How Monopolies Are Making Tech Worse

There were signs that the markets were finally starting to wake up to the bullshit of generative AI and kind of seeing that it wasn't making anyone money really, you know, the very obvious thing that some of us have been saying for quite some time. Anyway, though, it was remarkable, but not as remarkable as what happened in August fifth, when a federal judge delivered his ruling in an antitrust case filed against Google by the US Department of Justice.

In three hundred pages of dense legal text, Judge Amitt Meta confirmed an excruciating detail that lengthened the breadth of what all of us Gander's sort of new. The Google has a monopoly in search and online general text advertising. And that's a specific term of art. For many reasons, this ruling was a humiliating one for Google, not least because it showed the sordid, nasty little details of how it's maintained its market dominance and actively impeded any chance

of fair competition in the search market. Documents obtained through discovery revealed the incredible amounts of money that Google's been paying companies. They paid Samsung eight billion dollars over four years and Apple twenty billion dollars in twenty twenty two alone to remain the fault search engine on their devices, as well as Mozilla that makes the Firefox browser. They pay about half a billion dollars a year. To be clear,

this is one of the grizzlier puts. Mozilla is an organization I actually admire and they do a lot of cool stuff technologically, but it also kind of revealed how dependent they are on Google's money to stay afloat. Anyway, Judge Meta found that Google had violated the Sherman Act, a century old Dante trust legislation that, among other things, led to the breakup of Standard Oil in nineteen ten, as well as the breakup of AT and T in nineteen eighty two. This is a significant moment in Silicon

Valley history, and it's an existential threat to Google. While Google's initial success came thanks to it being actually better than the alternatives.

this ruling kind of proves that they can't. As I mentioned, the Sherman Act is roughly one hundred and thirty years old, and since its creation, it's unwoven some of the America's most intractable monopoly players, single handedly ruining the days of oil company CEOs and rail barons alike. It's robust, powerful, and it's a really good piece of legislation which in the decades since its creation, has been augmented with new

laws to cover the blind spots missed by the original authors. Problematically, the Reagan administration kind of detoothed it by refusing to actually enforce it. You heard a little of that from Matt Stoler's interview from last episode. But crucially, the Sherman Act has teeth. It contains provisions that allow judges to levy big fines, impose criminal penalties on CEOs or anyone else involved, and those penalties can be about a decade long.

They can also order companies to perform specific actions like divesting a business unit to remedy the situation. It's good shit, and it's exactly what we need. Well, I don't think that Sundar Pashai is going to prison, which would be very, very funny, mostly because hardly anyone ever actually gets prosecuted

for violating the shit German Act. I do think this ruling has the potential to kill Google, at least the current Google that we see today, this present form of this company that bankrolls its other entities using a crooked monopoly over the search market. And in this two part series, I'm going to take a look at how Google created its monopoly and how that monopoly allowed it to.

stopped working. So many problems in the modern tech industry are a result of a lack of competition, of monopolies and oligopolies that change the incentive of a company from selling you a service, you a customer who likes the service, and for it to extracting as much value from you as possible because you have nowhere else to go or leaving is difficult. Competition is deeply important. After all, if you're not worried about the competition, why would you worry

about your customers leaving? The incentives of the monopolist are inherently degenerative. Monopolists are not concerned about building better products. No, they're concerned about squeezing their captive audience as much as possible. The documents I covered back in April in The Man Who destroyed Google Search are a great example showing how

