> On Sunday, Google posted a blog warning that any attempt to break up its ad business could rattle customers who choose to use Google's ad tech because it "is simple, affordable, and effective."
Has that ever been true? Every instance I know of monopolies being broken up has been good for customers.
1970’s Airline breakups were very beneficial to customers with lower prices and more routes popping up virtually overnight (though read “Hard Landing” if you want a more nuanced take), 1980’s AT&T breakup was somewhat beneficial in that long distance and cell rates went down but local rates went up (see “The Deal of the Century”), 1990’s California Energy breakups were basically a net negative for customers allowing energy market speculation and manipulation (“Smartest Guys in the Room”), and in a handful of examples like the Soviet Union or South Africa, deregulation lead to outright collapse of essential sectors in banking, agriculture, and energy and set society/customers back decades (“Sale of the Century”/“After the Party”).
The airlines weren't broken up in the 70s. They were deregulated and allowed to add or remove routes and set fares as they saw fit. Less government oversight in this case turned out to be a good thing for consumers.
That’s a literal interpretation, but it misses the point of “Hard Landing”. The book argues that while the airlines weren’t monopolies in name, they acted like a government-sanctioned monopoly under the Civil Aviation Board. The Airline Deregulation Act was essentially meant to break up this cartel, and was pushed through despite heavy resistance from those same airlines.
They didn’t want the Civil Aeronautics Board dismantled because it protected their monopolies over routes and guaranteed income, and they feared new entrants would disrupt their control.
So, while the airlines weren’t formally ‘broken up,’ the airline business, the route monopolies, and CAB were which directly led to the dissolution of companies like Eastern and Pan Am, and the creation or expansion of new entrants like Frontier, JetBlue, and Southwest which were previously prohibited from competing in these markets.
In the short term? The flying experience is less than miserable now and the costs are going up. I see a lot of articles out there talking about how prices have fallen, but I haven't actually seen the data. The one article that actually cited prices as examples was obviously wrong about those prices, had cherry-picked them or used the laughable quoted prices you see to sucker you into clicking (which then triple as you go through the actual process of getting the ticket). Looking at BTS stats [1] the price appears to be going down somewhat since 1995, but it then goes on to say that the price only covers the base fare, not extras like baggage and the like. We all know by the time you actually fly the cost has gone up considerably. I was forced to pay 150$ for a bag on a recent flight (not even over-weight), that price isn't listed in the base fare anymore but it used to be part of the ticket. Looking at the BTS numbers I see an industry that has had 30 years of technology improvements and customers that aren't seeing that benefit.
I believed you missed my point about 'in the short term'. My argument, backed by the linked data, was that for the last 30 years the prices actually look flat when you factor in the lost services like luggage. (is that actually a service?) Combine that with the completely horrific experience and there is a clear argument that the overall value proposition for consumers is tanking, badly. Deregulation happened in 1978. The trends I pointed out are lined back to 1995. the consumer benefit looks like it is lasting less time than the detractors to me so 'in the short term' is, I think, a good discussion point.
i'd argue most of the annoyance is tsa type things... no water of x amount... stuck in security line arrive an hour early... disrobe and pull everything out now put it back on...
This is the natural result of businesses only fighting the regulations that actually hurt them and quietly letting the bad ones that help them stay. They have no incentive to lobby to get rid of that silliness. In fact, the worse the airport experience is because of someone other than them the easier it is to give us the worst experiences of our life and charge us for it. It shows who actually has representation, and who doesn't. We don't need less govt regulation, we need better representation.
>Soviet Union … deregulation lead to outright collapse of essential sectors in banking, agriculture, and energy
You literally named one of the most successful sectors of economy in ex-USSR. Banking sector in most former republics did effectively a greenfield start becoming the most technologically advanced in Europe - if they were able to expand to Europe, they would crush it.
Agriculture? Changed hands from state to private, productivity and yield increased, pre-war exports are all-time high.
Energy? 1990s weren’t great in some republics like Kazakhstan, but having some private companies in the business definitely helped. Not enough is being done on green energy, but that is a different story.
