[This fragment is available in an audio version.]
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.
Contributions
Comment feed for ongoing:
From: Sankar K (Oct 22 2020, at 01:32)
There it is: 60% of mobile search traffic originates in Apple iOS.
Posit that Apple is not indebted to Google/Android for the kickback revenue and it can live with out it and doesn't give exclusivity to Google search.
Whats preventing Apple from
(a) put a search icon right on home screen - one with google search & one with duckduckgo or bing?
- what stops Apple from building the crawlers and indexers to find the relevant material - and build its own ecosystem/value adds.
The entire contents of FB is walled garden for Google search engine. So how is 90/95% calculated - if the searches happening within FB is included what % does it come down to (I am not on FB and so no idea how FB search is used or behaves). So take that with a pinch/spoon of salt.
Just a thought: all publishing industry sites can put a nobot instruction on their sites and Google wouldn't index them. So users can direct visit NYT or WAPO or MOJO or Fox or Economist or GlobalTimes or SCMP or SMH, you get the gist. Or the heavies can do so and the smaller ones - not. How would that tilt the playing field - say there is a Publishing Industry Association and the members of that Industry do so (is that Cartelization).
Is this a solution in search of problem (now) or a solution in search of a problem (future)?
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From: Justin Crites (Oct 22 2020, at 04:55)
Tim,
I believe the state of Play Store licensing is even worse than the complaint explained.
I have no inside knowledge but I speculate that this was one of the reasons why the Play Store was not on the Amazon Fire Phone. Amazon bases a variety of its products on Android, such as (as I understand it) Kindle, FireTV, Echo Show (the one with the screen) and so on. It is entirely speculation on my part that Amazon was not willing to agree to the requirements described in the complaint, which I will deep-dive on below.
The public's understanding of this issue is based on a contract between Google and Samsung that became public because it was the subject of a court case and became part of the public docket; otherwise these contracts are locked up tight under NDAs.
This Ars Technica article published in 2014 reviews the contractual restrictions that were already in place then, and manufacturers have been complaining that Google has been tightening the screws even further since:
https://arstechnica.com/gadgets/2014/02/new-android-oem-licensing-terms-leak-open-comes-with-restrictions/
The contract contains licensing terms such as:
* What software the OEM loads on the phone
* Where in comparison to the home page Google apps are located
* Requires Google to be set as the default search engine
* Requires the OEM to submit monthly reports on the number of device sales (something I couldn't see Amazon agreeing to)
* Google can update its software whenever it wants, and OEMs are not allowed to prevent any of these updates [1]
* The OEM may not "take any actions that may cause or result in the fragmentation at Android including but not limited to the
distribution by Company of software development kit derived from Android or derived from Android Compatible Devices and Company shall not assist instruct or encourage any third party to distribute software development kit SDK derived from Android or derived from Android Compatible Devices" -- all things Amazon likely needed to do to provide SDKs for its other Android devices (Echo, Echo Show, Fire TV, etc.)
* The OEM must include Google's "Network Location Provider" and prompt the user for permission to turn it on. (I assume this means user location tracking), and this provider must be the default on all Android compatible devices
A more detailed and technical deep-dive into the contract and its requirements is available in http://www.benedelman.org/news-021314/ - which has links to the actual contract within.
Quoting Ben Edelman:
> These MADA restrictions suppress competition. Thanks to the MADA, alternative vendors of search, maps, location, email, and other apps cannot outcompete Google on the merits; even if a competitor offers an app that’s better than Google’s offering, the carrier is obliged to install Google’s app also, and Google can readily amend the MADA to require making its app the default in the corresponding category (for those apps that don’t already have this additional protection). Furthermore, competitors are impeded in using the obvious strategy of paying manufacturers for distribution; to the extent that manufacturers can install competitors’ apps, they can offer only inferior placement adjacent to Google, with Google left as the default in key sectors—preventing competitors from achieving scale or outbidding Google for prominent or default placement on a given device.
That was all required in 2014 and based on what I understand things have become more restrictive since.
On a side note, the lack of apps from the Play Store and other Google apps on the Fire Phone was probably one of the reasons that the phone was a failure (a lack of all apps that users are familiar with and expect with no real substitutes; and I don't understand why Amazon thought they could launch successfully in such a state) -- all because acquiring this software would have required Amazon to agree to this contract, potentially limiting all of its other innovation with Android and disclosing its confidential sales data.
This may be a concrete example of Google's monopolistic behavior harming innovation and gaining undue insight into competitor operators. Undoubtedly Google sees Amazon as a competitor in many spaces: Google Shopping, Google Cloud vs AWS, Google Home vs Alexa, etc.
I also got the impression reading between the lines that manufacturers who agreed to this contract were expected to comply with it for all Android devices they produce, although I can't find that language in the contract just now.