Prabagar Ragavan god I love saying his name. The former head of ads at Google demanded an increase in queries, meaning more searches rather than better results, as a means of increasing the amount of time one would spend on Google, which in turn would allow Google to show you more ads. However you feel about capitalism, a better economy is one where actual, real competition between businesses exists, one based on their ability to meet customers' needs. This stuff feels very obvious,

but it needs repeating. A company that fears the competition is one that will compete to win a customer's business and heart. And conversely, a company that has no real fear of losing customers because they've dominated the market with say a monopoly, or set up a healthy cartel of friendly, other bigger quote competitors where newcomers are effectively chased out. Yeah, they can make their products worse without fear that customers might do something annoying like choose another option. You see

a lot of it outside of tech two. Ticketmaster and its associated properties have dominated live events to the point that they control both on sale tickets and the resale market, leading to things like their horrifying Platinum Seats deal, where Ticketmaster reserves tickets so that it can sell them for a higher price to fans that couldn't buy them the normal way, which Ticketmaster also runs. And that's why the Department of Justice is suing them, and they suit them

in May for their monopoly. I wish the executives at Ticketmaster nothing but the worst. Four companies control eighty percent of US air travel after decades of acquisitions, allowing them to effectively charge whatever they want, and because there are so few of them, they'll pretty much keep their prices around the same amount. It's a fake competition and a fake competitive environment, and it's bad for customers and it's disgusting.

Now you may think, ah, I got really shitty internet speed, and whenever I call customer service, they don't seem to

pick up. And that's because most Americans have no real choice in internet providers thanks to monopolies run by companies like Comcast, Charter Central, Lincoln, Cox, who can charge what they want, perform a fairly mediocre standard, and effectively abandoned less profitable rural areas, discarding some to ultraslow DSL Internet that many of you probably have not used in decades, and one of my favorite ones are the real fuck nuts.

The scumbags are at Frontier Frontier Communications, which is partly owned by a private equity firm called Cerebrous Capital Management, which owns part of Albertson's, a grocery store that's currently in the midst of a battle with the FDC over a larger chain called Kroger's trying to buy them, with the FTC correctly arguing that it would eliminate competition and allow one firm to control grocery prices. Hey, that reminds

me of something. You remember when inflation was increasing prices everywhere. Yeah, if you'd like a journalist who was writing, actually, it's it's nothing to do with the companies. You're fucking wrong. You were wrong at the time, and you should not

write anymore. It's disgusting. What actually happened was the increasingly dwindling amount of competition in many consumer goods companies allowed them to all raise their prices at once, gouging customers in a way that should have had someone sent to jail rather than make nineteen million dollars for CEOs that were bleeding Americans dry. It's also much much easier for a tech company to establish a monopoly because they often do so nestled in their own platforms, making the monopolies

just a little bit harder to pull apart. Without a three hundred page legal document. One can easily say, if you own all the grocery stores in an area, that means you can control the price of groceries. That one's a bit more obvious, but it's a little harder to point at the problem with the tech industry because said monopolies are. They're pretty new and different, yet mostly come down to owning on some level both the customer and those selling to the customer. There are no alternatives.

And yet it's these conflicts of interest that the tech industry has made billions of dollars off of and I'd argue that they can't operate without metas monopoly over the advertising on both Instagram and Facebook, as well as its own black box algorithms allow it to make the products that you use every day so much worse just to show you more ads, and they can increase advertising prices whenever they want something they've done multiple times without anybody

really covering it. As a result, Meta is also the only source of truth for houses successful your advertising is, to the point that it tricked the entire media industry into pivoting to video using phony numbers. Hundreds of people

lost their jobs. Nothing happened to Meta. Meta, as with any digital advertising monopolist, can basically say whatever it wants to you, inflating stats where they need to as a means of getting more money out of you, which is why there is a seven billion dollar class action suit against the company for literally doing that. How has it taken this long to do anything? It drives me fucking anyway, again,

it's about incentives. If Meta has no competition, Meta does not have to act honestly or give detailed metrics about ad performance, because where else are you gonna go, You're gonna go to the other advertiser on Facebook. As Matt Stoler said in the last episode, as Mata isn't really losing business as their products decay, that seriously suggests they've got a monopoly over well the advertising on their own products. Now, I know some of you say I'm too easy on Apple,

but don't worry. I'm writing the ship Apple has, at least outside of Europe, with the European Commissioners ruled the company must allow third party app stores the monopoly over the iOS and associated app stores as well as the advertising connected to it, meaning that it can set the prices such as it's seventy thirty revenue split, what can be installed and house said apps and monetized, which is again why the Department of Justice has recently sued it

for antitrust violations. There is only one way to buy apps on your iPhone, and that's why the app store is so utterly swamped with micro transaction, pumped filth and random flashlight apps with invasive advertising and spyware and shit, there's not really quality control.

