The company that makes the search engine and the company that sells the ads to the advertiser can be different companies, in the same way that you can put Ad Words on your website and they'll show ads based on the content of the site even though you aren't Google.
So assuming the company is splits into Google and AdWords,
would Google be forced to work with AdWords or are they allowed to use different providers? Are they allowed to create their own competitor to AdWords? Which problem is this solving?
Yes, they'd be allowed to use other ad providers, and hopefully it would be illegal to penalize them for constantly running some multi-armed-bandit trials across multiple ad providers.
Then AdWords would draw the short end of the stick because their product would become commoditized. Google would still hold the same market power as before. Ad quality might go down because there are multiple providers. Overall I don't see the upside.
Maybe something that would make more sense is if Google was split into two or more search engines, each of them would get a copy of the current source code and data.
More like car manufacturer and car purchase loan provider (if that were something it were offering in-house).
We could create our own search engine, funded by showing Google Ads, today; the suggestion is that that Ads business be separate to Google's own Search business which happens to use it, but which might easily (except obviously it doesn't) use Facebook Ads or whatever instead.
You can already create your own search engine, and have Google serve the same ads on it as they would for their own search. I don't know what the product is called, or what the requirements for signing up for it are, but it is how a lot (most?) of the smaller search engines monetize.
(I just checked Ask Jeeves and Startpage, and they were both serving ads from Google.)
I consider myself anti-monopolist but lately I've been thinking...wouldn't breaking up American big tech companies put the US in a worse position to compete against Chinese tech companies?
Being in a more competitive industry generally reduces margins but increases the size of the market. Vertically integrated companies lose to aggressively competitive non-integrated competitors when they exist (and a monopolist is proscribed from buying them all up), because the existence of that competition means they can't be abusive or collect monopoly rents.
Vertically integrated monopolies are sticky because you can't replace any individual part of the stack by itself. You can't compete with iMessage just by creating your own messaging app, because to be on a level playing field you would also have to create your own mobile operating system and design your own phone hardware and microprocessors and convince all the customers to switch despite the existing network effect.
If we made it to a market where anybody could create a new OS and have it run on the existing installed base of hardware, or create a new app in a write once run anywhere language and it could run on every existing device, vertically integrated competitors are at a disadvantage because they have to be best in class in all of their individual markets or else customers find themselves better off to have the ability to mix and match.
I'll give an example of a Canadian vertically integrated monopoly: BCE (Bell Canada Enterprises). BCE grew out of the incumbent phone company (Bell) in most of Ontario and Quebec. Over the years it has used the massive profits from telecom to extends its reach into other sectors of the economy. Over the past 10-15 years, it has made quite a few acquisition of various content producers. Most notably to me was the purchase of CTV and Discovery Channel.
Back in the 1980s, Ottawa had a local independent broadcast named CJOH. They produced their own local news at 6pm and late night. The CJOH news team was well respected and an active participant in the community. CJOH eventually got purchased by CTV and ultimately landed under the control of BCE / Bell Media. Shortly after Bell Media gained control a few years ago, they laid off longtime anchor Carol Anne Meehan. Not a good move in my view, as they brought on an entirely new and young team. Further cuts to the news staff have happened over the last few years as increasing use of technology has allowed further staff cuts -- everyone from camerapeople to editors and technical support staff. Each cut means one less means by which the news organization can learn about things that are happening in our community.
The acquisition of Discovery Channel was even worse in my opinion. From 1995 to 2018 Discovery Channel ran a show called Daily Planet, which was one of the only daily science news shows. This was a wonderful way to find out about all kinds of cool things going on in the world of science and technology. It aired on weekdays at 7pm after the 6 o'clock news. Bell Media cancelled the show on May 23, 2018.
The loss of Daily Planet is, in my opion, worse than that of a local news channel. Daily Planet was part of the reason for the existence of Discovery Channel. There are no real replacements being broadcast that I know of.
The reason I bring all this up is to show how the priorities of a monopoly impact existing services that are a public benefit. In my opinion, the BCE layoffs were not the result of the company losing money. The reasons were to free up cash flow to pay for Bell Canada's massive investments in building out its Fibre To The Home network. Bell has spent billions of dollars thus far building out FTTH across Ontario and Quebec, acquired the incumbent in Manitoba. Purchasing content producers that were once separate entities, then gutting them and using the savings to pay for FTTH construction is a brilliant strategy. Money that was previously an expense gets turned into capex that builds a new asset.
Sadly, our phone and TV bills don't go down in price despite us getting less new content. I had the chance to speak to folks at Discovery Channel at a conference back in the 1990s when I was a teenager, and their enthusiasm about bringing real science content to the public was amazing. I'm sad this has been lost at the alter of corporate greed.