Google execs have also arguably been duplicitous while discussing these topics in public. For example, when asked in a senate hearing whether Google demands that smartphone manufacturers make Google the default search engine when using the Android operating system, Eric Schmidt answers "Google does not demand that smartphone manufacturers make Google the default search engine as a condition of using the Android operating system. One of the greatest benefits of Android is that it fosters competition at every level of the mobile market—including among application developers. Google respects the freedom of manufacturers to choose which applications should be pre-loaded on Android devices. Google does not condition access to or use of Android on pre-installation of any Google applications or on making Google the default search engine. …"
As we can see from the requirements above, his answer is a lie for all practical intents and purposes, despite being *technically* true. Android is open source and making Google search default is not a condition of using it. However, few of the major OEMs use merely Android, and instead use the Play Store ecosystem which comes with that exact limitation.
The senator didn't know the right question to ask and Schmidt was happy to answer this question in a way that was technically correct, but duplicitous and deliberately ignoring the spirit of the question. Ben gives examples of other Google execs acting duplicitously and deceptively in public while discussing the alleged openness of Android.
I look forward to seeing the current Mobile Application Distribution Agreement (MADA) contracts become public knowledge when they enter the court record, which they seem highly likely to do as a result of this case during discovery.
I thought I wanted to work at Google one day, to experience what I thought was a great company sometime during my career, but given all of what's transpired over the last few years (employee wage fixing, this, etc.) I fear Google has lost its way. Google started off emphasizing minimalist search results, touting its "Don't be evil" motto, clearly distinguishing ads from organic content when they were introduced, and seems to have gradually transformed into Microsoft of the 1990s. To pick a small example, Google has been changing ads gradually over time to make them look more and more like organic search results -- assuming that a given search even shows organic search results, which may now actually be below the page fold. (For a previous discussion about how "Every Google result now looks like an ad", see https://news.ycombinator.com/item?id=22107823 )
Cheers,
Justin
[1] On the whole this is probably a good thing for security when used exclusively to force patching for security reasons
But outside those narrow reasons, it can be seen as a monopolistic requirement allowing Google to do whatever it wants on device manufacturer phones. Imagine an Amazon Fire TV running the Play Store being obligated to accept some app from Google that competes with Prime Video being contractually unable to prevent that software update; or an Alexa device being required to also respond to "Hey Google"; or an Echo Show being required to download a Google Shopping specific app that competes with Amazon shopping. Unacceptably monopolistic requirements.
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From: Paul Katurov (Oct 22 2020, at 05:10)
Pardon, but Google isn't an only player on web-search. E.g. Yandex can help. For sure, Yandex search is a bit poorer than Google in most cases, but as far as more people will use it, this will grow better.
Sure the conception of "Google Play" is very comfortable for user, but take a look on Apple users... just to compare that android' users know how and are able to install application from different sources, the story goes how to teach 'em all and how to motivate 'em all... but this is a question for other "grands" like Fornite may be. OR for a society of programmers.
For sure Google is not that "not evil" how it was started, but biggest problem of this situation is that programmers rarely thinking about "how to distribute" and something.
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From: holmes (Oct 22 2020, at 07:08)
The lawsuit is a function of backward thinking as it tries to apply traditional ways of thinking of business, and how they can stifle competition. The computer revolution is first and foremost a cognitive revolution. It is first and foremost a theory of mind, that says mental content is a function of computation, whereby the world that is shared is represented. How are we supposed to manage that, without denigrating the mind's inherent abilities? Teenagers now produce both television and it's commercials on YouTube. This is a long way from "Father knows best," or "Rebel without a cause. It is time for the grownups whereby weakness is not given strength,through censure,or strength that lacks compassion.
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From: Bob Truel (Oct 22 2020, at 10:25)
The problem is that regulating a system is notoriously difficult to get right. That is what competition does best.
They should create 3 companies that each get the source code and split Google's capital. Customers are free to use Hoogle, Joogle, or Koogle which must compete against each other and Bing.
Android should be split off, and is free to sell access to whichever search services it wants.
Advertising would be split off into 3 (or more) companies, each with 1/3 of the accounts to start. Each would compete against each other for a certain percentage of search engine traffic and for it's advertising customers. Would get some of capex split.
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From: Kevin Burton (Oct 22 2020, at 12:01)
Hey Tim.
The problem here is that this won't actually fix anything. The reason FANG companies exist - AKA too big to fail is because of taxation policy.
The become like a tumor and metastasize and grow out of control.
It's like gravity, once you've exited a gravity well everything is insanely easy.
Companies like Amazon, Google, etc, essentially do not pay taxes and when they do it's not much compared to smaller companies.
They have an unfair advantage.
If we fix tax policy, and remove loopholes that allow them to NOT pay taxes, this problem will be solved.
Until then we'll have "too big to fail" more disasters, more economic implosions, and far far far less innovation.
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From: Les Brunswick (Oct 22 2020, at 12:07)
People say Google's search engine is free to users, but that is not the case, they are paying for it but it is hidden. The search engine is paid for by advertising revenue, and the advertisers add this expense to the price of their products.
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