Gongol.com Archives: October 2024
October 16, 2024
The Department of Justice is considering a breakup of Google, or so it appears from a filing related to antitrust action being pursued against the company. There's no escaping notice of Google's considerable influence within some Internet-related markets, like search engines, video delivery, and smartphone applications. And intervention may be called for, depending upon what uses the company may have made of its market power to inhibit the growth of competitors. ■ Corporate disassembly, though, should be very much a last resort. It is one thing to prevent the bolting-together of a monopolist; if all of Google's components were independent and equally powerful without combination, then putting them together after the fact would certainly deserve to raise scrutiny. ■ But if organic growth is largely the cause of Google's success, then breakup may actually prolong the behaviors that the Justice Department finds undesirable. For one thing, obvious rival buyers with pockets deep enough to buy the spun-off companies may be unwilling to risk facing antitrust suits of their own, rendering them artificially less willing to promote competition. ■ For another, the risk of breakup could entice Google/Alphabet as it exists now to maximize its profitability before time runs out. After all, so doing might be in the best short-term and mid-term interests of its shareholders, regardless of what the long term might bring. ■ Moreover, if the constituent companies within today's Google/Alphabet are broken apart, they may be incentivized to engage in increased risk-taking as standalone entities -- which could in turn lead to even more aggressive sales practices than any in which they might be engaged now. ■ Categorical changes often overtake monopolistic behaviors anyway. AI could supersede search. Google could already be breaking its own search quality by contaminating the results with AI input, and the mass production of junk content could poison search engines altogether. Even better ad services could deplete the market for Internet advertising, just as Internet advertising mortally disrupted newspaper classified advertising. ■ Modesty should be the guiding principle for would-be regulators and trust-busters. Many if not most of yesterday's behemoth names in business are shadows of their former selves -- General Motors, General Electric, AT&T, and Sears are all vastly different than what they once were. Google is almost certain to experience the same, and market and technological changes will do more for the cause than anything that the government is likely to achieve.
