
The antitrust case against Google - lawrenceyan
https://insights.som.yale.edu/insights/the-antitrust-case-against-google
======
greggman3
> You mentioned in the paper that Google is going to be blocking third-party
> cookies in its Chrome browser, which is the biggest browser in the world.
> This has been presented as a victory for privacy, but you suggest actually
> it’s another way for Google to shut out other people who want to do digital
> advertising.

I find it interesting that the HN crowd loved that Apple was blocking 3rd
party cookies in Safari but now that Chrome is about to do the same suddenly
it's evil.

If it is evil then it was evil even when Apple started doing it. If it's good
that Apple did it then it's good that Google is following.

The article basically argues it's evil and both Google and Apple should stop
blocking 3rd party cookies because having 3rd party cookies provides
opportunity for more competition

> We need to explain that the information about you can be passed among 25
> different ad tech companies or it can be passed among 25 parts of Google.
> Which one of those is better or safer? That’s hard to know. I know which one
> of them is cheaper—the one where there’s competition. And it’s also better
> for consumers in the sense of stimulating the content that they want to
> consume on the internet.

~~~
uoaei
> I find it interesting that the HN crowd loved that Apple was blocking 3rd
> party cookies in Safari but now that Chrome is about to do the same suddenly
> it's evil.

Apple isn't an advertising company. Google is. The label of 'evil' doesn't
need to be part of a conversation about anti-trust and anti-competitive
behavior.

~~~
idontevenknow1
[https://searchads.apple.com/](https://searchads.apple.com/) Apple is an
advertising company.

Google sells android phones and gsuite, as well.

~~~
Supermancho
> Apple is an advertising company.

Primarily, it's a hardware company. Lots of companies have advertising
services, this does not make them "advertising companies". If your advertising
products disappear and the company would function more or less the same,
that's not the primary product in your company's portfolio. Google would be
crippled, as advertising is the primary product (fed by data from all the
other services it offers, often at a loss). Similarly, most of apple software
would be useless if they lost control of their hardware production/control.

~~~
idontevenknow1
Depends on your definition of advertising-company. If you sell eyeballs
through ads that means you are an advertising company.

~~~
typenil
This is an article about monopolies - which are all about scale and market
dominance.

Yet you've excluded both from your analysis. It doesn't seem to be a good
faith argument.

~~~
idontevenknow1
Faith doesn't matter in an argument.

This is a purely logical discussion. If you sell ads, it means you are an ads
company. The degree to which you sell ads doesn't factor in to that.

I can argue that apple monopolized ads on iOS devices by disabling cookies on
safari and removing the targeting capabilities on ad-identifiers. Now the only
way to have targeted ads is through the app store. Hope this satisfies your
arbitrary 'it should be a monopoly before i discuss it' argument.

~~~
mpweiher
_Good faith (Latin: bona fides), in human interactions, is a sincere intention
to be fair, open, and honest, regardless of the outcome of the interaction._

[https://en.wikipedia.org/wiki/Good_faith](https://en.wikipedia.org/wiki/Good_faith)

OP wasn't discussing "faith".

> If you sell ads, it means you are an ads company.

Nope. An <x> company is a company that _primarily_ deals in x. Ford is a car
company. Their cars contain computers. Doesn't make Ford a computer company.
The cars also have tires. Doesn't make car a tire company. Some cars have
leather seats. Doesn't make Ford a leather company, furniture company or
upholstery company.

> The degree to which you sell ads doesn't factor in to that

Sure does. Particularly in the case of anti-trust, which is the topic here.

------
akersten
I'm confused about what the remedy is supposed to be, or what outcome the AGs
are seeking. Actually, it sounds like they haven't made up their mind yet
either:

> And then the states are going to presumably file a complaint also at some
> juncture, probably after that. So then we will see what those complaints
> say, what kind of conduct they allege as being anti-competitive.

Is it normal for suits like this to be touted out in public for so long ahead
of an actual complaint being filed? Seems like intimidation to me.

~~~
pm90
> I'm confused about what the remedy is supposed to be, or what outcome the
> AGs are seeking.

Further down the article this is mentioned:

> If the federal government is in fact in the beginning stages of antitrust
> action against Google, what should we expect to see publicly?

