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Separating Google would be a mistake

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Breakups are never easy. But one could be at stake for Google’s $2 trillion empire. On Tuesday, the US Department of Justice recommended breaking up the company – which encompasses its Chrome browser, its Play app store and its Android operating system – as one of several options to remedy the Big Tech group’s “anti-competitive conduct.” The suggestion follows a landmark court decision in August when a federal judge, Amit Mehta, called Google a “monopoly.” It said deals it had made with wireless service providers, browser developers and device makers, including Apple, had helped tighten its control over the online search market.

Google is also under fire on other fronts. Mondays Another federal judge said the company must open its Play store to competing apps. A separate lawsuit alleges that the company uses unfair practices to dominate the online advertising technology market. All cases fuel the belief that Google’s size is a problem for the technology sector. But it makes more sense to target the company’s ability to consolidate its power than to divide it.

Google’s strength in online search (where it handles more than 90 percent of queries) has been supported by a network effect. As it grew, it collected more user data, allowing it to refine its search tools and actually drive more traffic to its site. This has been a boon to its advertising-driven revenue model, helping it deliver innovative products that all Google users and marketers benefit from. The problem, then, is not so much its size as its ability to generate income. entry barriers.

Forcing Google to remove Chrome or Android, which help promote its search tool, risks being ineffective and too retrospective. A breakup will have little impact if it can still reach agreements to be the default search engine. Even when users have the option, they still tend to opt for Google’s search tool instead of Microsoft’s Bing. A misguided focus on size is also not the best message to send to other fast-growing tech companies.

Time is another factor. The final decision on how to sanction Google may not come until August 2025. An appeal could drag on for years. By the time any remedy even reaches business, technology and market dynamics could have changed. As it is, users have complained in recent years of apparently declining quality in Google search results. New generative AI search tools are also gaining market share. Microsoft, which was split up in 2000 to put pressure on the competition, is a good example. That case was overturned, but the software company’s dominance fell anyway because it failed to innovate and mobile technology grew.

So what should be done? The Justice Department is better off focusing on other prospective solutions it proposed. on tuesday. That includes restricting Google’s ability to enter into contracts with other technology companies to set its search tool as the default. These agreements prevent other search companies from growing.

Encouraging technology companies to offer a variety of potential search engines, including those powered by artificial intelligence, could also help. Asking Google to share a portion of its data trove could also support new entrants and help level the playing field for companies trying to develop generative AI search tools. But data privacy concerns abound.

Investors don’t seem too worried about the threat of a split for now. The impending presidential election also increases uncertainties surrounding the final outcome of the case. Either way, talk of breaking up Google is an oversimplified answer to a complex problem.

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