that's what customers want. Fuck you, it's what you allow. Apple allowed the micro transaction industry to grow on iOS and in doing so, effectively killed gaming on your phone. The reason that most games require some kind they're free to play, but they require some kind of micro transaction to really use them is because these games are insanely profitable. They're also deeply evil and exploitative. Yeah, Apple allows them because Apple makes so much money off of them, thirty

percent of each transaction. If there was a just world here, if we lived in a just society, if the App Store was a just society, Apple would have said, no, this is an evil kind of money making thing. There is no reason why this should exist. And I know I sound a bit radical on this, and I'm sure someone would disagree and say, oh, I like playing Warlords Battlemasters.

I don't care. Those games are evil. There's a reason why mobile gaming is so thin, and it's because of companies like Apple, and Matt Stoler said this on the last episode, and I really like this. When you have such a strong monopoly, you're effectively a political power, and things grow within the system, evil things when you use that monopoly and that power in a way that incentivizes them. Apple could and should have and the play Store to

an extent. Sure, but Apple really created this market, should have crushed microtransaction filled free to play games. They should have rate limited them, I don't know, or they should have just not allowed them to live. Companies like Ebony, for example, have got so rich over these games that require people to put hundreds of dollars to even compete. Hey, it's another competition thing, all right. I'll stop rating about this though. We'll get back to the advertising side of

the app store. And Apple, just to be clear, is the only advertising firm on the app Store, and that is a big problem. Apple has aggressively moved against tracking of iOS users, a good thing, by the way, yet they hold a complete monopoly on any advertisements on the app Store on their phones and any associated advertisement at all on the iPhone, and yeah, you just have to trust them, by the way, on the results there as

that's the only company you can advertise with. There's not really any other choice.

to back for Apple. But when you really sit and think about it, does it need to be like this? Could Apple not open this stuff up? There's not really a quality control thing. Eddie Q, if you're listening, come on the show shoot the shit with me, because I'd like to hear the justification. Steve Jobs was a horrible man at Deadbeat Dad, real piece of shit, but he at least realized that there was a level of quality you had to provide and the app store doesn't have it.

There is an App Store episode coming, By the way, I'm gonna really take it to task because I think that Apple's responsibility to society here is yet another thing they've defaulted on, just like Google's defaulted on search. And you know, this whole thing is it comes down to restrictions. And I don't think you should live restrict for lives.

Though restricted lives, I don't know, but if you want to free yourself and especially the money in your wallet, you should buy one of the following products.

curated by the company that made it. Yet the companies that make these things a huge constantly laying people off, though this isn't the case with Apple, and when given the chance, will take as many liberties as they can to squeezees many dollars out of every user. And when they don't have to compete, they get lazy, they get domesticated. They don't have to innovate or impress you. They just have to keep you there, and keeping you there can be as simple as it's really difficult to move, or

where else are you going to go? I keep using my iPhone because I genuinely like iOS, but I also know that if I message was an app rather than a thing only found in Apple products, I'd absolutely consider using another platform. I'm sure someone's going to message me about goddamn beeper or something like that. It's not a good ux. I don't like it, sorry, Casey. Anyway, when you have a marketplace entirely dominated by one company selling advertising on services it runs, you really have no idea

what you're buying. And this is when we get back to Google and specifically their AI powered Performance Max platform, a four year old black box advertising solution that covers all of Google's properties, letting you run one campaign across