> They’ve said that they’re going to file a complaint in the summer, which is
> really quick. So that would be obviously something to watch. And then the
> states are going to presumably file a complaint also at some juncture,
> probably after that. So then we will see what those complaints say, what
> kind of conduct they allege as being anti-competitive. Or perhaps the
> federal government doesn’t file a complaint, but they settle. They say,
> “Well, here are the six things we didn’t like, but you’ve changed your
> behavior, and so therefore that’s remedied the lost competition and we’re
> not going to bring a case.”

The situation that they are trying to address is a novel one and will likely
require a novel solution. The AG's are not business people; their interests
are in protecting their constituents from harm caused by monopolistic players
in the market. How that is to be done, remains unclear.

I imagine the prosecutors will learn more about Google during the course of
this process and they will come up with a solution that would allay their
concerns.

If it looks a bit like bullying, it kind of is. The Government is the other
pillar of power and steps in occasionally when its interests (usually things
relating to the betterment of society, not always) need to be protected. It
has the power to control the destiny of corporations that grow too big and
"abuse" their power (whatever that might mean). This is how society works; if
corporations operated with unfettered control over everything, society would
quickly degrade into a dystopian hellhole (this is unfortunately already
happening in the US, see the freeze on minimum wages at the federal level).

~~~
thebean11
> The AG's are not business people; their interests are in protecting their
> constituents from harm caused by monopolistic players in the market. How
> that is to be done, remains unclear.

Are we just assuming good faith on the part of government now?

I personally think Google should be an antitrust target, but I'm not placated
by a "don't worry, the government has all of our best interests at hearts"
argument.

If they want to release a "teaser" of their allegations I don't think we need
to buy it at face value. Personally I'll reserve my judgement until they make
real allegations.

~~~
pm90
The Government is elected and accountable to the public. Google? Only to it’s
shareholders. I think I know whose side to assume good faith on.

~~~
thebean11
You can't think of a single elected official or government body that has acted
in bad faith..?

~~~
pm90
I definitely can.

------
netcan
This is very well written.

If antitrust laws do not define google as a monopoly, it's obviously the
antitrust laws that are wrong. Google is obviously a monopoly.

The 2018 case against Google in the EU (€1.5bn fine) made very similar points
and won.

The real problem is what comes next. If recent history is a guide, it will be
a cost-of-doing-business fine. This does nothing. At best, they'll adapt
practices slightly. Maybe they've adapted enough post 2018 to make this case
difficult.

We need a new approach. There is no way antitrust courts can act as regulators
effectively. They find that a monopoly exists, but... the goal is not
regulated monopolies.

The whole premise of antitrust is that monopolies are harmful in lots of
_systemic_ ways. We must assume that most are unknown. A prosecutor & court
can't track down every monopolistic mechanism or dynamic and fine google for
it. We need to avoid and void monopolies. This is why there are mechanisms to
void mergers.

Adwords could IPO independently. They'd be a great, profitable company. So
would Google search, youtube, android... All these could be financially viable
companies independently.

Total share price would be lower. This reflects the fact that monopolies are
more profitable. OTOH, the Google monopoly is an easy one to solve. It's so
profitable that financial viability is easily achieved.

~~~
jeffbee
There is no chance whatsoever that YouTube would be a profitable stand-alone
business. The only reason it works at all is because it gets a free ride on
the infrastructure that Google builds for serving products with better
margins. Network transit alone would completely destroy YouTube, nevermind all
the storage and compute they need for transcoding etc.

~~~
netcan
What makes you say that?

Google report Youtube's revenue as $15bn, and profits to be really high. Maybe
they underaccount infrastructure costs, but it's definitely not billions.

Google could be broken up into _very_ logical units.

~~~
acituan
Google doesn't report anything but revenue on Youtube, so we don't know the
margin. Most of the revenue is dispersed to content creators, and
infrastructure costs must be _huge_ , so more likely than not it is a loss
leader.