> most successful sectors of economy in ex-USSR. Banking sector in most former republics did effectively a greenfield start becoming the most technologically
Wasn’t it mostly controlled by foreign banks, though?
Not exactly. There was central planning, of course, but it was not one big corporation - it was extremely heavy regulation, basically telling different state-owned businesses what to produce, how much, where to sell it and where to get supplies. This is the reason why after privatization there were many companies in most sectors, not just one big monopoly. They were privatized independently.
Well, yes, they were effectively subsidiaries of that one big corporation.
I wouldn’t be surprised at all if some divisions of a a company like Stellantis have significantly more autonomy than any of the car companies in the USSR.
No, you are wrong, they were not. Centralized strategic planning did exist in USSR between 1930s (end of NEP) and 1950s (death of Stalin). The economic reforms of Kosygin shifted planning to enterprise level and the central planning authority - Gosplan - only coordinated the plans of each enterprise. In the last 30 years of its existence USSR was neither planned nor market economy, but rather something in between. They got incentives wrong, focusing on volume and revenue rather than on quality, innovation and profits.
Weren’t Kosygin’s reforms mostly reversed after a few years?
Could consumers goods companies adapt to consumer demand by freely increasing/decreasing production? Production targets were still a thing, weren’t they?
e.g. if the production target for the Lada factory was 1000 cars and they were allocated enough supplies for that (but there was enough demand so that 10000 could be sold profitably in the same period) would they be able to freely scale demand or would they be stuck with plan enforced on them by the central “corporate” office?
Again, plenty of modern companies have more control of their production targets, pricing, expansion etc. while being subsidiaries of major corporations than most Soviet “companies” generally did.
> 1990’s California Energy breakups were basically a net negative for customers allowing energy market speculation and manipulation
This was basically a regulatory failure. They broke up the energy market on paper but without making it feasible for new entrants to actually enter the market, which is the sine qua non of making this work. So then the incumbents purposely constrained generating capacity to spike the prices.
That sounds exactly like a binary, as hinted at by a sibling comment: Breakup of a company monopoly (always good for the consumer) vs. Breakup of a government monopoly (potentially bad for the consumer)
> because of the part on how local phone rates went up when AT&T was broken up.
Isn't that caused by the "last mile" problem? Even with the split there was always only one company in control of local infrastructure and from what I understand they could even block newcomers from installing their own, citing concerns over possible service interuptions and various kinds of interference. I think Google Fibre even went through several experimental ways to get its infrastructure in place just so it could avoid dealing with any of that.
In that case, it mostly just created local monopolies. You still didn’t have a choice for local service unless you moved several hundred miles away. From the consumer’s perspective, we just replaced one monopoly with another.
> Soviet Union [..] essential sectors in banking, agriculture, and energy and set society/customers back decades
That was pretty much unavoidable though. The old Soviet system and institutions were unsustainable and couldn’t coexist with “capitalist” institutions. There was no banking sector (at least how we understand it) to begin with, any company producing consumer goods, electronics, cars etc. collapsed overnight because they were producing garbage products that nobody needed after foreign substitutes became available.
Basically there were only two choices, sell off everything remotely useful to foreign companies and hope that they modernize/fix it or allow the local oligarchs to privatize/steal everything. Arguably the countries that picked the first option came out ahead (but are now stuck with entirely foreign owned banking, telecommunications. Retail sectors with much of their industry either directly foreign owned or incapable of doing anything but subcontracting)
e.g. Belarus tried to hold on much longer, instead it got stuck where it was for several decades with little progress. The Baltic countries crashed and were close to societal collapse for a few years but have been on an almost continuous upwards trend since they recovered.
> Every instance I know of monopolies being broken up has been good for customers.
Sometimes breaking government monopolies may lead to worse outcomes. In Europe breaking transportation monopolies (especially rail transport) lead to decades-long worsening of services in some countries. Because instead of one company managing everything you now have one company owning moving stock, one company owning rails, one company offering repair services, one company... And all of them delegating and re-assigning blame.
Also everything related to privatisation.
Often, short-term gains (cash for the current government) results in later higher prices for customers.
Basically, a lot of stuff in UK.
