Startups Worry about Google Breakup: The Good and the Bad

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The power of Google is not unknown to anyone. Most of its products enjoy a good position in the market and an edge over the competitors. Google Chrome wins the competition when web browsers are compared based on usage percentage. Google Search also holds a major market share in terms of search advertising. Gmail is one of the most preferred email services, and YouTube is the largest site in the world for video content. The popularity of Google Maps is unrivaled, and more than 70% of mobile phones in the world use the Android OS by Google. This is enough to understand how Google is part and parcel of our lives. 

Governments and regulators are constantly trying to police and regulate Google so it doesn’t abuse its power. The three anti-trust investigations launched by the European union bear testimony to it. They have done this to investigate the violation of competition laws in the EU by Google. As a result, Google has faced formal charges related to its verticals- Google Shopping, Android OS, and AdSense. 

A Google breakup is also on the cards given the penalty of €8 billion for being proven guilty in AdSense and Android. The latest penalty that Google incurred was €1.49 billion in March 2019. Now, the US has also filed three anti-trust lawsuits against Google. The US Presidential elections also saw campaigns by Elizabeth Warren and Bernie Sanders that defined their agenda as calling for the breakup of Google and other big tech firms.

Below is what the antitrust lawsuits by the European Union are about:

  • Unfair shopping comparisons
  • Misusing Android to favor Google services
  • Suppressing competition in online advertising

The call for Google’s breakup has created ripples around the world. Startups worldwide are left wondering what it means for them and how it would impact the tech innovation ecosystem if the breakup is accomplished.

Product Integration

All Google products are well integrated and engage most internet users within the ecosystem. For instance, Google search will lead you to Google Flights, Analytics, YouTube, etc.

Once these bundled Google products are separated and allowed to interface with other products, new players will get a fair chance to compete. For instance, if you search for a song, you won’t get just YouTube results but other video platforms.

Think that you create video content to earn. However, the advertising and monetization by YouTube don’t work for you. In this case, YouTube doesn’t allow integration with third-party advertising and monetization platforms. This is a great compromise for you. This way, both competition, and innovation suffer. Such bundling exists in the case of other products too. Most competitors start as startups that challenge the monopoly.

Further, the huge volume of resources and buying capabilities that Google has enables it to develop new services super quickly and easily. This makes it quickly transition from being a tech enabler to a mighty competitor. 

Unlimited Resources and Huge Buying Power

Google’s parent company Alphabet Inc. is one of the tech giants in the world with the largest revenues. What this simply means is that Google is capable enough to outdo any company that it wants. It has been doing that ever since it was founded in 1998. Google has merged with, or acquired companies include web search engines, blogging platforms, maps and navigation providers, etc. They have either been integrated or clubbed with current Google products. It has been expanding its knowledge and scope of technology by acquiring startups.

According to Information Age, Google has acquired 30 artificial intelligence startups since 2009. These include Nest Labs, London-based DeepMind, and Onward. 30 is a huge number and thus led to the probe and concerns about the role of big tech in tech monopolization. 

Dil Pe Pathhar Rakh Ke, Aagar Google BreakUp Kar Liya

If Google breaks up, it will have a hard time acquiring rivals because the assets and buying power of individual companies such as YouTube are lower than the parent company.

This means that the startups can grow independently and stand a chance to become the next big tech. This chance is stifled when existing big tech companies see the new startup and its technology as a threat to their existing products. They then acquire the startup to use its technology to enhance their existing products or come up with new products. In many cases, the acquired technology may also get suppressed. Ultimately the gain is only to them.

However, the lawsuits haven’t affected Google’s revenue, and Google has also appealed against them. Startups that want to get acquired by Google need to worry about the imminent Google breakup as the US Congress debates it. But those startups that aim to emerge big, independently, may have a ball of a time.

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