~~~
nerfhammer
the purpose of a loss leader is to bring you into a store to buy other
presumably more profitable stuff. what is youtube leading people into?

~~~
acituan
YouTube is mainly a 3-way market; the content producer, the content consumer
and the ad seller. All of which benefit from network effects. In addition to
that, a high 7 day active user count is a very attractive goal in itself as
you can upsell them almost anything adjacent. Eg. Premium subscription, music
service, movies, tv channels...

------
andromeduck
What's even the point of adding a bunch of rules to break up a player with
less than a third of the market and already in decline? It seems pretty clear
that competitors have stepped it up. Meanwhile in Mobile ma bell has
reassembled itself and in cable we're stuck with regional monopolies; in
healthcare we're happy with the same or greater dominance by total monopolies
like for insulin or glasses amongst other goods; likewise in payments with
Visa and Mastercard.

Smells like political rent seeking to me.

~~~
grandmczeb
I think it's pretty clear what the motivation is if you look at who's pushing
for this.

    
    
      - Large publishers and news agencies who have seen declining revenues due to increased competition for ads.
      - Left-leaning people who believe large companies are inherently bad for society.
      - Right-leaning people who believe "big tech" is biased against them.
    

Its also worth noting who's not pushing for this.

    
    
      - Advertisers.
      - General consumers.

~~~
halkcyon
Why should anyone care about general consumers? They're just fine being sheep
as long as they're comfortable.

~~~
grandmczeb
Protecting consumers is the entire basis of anti-trust law.

------
momokoko
The problem with US antitrust laws is that they ignore global competition.

Breaking up a Facebook or Google does not provide for more competition, it
actually will provide less competition as another large global competitor with
get even bigger by swallowing up their users.

~~~
threeseed
That doesn't make any sense.

Any company trying to build a US social network or social engine through
acquiring Facebook or Google would need US advertisers. Otherwise what is the
point of having these users.

And if you have US advertisers you will need to have an official US presence.
This in turns means you are subject to US law including antitrust. Also a deal
of that size would need the US government to sign off on it.

~~~
alexashka
> _Any company trying to build a US social network or social engine through
> acquiring Facebook or Google would need US advertisers. Otherwise what is
> the point of having these users._

The point would be collecting data on them and spreading propaganda.

Not every country operates using quarterly profits as their one and true God.

------
lordlic
> We need to explain that the information about you can be passed among 25
> different ad tech companies or it can be passed among 25 parts of Google.
> Which one of those is better or safer? That’s hard to know.

Really? Neither option is great but if you absolutely have to choose the
lesser of two evils it seems obvious that Google is going to be a better
steward of your data than 25 random ad companies. At least Google isn't going
to sell your data. Those 25 other ad companies are going to turn into 2500
real fast.

------
fanatic2pope
I look forward to Microsoft passionately coming to Google's defense in order
to protect the "freedom to innovate".

[https://news.microsoft.com/1998/04/09/microsoft-
advertisemen...](https://news.microsoft.com/1998/04/09/microsoft-
advertisements-promote-freedom-to-innovate-in-the-software-industry/)

------
Avicebron
Do antitrust cases normally result in a breakup or sanctions? or Both? I was
not around for the Microsoft one, did it have any real impact?

~~~
noir_lord
In the EU we got a pop-up letting us choose a different browser.

Beyond that it didn't have much effect directly but it also stopped Microsoft
been so hilariously agressive in other ways (though that's a harder effect to
pin down, 2000-era Microsoft was a shark with bloodlust).

