The Six Five team discusses DOJ Considers Breaking Up Google
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Transcript:
Patrick Moorhead: Department of Justice is considering breaking up Google. You likely read the news on that, but there’s some bigger picture implications. Dan, what do you got?
Daniel Newman: Yeah, this probably could warrant an entire show in itself. So you and I trying to hit this in a few minutes is going to create challenges. So I’m going to really keep this at about 50,000 feet. But first and foremost, very interesting, we know Lina Khan has gone from, on the FTC side, this is DOJ, but there’s been a strong urgency across regulators to show that it can make some hard decisions and take it to big tech. Google, specifically related to its search, the first instinct that I had, Pat, when I saw this is, well, I think a lot of people have long believed that Google had in some ways created a monopoly, whether that’s because its technology was just superior to everyone else’s or because it was doing things like buying access to the Apple platform as restrictive. It has been the most successful search platform on the planet. And there’s no indication that that was going to change anytime soon, except we’ve now entered an era of generative AI, which is about to take the entire search industry as we know it, traditional search, and completely turned it on its head.
You and I have talked about this Pat, but about 75% of my searches now don’t begin on Google anymore. Now you and I, we’re tip of the spear. We are tech evangelists, we’re early in the industry, we are more techno optimists, we’re trying new things, but this is the beginning of a wave of search being disrupted. Now Google’s investing big in Gemini, they’re looking at building Gemini and applications that can go and probably up level, augment, replace, and displace certain search for its future business. But breaking up Google around search right now seems like something that needed to be addressed a decade ago, and at this point, seems like a fleeting investment of time. What happens next? Let me just point to that really quickly because there’s so much here Pat, and I don’t think we have the time to really dive into it. But the real question is would they break up Google? Could they break up Google? And so, I’m going to put my answer out there. One is yes, they absolutely could. Will they? I really doubt it. And here’s my take. In Europe, it’s always about raising money. Here, it’s more about complexity of the law and the amount of time it would take to get through the legal proceedings to do this. Even if a judge ruled, you’d probably see anywhere from three at a minimum to seven plus years of appeals that would be going back and forth.
And if you think about the speed of which tech moves over a three to seven year period of time, how much would change and how much the industry change. Second of all, the unwinding may or may not be good for consumers. Another major consideration, because consumer experience is part of the antitrust constructive thinking. And then the third thing about it is, Pat, is I think, if anything, if Google really did feel that it was going to lose this thing, I think they would do a self-inflicted breakup. That’s really my take on it is, in the end, if Google felt that they had no chance to win, they would be ruled against, they could not win an appeal, I think they would end up breaking themselves up by some different business units, although I don’t think that’s likely spinning off some of their big bets, maybe spinning off parts of a YouTube end of things. YouTube, I think they paid a billion dollars for it. It’s worth like 70, 80, 90 times that now.
And the last thing I’ll note is just Pat, I really worry about the long tail. I really worry about the long tail here. So you break up Google, what’s to stop next being Microsoft, what’s to stop next being Apple? And again, I think major conflict in terms of the construct of antitrust to destroy and denigrate the experiences that these big platforms created in the name of upping competition because I also think this shuts down some of the VC spend. And that’s also a big place where people exit, which has already been slowed dramatically. So Pat, so much to cover. I’m going to stop there, just because I can talk for 20 minutes about it, but those are my biggest top of mind thoughts.
Patrick Moorhead: Yeah, so any trust has changed over the years, but I wanted to give a historical perspective on it. The DOJ wanted to break up IBM in 1969. It was thrown out in 1982. AT&T was the, I believe the second-largest employer in the United States at one time. It was broken up and separated, RBOCs or Regional Bell Operating Company. So it was broken up into what are called baby bells. And if you still have dial tone in your house, those were one of the RBOCs out there. And it’s split into four or five of those based on regions. Microsoft was actually, a judgment came down to break them up. That was in the year 2000. Judge Thomas Penfield Jackson said that he wanted to split it up to Windows and everything else. That was turned over on appeals in 2001. Microsoft agreed to a settlement, but I got to tell you, that whole effort put Microsoft behind 10 years.
Smartphones came out. You had a search that came out. All of the bigger players out there basically were enabled by this happening. Apple almost was on its way to be going bankrupt. And just, you can look at their numbers and their cash flow, they got a lifeline from, guess who? They got it from Microsoft. And what that was to do is Microsoft surely would’ve liked to kill Apple, but they wanted to do it in order to look like less of a monopoly. So pretty clever here. The other thing that I look at is the new threat is China, and the discussion of hey, do we… I’m looking Pan Tech as opposed to just Google, do we break up a company? What are the national defense implications? I think for Google, I don’t think they have that protection. I don’t think that’s going to be a very good emotional argument or something that could be overturned on some presidential decree. Meta, the FTC also targeted Meta through Facebook, and they wanted to break out Instagram and WhatsApp after the acquisition, even after how successful it had been. So we have a radically different antitrust leadership in place, but I do not think that it is out of question that Google could be broken up. Good point, Dan, on people maybe using generative AI first, but based on all of Google’s profit, I’m not seeing any weakness in that at all.
Daniel Newman: No, that’s that’s just a trend line that I think, like I said, you’re regulating things in. It’s like the ninth inning, and it’s the last part of the game. And all I’m saying is everything’s about to turn, and now you’re going to break it up when there’s new tech breaking through. I think you made a great point about the setback though. If they spend the next 10 years litigating this, that will have major costs. I also love your point about China. All of our mega tech companies are required right now for the US to maintain global technology leadership. The perspective of perception of that. Are we willing to shelf our technology leadership? We hear they’re going after NVIDIA, they’re going after Google. When these companies start getting pushed, doesn’t that put some risk of giving China an opportunity to play catch up?
Patrick Moorhead: That’s a very valid argument, which is why I brought it up. No, no, no, no, I know you said that. No, it’s just, listen, I think when it would come to maybe some other companies, I think given that Google’s in the ad business, I don’t think they could use National treasure as a reason.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
