had no idea how to work with SPAs
in the first place, so no loss there...

------
cabinpark
No one is forcing you to use Google, Facebook, Amazon or any other Internet
website. End of story for me.

~~~
corin_
I'm fully on Google's side in this news story, but the fact that no-one forces
you to use them... that's irrelevant to monopoly or anti-competitive laws
(both of which are good things to exist, even if they can lead to shitty
attempts at execution).

~~~
nickik
What are the brilliant sucess storys of antitrust laws? I have spend a fair
bit of time reasearching them and far more then 50% of the cases it was just
losing competition looking for governemnt hand outs.

So if that is true, on what bases do you defend them?

Let me give you a example for another imaganry law. Assume cops are allowed to
walk around with full automatic weapons. Now in the majority of cases this
causes suffering for people who are not at fault. In a few cases it helped.
Now, your argument applies, sometimes you need automatic weapons. My question
is does that make it good these laws exist? (Note I know nothing about the
this example or what the data is there, its a example).

Also in the antitrust cases there are tons of external cost. Companys spend
there money on lobbying and laywers because they think its more effective then
improving there product. Good companys getting hurt and also having to spend
money on defence. There is also massiv amount of tax dollers spend on these
things.

~~~
corin_
This isn't an area I've ever looked into, so you could well be right that the
negatives outweigh the benefits. My gut instinct is to disagree with you, i.e.
you'd have to show me the evidence to change my mind (don't get me wrong - I
could equally gather it myself if I cared enough, and I'm not actually asking
you to try to change my mind).

I'm defending them on the basis that the theory is good. For example the
theory of cops having fully automatic weapons is good (they stop criminals,
the more armed they are the more they can do that), but you're absolutely
right about cost/benefits, and I'd always support less-armed police over more-
armed police.

My point was that you can argue the negatives outweigh the benefits, but "you
can choose not to use them" in the context of a monopolies debate isn't
relevant.

~~~
nickik
Well, Hacker News comments are not a format for this. I cant get all the
sources in a short amount of time and doing this for one person in a tech
forum is not really worth my time. Also if I just gave you things to read, you
will have a bias starting point, I would only provide things that I think are
good. So I can only advice that you start from blank and dive into it, see
were your research leads you.

I can only tell you my story. I had the same opinion as you do now, and
because I became intrested in economics I started reading a lot about it and
these tech monopoly cases pushed my attention towards these antitrust laws and
my research change my mind.

And its not even the case that these laws were put in place with good
intention and then they were abused, but the other way around they were put in
place to be abused.

> My point was that you can argue the negatives outweigh the benefits, but
> "you can choose not to use them" in the context of a monopolies debate isn't
> relevant.

The question really is, what is a monopoly. Its suprisingly hard to answer. Is
the defintion that there are no real alternatives? Or that they have a market
share of X%. Is a company that has a techniclly unique product a monoply
because nobody else can produce it. If you think about it, everything is a
monoply, nobody else can produce the exact thing you do. So there is a
question about granularity of monopoly definition. Some might say 'over one
market' but that is very vage as well. Take the car as a example, does it only
compete with other cars of simular size or does it also compet with airplanes
and trains? Does a car sometimes play in the same market as skype, because if
I can work remotely I dont need a car.

In economics, price theory is used, when a company can push the price over
some equillibrum price its a monopoly but that of course cant really be used
in the case of google or the internet explorer case.

Also "you can choose not to use them" is relevant, because thats the last
competition even the biggest monoply provider faces. For everything that is
not a live or death question you have the option to not use it. Befor some
pruduct/service X was invented you could live without X and now a monopoly
provides X, you are not forced to buy X now, you can just go on with your live
unchanged. This is very relevant in the economic analysis of markets and
monopolys.

Im not saying monopolys are not sometimes a problem, im just saying that the
issue is far more complicated then it seams.

------
jasonisalive
It's nonsense like this that makes me really doubt whether Europe has a
future. So much negativity.

------
happyscrappy
Europeans can flag these stories out of existence all they like but they are
the ones stuck with these ridiculous rulings.