~~~
judge2020
> In the EU we got a pop-up letting us choose a different browser

Wonder what it'll take for this to come to all of the other OSes with default
browsers

~~~
wmf
Those OSes would have to have monopoly market share.

------
laser
With Google taking 32%-49% of ad spends [1], and perhaps even more as AdMob
appears to be undisclosed (although let's assume in this range), if
competition could cut this take in half while maintaining equal targeting
efficiency, we might see an explosion in growth of niche businesses. If the
cost reduction resulted in a 50-50 split between higher publisher revenue and
decreased ad costs, then that ~12-24% higher revenue plus 9-16% advertising
cost reduction would make a ton of businesses with LTV:CAC ratios on the
margins vastly more profitable. Even more importantly, they would be able to
reinvest earnings on a far tighter cycle back into their businesses.

The vast, vast majority of young businesses do not have access to
institutional capital, fueling their growth through positive unit economics.
Relatively small changes in costs and revenue relative to margins can have
huge effects. For example, an ad-based business with $1 CAC and $2 LTV, where
50% of the LTV is earned over the first 12 months, 25% in the first 3 months,
takes a year to see it's ad spend returned and break even, at which point it
can reinvest that dollar for new customers and start the cycle again.

With 15% lower ad costs and 20% higher revenue, the LTV:CAC becomes
$0.85:$2.40, and assuming the same earnings-curve, at three months in $0.60
has been earned, and $0.85 in under five months. That means this business, and
those like it, are suddenly able to grow at over 2x the rate as they could
prior to such a breakup.

As much as many people hate advertising, it is still one of the primary
channels for people's wants/needs (often unknown) to get matched to supply,
and thus removing a monopoly and increasing the efficiency of this matchmaking
could stimulate explosive growth in new and existing products and services
that can't currently cost-effectively reach their customers. Ultimately, this
would be a great benefit to everyone.

As a final note, this is relatively loose thinking and doesn't account for
second-order effects like increased ad spend competition with increased
revenue, but I think still an interesting thought to get out there, as I think
the gist of it still holds.

[1]
[https://support.google.com/adsense/answer/180195?hl=en](https://support.google.com/adsense/answer/180195?hl=en)

------
remote_phone
Google is definitely exhibiting anti-competitive behavior and they should be
broken up.

What kind of company can get away with a critical product, such as advertising
platform, email services, etc and provide ZERO SUPPORT. Literally they have no
customer support that you can contact. This is the behavior of a monopoly.

If they were in a competition, they would invest more and more into things
like customer support. But they save billions by not investing In customer
service and having no way of contacting them. This is monopolistic behavior,
because that’s how they squeeze more and more money out of their customers.

Instead of raising prices like traditional monopolies, they do it in other
ways like having a product that is easy and cheap for them to maintain but
hellish for their customers who are dependent on it. They hide behind
algorithms to detect fraud, they close accounts immediately based on bad
information and there is no recourse. If they were in a competition they would
have customer support but since they don’t have competition, they eliminated
it entirely with impunity.

Google should be broken up or forced to spend a certain percentage of their
revenue to customer support the way any other company would be forced to in a
regularly competitive environment.

~~~
logicchains
>What kind of company can get away with a critical product, such as
advertising platform, email services, etc and provide ZERO SUPPORT. Literally
they have no customer support that you can contact. This is the behavior of a
monopoly.

They're giving away a product to you literally for free, and you're
complaining about a lack of support? Do you expect any company to offer you
support for free? People have other choices; there are plenty of paid email
services, but people pick GMail anyway because it's free. Clearly these people
would rather have a free unsupported service than pay for a supported one, who
are you to take that choice away from them?

If somebody leaves an old piece of furniture out on the curb for anybody to
pick up, do you think the person who takes that furniture home is owed support
by the original owner? Free is free; what kind of a sense of entitlement does
it take for somebody to expect support for something they're not paying for?

They do actually offer support for their paid services.

~~~
robbrown451
"They're giving away a product to you literally for free, and you're
complaining about a lack of support?"

I think he/she is saying that isn't how they should do business. Maybe they
should charge.

From an antitrust perspective, giving away something for free isn't generally
seen as benevolent, it is often seen as predatory. Microsoft got in a lot of
trouble for giving away IE "for free." They did it to kill Netscape's business
model.

Are you suggesting Google is doing it out of the kindness of their heart?

A healthy market isn't one company giving things away for free, making their
money indirectly, and squashing all competitors.

~~~
logicchains
>From an antitrust perspective, giving away something for free isn't generally
seen as benevolent, it is often seen as predatory. Microsoft got in a lot of
trouble for giving away IE "for free." They did it to kill Netscape's business
model.

It's predatory (dumping) if they lower prices to kill off competitors and then
raise prices later. I don't see them doing that, at least with GMail; can't
imagine them charging for it.

>A healthy market isn't one company giving things away for free, making their
money indirectly, and squashing all competitors.

A healthy market is one that generates the most value for consumers. I don't
see how consumers win if the government kills off all free email providers and
forces people to pay for what they were previous getting for free.

