Unlike Microsoft, where at least some of the business units could do pretty well on their own, if the company was broken up, I doubt the same would be true for Google.
Other than search and ads, I doubt other part would do particular well. Breaking up Google would result in a lot of people losing their job.
I’m not arguing that you’re wrong in the idea of breaking up Google, but I doubt it will happen.
That means Google is strangling innovation and market efficiency by offering unsustainable products that prevent profitable businesses from entering those markets.
Some people might lose their jobs at Google, but a healthier market will allow competition to hire for actually sustainable businesses. The benefits of increased innovation and competition for consumers makes breaking companies like this up worthwhile on their own.
> Other than search and ads, I doubt other part would do particular well. Breaking up Google would result in a lot of people losing their job.
This is exactly why companies should be broken up. They can currently afford doing a lot of anti-competitive stuff just because another department is profitable while the anti-competitive methods/departments won't. That people would lose their job shouldn't be a consideration as they can surely find jobs elsewhere that won't exploit the public like Google have been proven to do here.
Companies should be allowed to dabble in unprofitable things as they wish.
The need for everything to be profitable is why Google got into selling Ads and also why they keep killing projects. Many things in the world worth doing don't nearly fit into a nice profitable business but in many ways, bring some positivity to the world.
Android gave many people a chance at a modern smartphone and connected future. Chrome would never be profitable on its own but for a time, it forced web standards to move forward and freed many people from the mess of 1000 virus-laden toolbars in I.E.
Chrome and Android aren’t really about giving users a better experience, that’s just a side effect - they are a way of solidifying their domination of search and ads by owning the full stack.
It’s just a big risk-mitigation technique so they can further cement their monopoly for search and ads.
I can see at least five entirely separate units with very little synergy:
1. Search + Maps
2. GSuite + Gmail
3. GCP
4. YouTube
5. Android + Chrome
Each can probably support its own P&L sheet, other than perhaps the last (not sure about that one).
Such a move would surely limit innovation (I can’t see these smaller entities doing things like mobile ASIC development, although if TPU is under Search it would continue), but increase competition, especially in the ad market.
The only two of those I’m pretty sure could survive on their own is search and YouTube.
Android and Chrome pretty much doesn’t have a business case. GCP might be big enough at this point, but is still just burning ad money. GSuite/GMail is again a maybe, but can it afford the infratructure? They would at least have to cribble the free tier.
Here, let me help you out with ways to find hard data that disprove these conjectures.
> Android
Take a look at recent court documents about the size of the Play Store revenues. It’s a multi-billion-dollar cash cow after paying off the carriers and device makers to keep their spyware loaded.
> Chrome
Google single handedly kept Mozilla running for over a decade with their search deal. The deal for iOS is worth billions. Chrome will manage just fine.
> GCP
They don’t exactly run that thing as a charity. Anyone familiar with their pricing knows that this is a super-high-margin business. Plus, as a spin-off, it would immediately have a couple gigantic customers: Google spin-offs.
> GSuite/GMail
There’s only two main options for email and productivity SaaS (sorry Zoho). They’re printing money on this one too.
I should disclose that I would rather see Google stay intact, so whoever kneecaps their ad business can kneecap the whole empire in one go and make the whole company and all of its shareholders suffer at the same time. Companies don’t have a right to live if they are generating negative social impact.
It’s hard to say how a split would happen. I guess I would assume a different split, which would force Android and Chrome out of any type of ad business, meaning that Chrome could not take money from search and where Android would be forced out of any user tracking.
Other than GCP, which I still think would fail, if split out in the next year or do, you make a good point.
I worked on GCP until recently. I remember celebrating (in-office) our product within GCP surpassing one million dollars of revenue per day. GCP would be fine.
How are the services provided to Alphabet subsidiaries taken into account? I’d bet that the cloud bill for YouTube alone would exceed GCP revenue numbers.
In other words, if GCP is spun out, and Google services keep using it (with realistic pricing) it’s going to have a revenue far exceeding $4bn.
I’d bet that Gsuite could compete is they actually invested in improving the product. After all, office is still one of Microsoft’s major money spinners.
Gsuite isn’t a very good experience compared to office365 with its high quality native apps. I don’t the costs but I imagine Gsuite has to be a lot cheaper because of its offering.
How come? Also they already have a dominant position, producer licensing can go a long way. Nobody is gonna make Android suddenly irrelevant in the next 10 years.
As the epic vs. apple showdown shows, the position of gatekeeper is potentially legally tricky.
Additionally, google works as a gatekeeper now because handset makers kind of need googles blessing. But android is open source, and potentially forkable. What really keeps handset makers onboard are the google services. But... if you split google, are those handset makers really going to feel as beholden to the android play store if they can get all major apps to run on an alternate store (already the case), and can get access to essentially all google apps without giving the android store any cut (after all, those aren't part of a single "google" bundle anymore then!)
