Time to Break Up GOOGLE?


Judging from a very recent  NYT editorial, it definitely seems like the mainstream media is starting to understand what the alternative media was screaming for years: that Google with its humongous 88% market share with regards to search advertising is basically a monopoly.

And monopolies are not allowed to function in capitalism. In case you did not know it, there’s a special Anti-Trust department in the US Government which is supposed to deal with what can be defined in classic economic terms as monopolies. The same is the case with Facebook and Microsoft by the way, as the former via its WhatsApp, Instagram and Messenger owns 77% of mobile social traffic whilst Amazon controls 74% share in the e-book niche.

According to 20th century philosophy which deplored the curse of bigness (we’ve already went full retard with the too big to fail financial institutions,but that’s another matter altogether), one of President Woodrow Wilson’s counselors said about monopolies:

“in a democratic society the existence of large centers of private power is dangerous to the continuing vitality of a free people.”

The thing is, there’s a phenomenon called a natural monopoly, which usually applies to water and power companies or railroads, i.e. specific situations where it would make sense for one or a a small number of companies to control an industry. The question is, is Google one of those natural monopolies?

The argument for breaking up Google is that despite of having all the attributes of a public utility, it’s a private company after all, boasting its monolithic power over the internet thus potentially inflicting damage on democracy and user privacy.

The rise of Google, Amazon and Facebook led to a steep decline in the revenues of media businesses, the likes of music business and newspaper publishing, i.e. a 70% fall since 2001.

And now, all content creators are basically forced to comply with Google/Youtube/Facebook/etc arbitrary rules (including censorship via political correctness et al) if they’re dependent (read want to make a living) on advertising. It’s “their” way or the highway.

There are a few essential regulations to begin with for mitigating the monopoly issue. For example, the current monopoly was made possible by acquisition, i.e. Google bought YouTube, DoubleClick and AdMob, then Facebook bought Whatsapp and Instagram, Amazon did the same with Zappos, Audible, Alexa and Twitch and so forth and so on.

As a market analyst put it perfectly:

it has become increasingly advantageous to be an incumbent, and less advantageous to be a new entrant.

At the minimum, these things should have never happened in the first place, i.e. the internet giants should not be allowed to buy major companies like Snapchat or Spotify.

Another salutary measure would be to force Google via regulations to work just like a public utility company, i.e. to require it to licence out its patents for a fee; for example, its advertising exchanges, its search algos etc.

Finally, the safe harbor clause in the Digital Millennium Copyright Act should be abolished, as it allows companies like YouTube and Facebook to free ride on the content produced by its users. For example, one million downloads of a song from iTunes would bring the song performer and his record label almost one million dollars while the same song streamed one million times on YouTube would yield about $1000 tops.

Woodrow Wilson put it best in 1913:

“If monopoly persists, monopoly will always sit at the helm of the government.”