------
pwdisswordfish2
I love the cover art on the paper. Sums up the issue perfectly. For those who
will not read the PDF:

Google completed a series of transactions that allowed it to participate in
every level of the ad stack. (#1)

Google leveraged its power in search advertising, in which it holds monopoly
power to coerce advertisers to use Google products to access the display
market as well. (#2)

Google advantaged itself through arbitrage and cross-subsidization
opportunities made possible by the fact that it, and it alone, operates at all
levels of the value chain. (#3)

Google withheld interoperability in order to disadvantage, foreclose, and
punish its ad stack rivals. (#6)

Google designed auction processes that cement its own market power and raise
rivals costs. (#10)

Google kept key market information hidden to shield itself from scrutiny from
publishers, advertisers, and potential new entrants, suppressing otherwise
natural competitive forces. (#14)

Google leveraged its control over the ad tech stack and Google Analytics to
weaken rival sources of display supply. (#18)

1\. Acquiring Independent Companies To Cement Its Role Across the Ad Stack

2\. Leveraging Market Power in General Search into Display

3\. Designing Auctions That Facilitate Arbitrage and Rent Seeking

4\. Cross-Subsidizing Competitive Functions of the Ad Tech Stack with
Monopolized Functions In Order to Rise Rivals' Costs and Foreclose

5\. Deceptive Gathering and Integration of Data

6\. Strategic Disabling of Interoperability To Disadvantage Rivals

7\. Withholding Interoperability to Steer Demand and Supply Through Its Own
Exchange

8\. Providing Exclusive Programmatic Access to YouTube Though Google's DSP

9\. Retiring the Third-Party Cookie

10\. Disadvantaging Rival Exchanges by Google s Publisher Ad Server

11\. Undermining Header Bidding Through the Development of So-Called Open
Bidding

12\. Undermining Header Bidding Through Exclusionary Features of AMP

13\. Designing Analytics to Steer Market Participants to Google Products and
Prevent Entry

14\. Resisting Transparency at All Levels of Ad Tech Stack

15\. Obscuring Fees So That Competitors Cannot Enter and Compete Effectively

16\. Using Privacy Laws as an Excuse to Hide Performance Data

17\. Thwarting Publisher Efforts to Understand Source of Payments

18\. Designing Attribution to Favor Search and Disadvantage Publishers

19\. Raising Rivals Costs and Foreclosure of Existing and Potential Horizontal
Competitors

20\. Capturing Publisher Data in Order to Monetize Their Audiences

They are not looking at Facebook, Amazon, or other walled gardens as viable
alternatives for those who want to place ads on the open web. There is only
one "choice". "All roads lead through Google".

------
hogFeast
Wow, this is very poorly written. Even ignoring the fact that they appear to
have just sourced all their info from the CMA(note below), they really need to
tighten this up considerably. In particular, you cannot mix conclusions and
introduction/background into the same section (when this happens, it is
usually because someone is writing to a conclusion). Also, the overuse of
lawerly adjectives (i.e. hyperbolic) and catch phrases really shouldn't fly.

Either way, I don't think the case is made particularly well.

Anytime you talk about prices, you are on very shaky ground indeed. If
advertisers can't make money at a certain price, they don't buy it. Equally,
Google's marginal cost is zero so they have every incentive to move inventory.
Equally, publishers make money when Google does so the gross price is roughly
correct (in other words, focus on fees...that is where the issues are).

There is conspiracy theory stuff here - Google are fiddling attribution
measurement to favour search ads, they are hiding prices (no, publishers say
this but advertisers are very aware of what they are paying...it is leaving
their account), arbitrage... _clutch pearls_. There is inaccurate stuff here -
imposing rigid market definitions (for example, the difference between
exchange and Adsense is the publisher...most small publishers want a simple
product like Adsense). There is directly contradictory stuff here - Google
uses data to steal from publishers...but taking away third-party cookies will
lower prices and publishers won't be able to bid efficiently...okay, which is
it?

I think there is quite a clear case, it isn't made here. It needs to be far
more concise. Google shouldn't operate exchanges and publish, it shouldn't
operate exchanges and advertise, the exchange should be transparent. The core
business here isn't complicated: I have something to sell, I need a venue to
create a clearing price, there are other people who need to buy it. There is a
long history of people creating venues that aren't fair, the solution is:
create a fair venue.

