Google Must Split
In the mid-90s, everyone remembers the slogan "WindowsMustDie". At first it was a slogan, then it turned into an ordinary greeting, and then completely began to go out of circulation. Microsotf with its Windows was the first IT company that faced the global consumer monopoly: IBM is not taken into account, as it worked in the B2B segment. The end of the 90s was the birth of Google and, of course, this slogan against anti-monopolies and make the world better they used to the fullest. I think everyone who was interested in the IT industry at that time remembers that old “company of good”, and it’s not by chance that Google employees who came to work for this mission, arrange spontaneous riots against management decisions ( 1 , 2 ).
In the 90s, the attacks on Microsoft bypassed Google, but now they are increasing and threatening our comfort .
I think I will express an unpopular opinion, but the best way to deal with a monopoly is to divide the company. I will try to maintain my position.
1. The correct division of the company not only does not reduce the total income, but also often increases profits
The conventional wisdom that a large company combines secondary operations into a heap and thus saves a lot of money. General accounting, HR, recruiting, administration, etc. The mistake is that there are nuances everywhere and, for example, for the development of Youtube one type of recruiting is required, and for the development of Google Search another one. The more common tasks a person performs, the less effective is his work. If secondary tasks were very expensive and could not be partially outsourced, then small businesses and startups would not exist in principle. Of course, when a company is divided, there will be a period when these costs will grow, but it cannot be denied that the effectiveness of these costs may be higher. Again, renting a few medium-sized offices, may be cheaper than one very large.
2. And if expenses do not grow and one of the companies formed becomes unprofitable?
Everything is obvious here, both companies must find a market balance to coexist, if one of the companies suddenly becomes unprofitable, then this will be extremely profitable for the profitable company and it will thereby want to abandon the ballast. Roughly speaking, when sharing Google Search from Google Cloud, it turns out that AWS is cheaper, better and more reliable, well, Google Cloud will become unprofitable, but it will be completely at the mercy of Google Search. With proper separation, the final product should not suffer and profits should not change.
3. How will this affect the product and competitors' products, which will become more visible?
Any creation of market relations increases competition. Obviously, the development of Android requires money, there is only one product in Android that can be justified by the pre-installation and interests of “Android” as a separate company, and in part, this is Google Play. Installing Google Search, Google Maps and others is of course a paid service. And we even know how much it costs - Google pays Apple $ 1 billion .
The creation of a market mechanism and the price of the service removes unnecessary FAS proceedings in the Yandex and Google case. If Yandex knows that installing a search on a device costs $ 10. (the price is already known from EU proceedings), then they can make a market decision to participate or not, and not try to push this issue politically.
From the point of view of the state, the total GDP will only grow if Android can sell 2 types of search in the system or 2 types of pre-installed applications.
4. What about security and my personal data? Previously, they were in one place, and now?
In fact, for me, this is the main argument why it is necessary to separate Google Search from Gmail from Google Docs and from Youtube. A person has different activities that he prefers not to mix [link]. Yes, there is data like a payment system, where I use Google more comfortably with their 2x verification system. But my main concern is that data from business or personal correspondence can be used, at least indirectly, for searching and, excuse me, for any kind of advertising. I wouldn’t really like Youtube to show ads for lawyers and funeral services in a difficult life situation, and I wouldn’t really like to have advertising for my business during family viewing.
5. What if the division of the company leads to the closure of my favorite product X (Google Reader)?
I will not deny that this can happen. I even think, Google can declare it in the form of a threat, since you don’t want one company, then get a list - we close X, Y, Z. I think that the state has enough mechanisms to counteract this blackmail. But if the company is really chronically unprofitable, then it is better to find out about this sooner than later.
Take for an abstract example of Youtube that spends a lot of money storing and distributing videos. And Youtube’s economy doesn’t take shape, it has many users, but advertising doesn’t pay for its expenses and it’s constantly needed to be fed from Google Search. It seems a harmless situation and a vivid example that companies are in symbiosis. In symbiosis, but not in market conditions. Imagine that you will stop using Google Search, but you use Youtube and imagine what a surprise you will have when Youtube is closed, and Google Search will be left, because the first one does not make money, and the second has a crisis now. If the unit is chronically unprofitable, sooner or later it will happen, but if Youtube needs money for development, I think Google Search will not refuse to invest.
In any case, we understand that Youtube will find how to monetize its audience for the Google Search unit.
6. How to divide the company and what market relations will there be between new products?
In fact, this is the easiest question. Google itself has long divided everything and gave different names for brands. Just so that people are not afraid to mix personal, relationships and business in different services.
Meet individual companies: Google Search, Youtube, Chrome (with the app store), GMaps, GMail + GDocs, Android (with the Play market), GCloud, etc.
- Youtube takes ads from the Google Search site (Google Ads) and receives money for its impressions. Youtube sells movies and subscriptions without ads.
- Android agrees to pre-install the applications that come with the Play Market, this money and money from the Play Market is enough for the development of the operating system.
- Chrome (like Mozilla) takes money to preset the search engine. Possibly introduces a mechanism so that distribution (!) With the search engine enabled is limited.
- GMaps - earns from advertising, although it will be hard, and with the API. Too many expenses: pay Android for pre-installation, costs for satellite imagery and for street imagery. Main income: sells API for Google Search to display on the search screen map and some details.
- GMail + GDocs - finally starts to take money for using the disk in the form of a subscription. There is a suspicion that the number of subscribers for Google Drive should increase 10-100 times for self-sufficiency.
7. What does it mean to divide? What will happen to the shares?
It means to create separate public companies, as Google is a public company and divide the shares in current proportions. I do not know if there was such a precedent, but I think this is a technically legal question. Although without similar situations, this question will drag on for years.
8. Why is all this necessary and everything is fine?
I would give 2 answers.
I. Money is the primary way to tell me, I like this product and I will use it; I like it, but it's too expensive; I don't like it at all. If we do not vote with a ruble, it will turn out that our favorite product is useless for the company and it is not going to invest in the unprofitable direction at all, but for us it is most important that the purchase stimulated the development of the company to meet our needs, and not millions of other people in another service.
Ii. Monopolies are evil. But monopolies are not absolute evil, they just gradually become them, because of how capitalism works. Capitalism works well for small businesses, but for large ones it represents too many evil mechanisms of unfair competition from buying politicians to buying out all potential competitors, which oddly kills capitalism. Companies are born in competition, without it we would get faceless and unnecessary products, so over time, competition becomes a goal.
IT monopoly double evil. The fact is that IT monopolies do not spend resources on distributing copies of products, respectively, any copy is almost free. In any case, for each copy there is an expense in the form of support, localization, specific feature, but this is nothing compared to the share of resources in each car. The state has learned to control the prices of resources (resource extraction tax) and special resource markets, which creates a primary market. People still have to learn how to regulate IT companies, and we live in this wonderful time.
Unfortunately, any IT product is a small IT monopoly, with the exception of pure-Blockchain projects only, let's see what happens in the future.
What do you think? Google Must Split?