Rail is fundamentally expensive, though. Compared to hiring a driver to drive a coach on a road, where you can get your coach and your driver so easily, keeping rail running is a nightmare of expense, and the skills are not common and the unions are strong, so labour problems are massive as well. If you think the state-run railways were good, you must have only ridden them in the 1950s, when there was still an empire to fund government stuff, and far fewer people in the country to consume it.
> Sometimes breaking government monopolies may lead to worse outcomes.
if the gov't monopoly was receiving tax payer subsidy, then breaking it up means the taxpayer gets back the cost of the subsidy, and the service being provided returned to private funding model.
If you only consider the outcome as the cost paid for service by the end user, then this looks bad - after all, cost was raised. But you have to also consider the savings in the subsidy that is no longer paid.
It's not black and white. Personally, i would prefer a model of "user pays", as it aligns incentives the most.
> If you only consider the outcome as the cost paid for service by the end user, then this looks bad - after all, cost was raised. But you have to also consider the savings in the subsidy that is no longer paid.
You've got to consider other costs as well - higher road use means direct costs, direct deaths, and pollution. Some things simply aren't easy to isolate the effects of and bill an individual for; some things are natural monopolies, some things are economic lighthouses, and we shouldn't be afraid of administrating things via governments in the many cases where a true free market simply isn't a viable option.
> Personally, i would prefer a model of "user pays", as it aligns incentives the most.
We don't demand that highways generate direct profits/revenue outside of limited application of toll roads, would you also want every road to be pay-per-mile?
One time Google accidentally forgot to refund $70 million they thought they had refunded for ad fraud, and they only found out when they were sued for a $500k piece of it someone definitely knew they had not received. This was back when they were in the tres commas club so I'm sure consumers will benefit immensely from smaller companies with smaller responsibilities.
In a way it's like having a single one-million-line file vs a clean separation between API, UI, etc etc.
The best-faith argument I can make of it is that Google/Meta really are the lifeline for a lot of businesses who have zero chance of being able to leverage large-scale advertising blasts that big companies use. The customers using mega-scale digital ad exchanges get the benefit of being able to buy 0.001% of a billboard the moment someone actually interested in their product walks past.
If you want to increase competition and stop the market from consolidating into a few players it's not immediately obvious that breaking up these ad exchanges goes that direction because it deprives reach from everyone except already large companies.
^^ this is possible because the ads are delivered digitally, not because of any magic power google has.
Even if every website was its own independent advertising space (an extreme opposite), they could all still be open to advertising companies big and small by using “open standards”.
Okay so you have group A who has ads they want to put in front of potential customers and group B who has digital billboards and wants to sell them. Group A doesn't know where to advertise and can't identify customers, and Group B knows about their users but doesn't know what kinds of buyers might be interested in them.
I genuinely don't know how this doesn't precipitate a market-maker who can match up the two groups and who naturally becomes huge because the best matchmakers will be the ones with the largest populations of both groups. The bigger they are the more and better matches that can exist and everyone (theoretically at least) gets better prices because buyers and sellers are in competition in a larger pool.
This is incredibly fair. Where would you make the incisions? Google's own billboards, their own ads, and the brokers seem easy to cut but the rest is real messy.
If a device company can be forced to deploy browsers or search engines from competitors,
Can a search company be forced to allow users to choose their as network? Show me whatever results but I want facebook's ads, or bing's ads and so on.
Pretty sure google's going to ask for 30% of what Facebook makes I guess but that's fine, let's start building a business model on that.
Assumption is that search is a monopoly and that's why they will be saddled with regulations. Frame any other constraints and market solutions can be figured.
> Can a search company be forced to allow users to choose their as network? Show me whatever results but I want facebook's ads, or bing's ads and so on.
> Pretty sure google's going to ask for 30% of what Facebook makes I guess but that's fine, let's start building a business model on that.
Why wouldn't Google ask for the equivalent of what they make with their own ads? Which is likely to be more than what a 3rd party ad provider would make.
Search doesn't make money by itself, it makes money by displaying ads. Why should another company get to capture the profit from that?
