Google is being sued by the Justice Department (again) over its ad business. You’ve probably seen the story mentioned in the news, but to quickly recap: it’s mainly centered on Google’s monopoly over ad space. It owns the platform (where people buy the ads), the exchange (where people sell the ads), and a massive network of inventory, including their own search engine (where the ad space ultimately lives). All of this culminates in a clear advantage over other platforms and advertisers.
Of the many outcomes that may come from this lawsuit, its goal is to loosen the media giant’s chokehold over ad space and break it off into smaller pieces, the impact of which could be huge. So we turned the question over to our brilliant, talented, and sometimes cynical Ads & Analytics team: What would happen if Google broke up?
Upon breaking up, what part of the business do you think Google would keep vs. sell off?
- Andrew: I believe Google may be able to keep the search engine, but have to sell off the ad platform. This would allow the company to continue being a competitor in the space, while addressing the real issue within the lawsuit.
- Coel: What google would want to keep and what it could keep are two very different things. The extent of which is undetermined. Antitrust laws can have a wide-ranging effect and government lobbying by Google in Washington could spell a multitude of different results. If Google was able to choose what it would keep, it would be the most profitable and influential part of its business: its search ads. Money talks and the only thing companies care about is profit and keeping shareholders happy.
- Joe: I think it would keep the search engine… working with data partners and ad exchanges might feel cumbersome for them, but they’d still get to control all the user data and use that to power everything else their business owns.
- Rachel: They’d keep their search engine in order to stick to their practice of tracking and selling tons of information, as they are the most popularized search engine in the market.
Many of Google’s business units were once individual companies. Would they spin off into their own businesses, or would someone else seek to acquire one of those aspects? Realistically, what company is in a position to own them?
- Andrew: YouTube gets sold to Amazon since they have video knowledge with Twitch and Prime Video. Android sold to Microsoft, or would this open an opportunity for smaller competitors to take the reign and become the top dog in the industry rather than buying Google’s existing product?
- Coel: My best guess is that Google would break up into several new companies with similar namesakes. This is very similar to the Ma Bell breakup in the 1980s. Each sector of the business will break up into its own company, while having staff that previously worked at Google in order to create autonomous companies with an unspoken bond and loyalty to Google. Like how Ma Bell was broken up into the many successful “Baby Bells.” The sub-companies will then have the existing infrastructure comparable to Google’s code and platforms.
- Joe: I think in the short term they’d spin it off, but the instant value they’d create would be too much to ignore for the bigger players. There’s also a possibility of the new company collaborating with other search engine ad platforms to make a unified DSP-style offering to sell out to existing DSP’s, diversifying the ecosystem. In terms of companies ready to buy in, The Trade Desk for sure, Simplifi might have some interest, but they already have their own DSP-level offerings for search. My guess would be a “smaller” player, like StackAdapt, Basis, or a DSP that doesn’t already offer search, with enough cash in hand to acquire and scale up quickly.
- Nicole: I think companies are more likely to take ownership of Google products. They’re well established, compared to making a look alike product. Plus, Google would have the ability to sell other parts of the business for super high prices.
Right now, Google has incentive to increase ad inventory on its own site to increase profits. If things broke apart, how would that affect Google search pages, organic results, and other aspects of what the consumer sees?
- Andrew: The volume of ads shown will be decreased, which may be a good thing to some consumers! Organic search traffic would become the highest of priorities to ensure traffic is getting back to these sites. SEO specialists will be in high demand, and some advertisers may even shift focus to other platforms instead.
- Coel: It’s almost impossible to guess what will change. I suspect it won’t be a smooth transition. With increased competition and each new company vying to increase profits, there will be a lot more ads on the platform, potentially causing public resentment. Humanity is resistant to change and I suspect after seeing more ads and a less smooth experience, people will jump ship to Bing or DuckDuckGo.
- Joe: I think it opens the door to be less driven by ad revenue. The balance they had to strike previously was centered around profitability on both ends, but if they don’t have the headcount to worry about on the ad side, reducing inventory load and driving costs up won’t hurt them, since they’ll be getting their money either way. On the other hand, if other search engines perform better and cheaper with a heavier ad load and more net profit, there’s no incentive for them to reduce. The only side to suffer is the consumer.
- Rachel: Google search pages, Google Maps, and Youtube might look a lot different if they decide to break apart from the exchange, as they may no longer serve advertisements anymore. Possibly new navigation apps may appear that could serve ads from local businesses.
- Nicole: With the elimination of monopoly, other search engines (that are currently used way less) will become favored.
For people that sell inventory to the exchange, how does this impact them? Will they make more money or less, if things aren’t centralized?
- Andrew: With things not being centralized, sellers may have a harder time making money with the market more open as they will also likely see more competition.
- Coel: This has the potential to make some people a lot of profits. Competition is always good and will bring the real market price of inventory back to reality instead of being controlled behind the scenes.
- Joe: I think this is a huge opportunity for the sites that leveraged Google’s ad network to be Google’s “search partner network.” They could negotiate better rates with the new company or any DSP’s that play in the space, and it could open the door for a new organic search competitor to emerge with bigger funding.
- Rachel: Google would no longer be taking part of advertisers money and information, so it would benefit individual sellers. Website creators will earn more and lead to more loyal customers, through subscriptions, etc.
- Nicole: Those that are selling should make more money when things aren’t centralized.
For advertisers, what does this mean to them? Will ads be cheaper or more expensive?
- Andrew: I think this could go either way… Some other platforms may be cheaper historically, but with the shutdown of Google, would these platforms raise costs knowing that users will flock to them? Classic supply and demand. On the other hand, flexibility in ad options may come as a benefit to advertisers—more open space could lead to lower costs.
- Coel: Ideally, it would be cheaper and it most likely will bring down costs. However, referring back to the Ma Bells breakup, it would seem that progress will slow down. Many suspect that the breakup of Ma Bell caused the delay in the ability for customers to have high-speed internet for years. If this happens, there could be unsuspecting outcomes that we could never anticipate.
- Joe: Ideally, yes, things should get a little cheaper if you’re buying across many different sites at once, similar to how programmatic display and video work now. The DSP will always collect their fees, but it’s negligible when you open the door to more inventory. The democratization of ad inventory is always a good thing in my eyes, since it’s going to make the smaller businesses have a better chance at scaling up.
- Rachel: Advertisers will pay less in an uncentralized market, since they won’t have to keep up with Google’s competitive and controlling prices.
- Nicole: As Google monopolized, it started buying all the tools needed, meaning advertisers paid more to have their ads shown. It should become cheaper, but another company (ie- Bing, Yahoo) may just raise their prices significantly in response.
Regulation in the tech and advertising industry seems inevitable in 2023, but we have yet to see where the winds will blow. If you’re interested in more information on the ever-changing landscape, reach out!