I suspect the 30% cut would have to go; that super-high margin is really a bit of rent-seeking behavior even today, and only sustainable due to Google's overall market position. It's so high that the case could be made that e.g. Samsung's efforts to duplicate it is merited solely as a form of negotiating leverage, rather than as an actual alternative today. Without the whole consumer lock-in and bundle deal that google provides today, androids value proposition is much, much weaker; they could simply offer additional stores with better pricing, and wait for android to come begging for scraps.
Android the platform is certainly here to stay for a while, but as a business unit, assuming it were split from the rest of google? I'm less certain. I mean, I wouldn't count them out, but there are definitely competitors around that would gladly eat their lunch, and might actually succeed then too.
> Android and Chrome pretty much doesn’t have a business case.
Seriously? The most used browser and mobile operating system in the world can't finance their operations? If that's the case, then there could be no browser.
Firefox is still able to finance its operations and so does many other browsers. Google can still contribute to WebKit as an open source project.
Android can start charging a fee for every mobile device (not sure if they already do that?) and cover its development expense. It'll be a saner world where you pay for the services you are using.
Android has its Play Store and could probably pick a few bucks out of each handset sold, although the long term implications of Android without its daddy around aren’t clear.
GSuite is incredibly ubiquitous and has no free tier anymore (other than customers grandfathered in), and GMail can still do ads. I have no doubt they’ll be printing money, relatively speaking.
Android and Chrome can get a lot of money from search companies to be the default search option. Currently Google is paying nothing for that, maybe another search company would emerge.
> Such a move would surely limit innovation [...] but increase competition
Wouldn't increasing competition also increase innovation as more companies can actually enter the market with new ideas? Sure, the innovation at Google itself might go down, but that should hardly be an argument against solving their anti-competitive behavior.
There are some things requiring capital investment at a scale that wouldn’t be feasible for a company outside the 100bn market cap club. Data centers, intercontinental data links, high end VLSI development, high end smartphone hardware and things like Waymo all come to mind. It’s more than cash alone, it’s low cost nature of their mistakes (because everything is paid for by Search anyway) that enables that.
Though this isn't is a bad idea, if we really want to avoid the inefficiencies stemming from monopolies, we need to not just break up by business unit, but even more so ensure those business units are not themselves little monopolies. That would likely mean breaking up the units too; i.e. not just 1 search provider, but at least two; not just 1 android but at least two, etc.
Having each smaller niche served by its own monopoly is perhaps better than having just 1 monopoly with a larger niche, but it'll still just converge towards today's ever more feudal society.
There is 0 polical interest in dealing with that though, and it would be a really tricky issue - after all, if you're serious about wanting to support capitalism, google is by no means the only company that needs to go. It would mean a fairly dramatic restructuring of the corporate landscape, and you'd need to have answers for scenarios where economies of scale are so lucrative, they outweigh the benefits of competition (would those be non-profits with multiple competing clients?) Also, the laws around intangible value (i.e. intellectual property) are pretty much designed for monopolization. Finally, we don't live in a vacuum; how will you deal with transnational corporations, and specifically with overseas monopolies that can play off the now smaller intra-national non-monopolists against each other? As tax-avoidance schemes have shown, corporate structures can get quite complex, so it's quite possible some kind of mutually dependent franchise system might develop with the true ownership still centralized and monopolistic - but external.
All in all, the path towards the idealized capitalist system seems implausibly long. We're going to want ways of mitigating the damage before we get there, and that implies ways of dealing with these kind of non-capitalist entities in non-capitalist ways; perhaps a special huge-size tax and a more interventionist state. And even that seems like wishful thinking in today's political climate...
I think Chrome being the largest browser provider could make big profits from partnering with other search providers to make one the default search engine.
Wouldn't this be eventually a good thing? I imagine less free online services, which would condition people to also pay online more often. It would be a bumpy road, but I can see how online magazines could make more money that way, since I'm already used to paying for my online office suite, mail etc.
It could also just lead to weird tie-in with a central ad service sharing anonymized data between all participating companies, basically spreading the data Google monopolizes further.
Fine, break it up and let the chips fall where they may. So many people on HN like to tout that if businesses don't have a market, or a product people want, or whatever, then they should fail. Why should Alphabet's numerous companies be any different?
There would be a net benefit to the world that would absolutely outweigh the collateral damage of that relatively small handful of people losing their jobs.
Other than search and ads, I doubt other part would do particular well. Breaking up Google would result in a lot of people losing their job.
I’m not arguing that you’re wrong in the idea of breaking up Google, but I doubt it will happen.