All the stuff about trying to prove harm and say that Google is a bad actor
who is doing all these secret, ultra illegal things (that no-one has any proof
for) is, quite frankly, nonsense. It doesn't matter if Google is doing bad
things or not. The point is that their market position gives them that
opportunity, and most humans are greedy. Watching a lawyer try to moralise is
an unedifying sight (this paper comes from a billionaire's think tank,
watching someone try to moralise about other people's behaviour with their
pockets weighed down with gold is...really not a great sight, particularly as
this content is just copied from the work done by the govt in another
country...a charmed life indeed).

CMA Note - I am from the UK and the CMA are terrible...mainly very well-
connected Brits who either worked in business and ran their company into the
ground or people who can't get a job in business at all. In particular,
relying on CMA's market definition is perilous. Their logic is usually: what
definition do we need to get the right decision? It is bafflingly
inconsistent.

------
gorgoiler
At this stage in human history, Google search is so engrained into the web
that surely the only moral action is for Google to calve off the free part of
their business and place it in public trust.

The upside would be they would have more time to focus on their premium paid-
for services like G Suite, Google Cloud Print, and Cobra Kai.

------
afrojack123
This antitrust case seems very beneficial to Amazon's ad tech platform. Very
suspicious

~~~
scarmig
One of the more... interesting... conspiracy theories about this is that
Donald Trump is trying to punish Google for being insufficiently supportive
and helping the business of his noted political ally... Jeff Bezos?

~~~
afrojack123
I don't think Bezos is Trump's political ally.

------
switch11
Here is an example of the type of anti trust stuff Google does

One of the industries we work in is a classic New Startups Vs Established
Silicon Valley Company/Companies type of industry

In this case the Established companies are Google and a few others

 __ __ __ __ __ __ __*

Here are some of the things Google does

A) Whenever any company grows beyond a certain threshold, it drops that
company drastically in organic search

The #1 and #2 companies are at #41 and #42 in search results

B) IN parallel, fills up organic search with every possible negative result
they can find about these companies

C) Adwords RoI drops from 1:4 to 1:8 range to 1:1 range

D) Click Fraud increases + some of the click fraud is from Google Cloud and
Google servers

Either -> Google can't stop click fraud from ITS OWN SERVERS, or it is doing
it itself

E) One of the startups was growing very fast in Android - App STore - 1,500
people a day (pretty fast for our industry)

Within ONE WEEK of this information becoming public, each and every app from
every company in this space got kicked out of Android store

F) Drops email open rate by putting emails in Social Folder, Newsletter
Folder, Junk Folder

Of course, they are so blatant about it they did it to all the companies in
the space in the same week and dropped it by the almost exact same amount

So everyone's Gmail open rates fell from 11% roughly to 5%. In the SAME WEEK

G) YouTube comments are hidden

All the positive comments on YouTube videos get hidden and can only be seen by
finding the option to show all comments (which 99% of people don't even know)

 __ __ __ __ __ __ __ __ __ __ __ __ __*

A lot of people are making arguments without actually being the target of the
antitrust

 __ __ __ __ __ __ __

Keep in mind this (Google) is a company that has

The largest browser share

The largest search engine share

The largest OS share

The largest video platform share

and many other advantages

They also are a trillion dollar company

HOWEVER, they play very dirty

If you are in an area where you are competing against them they will use EACH
AND EVERY of their levers and they will go all out and do straight up illegal
stuff

Things like dropping the two largest companies in a space to FOURTH PAGE of
search results

------
nojito
After Google got caught compensating scholars for friendly content, people
should be extremely skeptical of anything read until the case the formally
revealed. Regardless of how critical or supportive it is of Google.

~~~
ariwilson
Remember the owner of WSJ, Rupert Murdoch, is vehemently anti-Google:

[https://www.google.com/search?q=rupert+murdoch+google&rlz=1C...](https://www.google.com/search?q=rupert+murdoch+google&rlz=1C5CHFA_enUS845US846&oq=rupert+murdoch+google&aqs=chrome..69i57j0l5j46j0.3325j0j1&sourceid=chrome&ie=UTF-8)

~~~
notriddle
Only in the same way that The Doctor of Thuganomics is vehemently anti-
Undertaker.

~~~
ariwilson
Do you have evidence?

------
megamix
Google is just that big bullying gang on the school yard. We all know what we
need to do

~~~
remarkEon
Get straight As, go to a better school, and eventually become its boss?

~~~
Avicebron
The bully can shut down your better school and hide you're report card.
Doesn't track.