The “at least” is unwarranted, and even the “theoretically” is being far too kind.
Of course if you allow a monopoly to develop they will protect their own interests to the exclusion of others, and use their power to entrench their position. Even the oldest theories about markets point out the dangers of monopolies.
Doubleclick existed before Google bought them.
Apple has an ad network.
Meta has an ad network.
Breaking google’s ad network off doesn’t change anything for the small businesses who want to spend $50 to reach 100 millennial women interested in home goods.
The ad exchange buys user profile data from those who collect it (which also happens today in addition to first party collection)
> because it "is simple, affordable, and effective."
Hahaha. Maybe if you compare it to getting a master's in marketing...
I'm a user of parts of their ad tech, and I've tried to be a user of more of their ad tech.
It may be affordable. I don't know, because there's not much left to compare it with.
It's probably somewhat effective for loads of people, since it's everywhere.
But it's decidedly NOT "simple". It's a monstrosity. If you come from no ad skills you will have to spend days digging through overly verbose documentation just to figure out which boxes to check. And probably a few hundred to a few thousand to "experiment" and find what's working.
This is absolutely NOT a "spend hundred bucks, get a few interested visitors" solution.
Even at the other end it's getting more complicated. It used to be: here's some HTML, slap it where you want the ad. Now you have to be constantly vigilant that they aren't destroying your site by sneakily enabling Auto Ads or showing interstitials.
When I started this back in '08, there were many of those providers. We could rotate through them to get some variety and get good payouts. ALL of them are now out of business, except Google, who started to magically payout less after competition declined.
As someone who uses them a lot, appreciates their technical ecosystem, who has his bills paid in part by their ad ecosystem, who is generally pro-business and thinks it's fundamentally unfair to punish successful companies for their success, I'll say this: Fuck Google. Break 'm up.
Very true, few people know how to keep ads profitable when you have a high volume of traffic. The rotation scheme used to help. In a way publishers have to have their own private ad tech to integrate with commercial ad tech to game it in some way in order to not be completely milked in a never ended reduction of value of one’s traffic as a user base grows unresponsive.
Representing the broker, the publisher and the house is efficient and is how google can spend your ad budget and deliver absolutely nothing in return. It takes expertise (more money) and a long runway to even break even with todays google “ad tech”.
Depends on how you slice it. Without Googles ad money, Firefox will probably die.
Without Googles ad money, so will Chrome - and then consumers are left with what exactly? Safari for those on Apple devices, sure, but thats about it.
If Android is made to stand up on its own, can it? And even if it does, is it competitive with iOS? And for how long? If each major manufactor ends up forking it, even that is a net loss for consumers.
You can split up ma bell, large airlines, and Standard Oil. But a modern high tech business? That is a lot harder.
How much development does Iceweasel do? Changing a logo doesn't actually help sustain a browser long term; they were effectively "leaching" off of Firefox development and by extension Google ad money.
The Ma Bell breakup was anything but. Splitting the county into regions and the regions don't compete with each other? That's just creating separate regional monopolies. They didn't break up Microsoft after their trial.
> Safari for those on Apple devices, sure, but thats about it
Webkit is open-source though. Wrapping a browser around it is not too hard (that’s how Chrome started after all).
So it might not be a horrible situation. Just like Google now they’b be subsidizing the cost of development to a significant extent which would result in much lower entry barriers without having a meaningful direct presence in the market themselves (outside of iOS/Mac).
I think same applies for Chromium. It wouldn’t just disappear and MS and other companies would probably pick up the slack to some extent.
Would breaking Google into smaller parts really cause these things to suddenly have no income ? Seems unlikely. The smaller "Googles" would still be huge companies no ?
> The smaller "Googles" would still be huge companies no ?
Or they would be worthless if they are not self sufficient and are only there to funnel users to Google’s profitable products (Ads).
Even something like GCP would struggle, and they aren’t necessarily doing that great compared to competition already.
Android or Chrome on the other hand? They have no direct revenue and wouldn’t have existed in the first place if Google wasn’t allowed to do stuff like this from the beginning.
Has that ever been true? Every instance I know of monopolies being broken up has been good for customers.