Daily Planet was indeed a great show. I wasn't aware it was cancelled.
But, I'd be surprised if many science-minded people from Gen-X or later, were still watching cable in large numbers. Same for the local 6:00 news for that matter.
I despise Bell as much as the next Canadian, but this shift is likely more due to the increased competition (internet, wireless phones) for mindshare.
>Sadly, our phone and TV bills don't go down in price despite us getting less new content
I was thinking about this recently. Every other area of technology gets cheaper and cheaper (relative to their capabilities) but internet keeps getting more expensive. At least in Canada.
At the very least it would solve the massive conflict of interest where a service that you can pay to make people find your webpage is strongly intertwined with another service people use to find webpages.
It's impossible to remove that conflict of interest. The search engine maximizes expected utility when serving ads: argmax(predicted-click-through-rate * cost-per-click). That's the only rational thing to ask for from an advertising network, and it's what the advertiser optimizes for as well by running the ad auction in the first place. It doesn't matter who computes the ad-quality score (the predictor of click-through rate); rational actors with sufficient information will agree on the value.
One could artificially prevent the search engine from e.g. sending keywords and viewer profiles to the ad network, but that is a completely separate regulatory approach from monopoly-busting.
While we're stumbling around the regulatory possibility landscape why not just ban advertising altogether? It's a ~1% drain on the economy that people who know better go out of their way to block.
AT&T / Bell was broken up in the 1980s into multiple entities. Splitting local and long distance services resulted in significant competition for long distance, while local phone service remained / remains heavily regulated in many markets. Here in Canada I remember having to pay $0.34 per minute to Bell in the 1980s to call a friend that was a 30 km drive away. Overseas long distance was in the dollars per minute ballpark.
This wasn't without some losses. Bell Labs lost a lot of funding once the Bell monopoly was split up. The amount of R&D that the telecom giants funded over the years resulted in massive public benefits, creating the tech industry we all know and love.
Cross market subsidies make this possible once you've killed off all the competition. Therein lies the danger of monopolies.
To be honest, I'm disappointed that no micropayment schemes have taken off yet. I'm perfectly willing to contribute a few pennies to every site that I visit, but there's no good way to do that today. Instead, every time I read an interesting news article that gets forwarded to me by any of a couple of dozen separate paths, I end up at a different news site that I don't have a subscription to. Should I really have to have 100 subscriptions to news sites that I only read 1 or 2 articles from each month? Some entity needs to aggregate this into a single convenient $30/month subscription. Ideally it would be standardised and be added on to my monthly internet bill (IETF standards ftw).
I think there might be psychological issues at play here, sadly. If you click onto a news website from a search engine, and it ends up being for the wrong thing, people feel cheated and will want their money back.
This is probably silly, because if you're paying a couple cents per view, you should be concentrating on the value you receive in the aggregate... but people aren't rational, and personally, I don't think I'd be immune to feeling a sense of regret when I spent money on the wrong link.
I'm not going to remember the episode, but I'm pretty sure Planet Money said this is what happened when micropayments were tried in the 90s.
I subscribe to Scroll.com, and I think they've probably got a better model down. Make agreements with lots of sites from different companies, and then offer a bulk subscription which removes ads from all of them. It doesn't let you through paywalls, mind you, but you could imagine a variation on the concept which did.
Agreed, but there is a "cheap enough" threshold where that doesn't matter. Netflix was like that ~5-6 years ago where there was all kinds of content available. Today I need Netflix + Amazon Prime + Disney+ + who knows what next to get the mix of content that I previously had in that one subscription. I'm at the threshold of no more streaming services now. Fragmentation can destroy markets. Striking a balance between competition and mergers is non-trivial.
A side note: one of the reasons I don't subscribe to more online news sites is that I can't handle changing my credit card number with more vendors than I already do today. I've had 3 card replacements in the past year due to data breaches. This is truly annoying.
Edit: Oh, I see where you're coming from in light of the parent. Well, Google could place ads inside their product without actually running an ad network—that is in fact what most websites on the internet do.
This wouldn't necessarily make sense at Google's scale though, so I don't think that's what GP meant. Rather, Google shouldn't be able to own most of the ad networks on the web while also running massive ad-supported properties in house.
Ad networks were separate years ago! Strangely enough they were acquired. Google bought AdSense and Sprinks in 2003, dMark Broadcasting in 2006, AdScape and DoubleClick in 2007, AdMob in 2009, Invite Media in 2010, mDialog in 2014, Red Hot Labs in 2015... I'm sure there are more.