every Google property. Man, how convenient, right? You just tell Google what you want, how much you want to spend, and roughly who you'd like to see it with what you're advertising a Google will magically tell you at the end how many people saw your ads and how much you owe Google for the pleasure. And no, you do not know where the ads ran, which is a problem That means that hundreds of large brands find themselves every year spending money on spammy and scammy websites that likely

never get them any real customers. And as an aside, by the way I'm hearing tell that there's a big problem in CPM advertising cost per mile, so impressions where I don't know the impressions might not be real people, they might be bots. Oh and you know what, I have to wonder if the end of this trial doesn't involve that data being shared with the rest of the companies in the industry and US finding out it's a much bigger problem. I have an advertising episode coming up

as well. This, by the way, all of this horrible monopolistic chicanery. This is what keeps the lights on for these companies. Google and Meta own both the products and the advertising services available on those products, and thus set

the terms of every part of the transaction. Because there's no other way to advertise on Google, Search, Facebook, or Instagram, there are entities competing for placement, but that competition is done on the terms and the platforms set by the platforms themselves, which in turn control how and when the ads are shown and how much you'll be charged for them. Crucially, these companies also control all the data involved. They are both the companies selling you the ad space and the

company auditing said ad space and the business. If you do not like Google as an advertising vendor on Google, or Meta as a partner to advertise with on Facebook, you are shit out of luck, both if you want to try an alternative and if you need them to

improve the product in question. This is the exact reason that Google is so nervous about its upcoming antitrust trial over its accused monopoly over digital advertising, because the government wants it to divest its ad management divination, which would in turn create an entirely different marketplace, one where it actually I don't know had to compete. I also don't believe that most of these companies can operate without their monopolies.

As I've said before, Facebook and Instagram are increasingly decaying products that make tens of billions of dollars a year because there's no competitor that can undercut or compete with metas advertising dollars, which make up ninety eight percent of their revenue. Meta made thirteen point four to six billion dollars in profit last quarter on thirty nine billion dollars in revenue, which is a direct result of it being able to manipul the platform to show more advertising and

increase the pricing of the advertising being shown. Metas users are trapped because Meta owns two of the largest social networks in the world three if you count Threads, though it doesn't show adds yet, and Metas advertisers need to be able to access the swards of people that the platform has. Everyone loses except for Meta. Of course, Meta does so very well, but we need to crush their monopoly.

And by the way, all of this goes for Google two and they made a profit of twenty three point six two billion dollars last quarter, but on revenues of eighty four point seventy four billion dollars. Do you really think that sixty one billion dollars in expenditures or losses is sustainable in the event that Google no longer owns a monopoly over its advertising space. All those costs aren't all associated with Google Search half of their revenue is, and how much of said revenue is tied in the

vagueness of the metrics it provides to its advertisers. Using these numbers, we see that Meta had expenditures of twins tent five point five four billion dollars over the last quarter. Again, can it sustain this level of spending without a monopoly on advertising on Facebook and Instagram? I don't think they can. And sure they could cut back on the tens of

billions of dollars they're putting into reality labs. That might help, but at some point they're going to run out of people to sell to and they definitely couldn't survive if they couldn't rig the dice how they have been. And while we might like the main revenue driving products and services from Apple like iPhones and MacBooks and Microsoft Xbox, Surface Office three sixty five and Windows, it's hard to say the same of Meta and Google, and I believe

both are very brittle. As a result, a lack of competition has turned Metascore products into skinner boxes that live only as a result of a combination of a black box advertising product where nobody knows what's actually happening, and a product that billions of people rely on and use for free, kind of like Google Search and its associated products like Gmail and Google Docs, which I got to admit I still really like Gmail and Google are so good.

I have had readers and listeners ask I don't know when they're going to fuck them up, and I'm scared. But these companies are not competing so much as they're holding the digital lives of their customers hostage and using that as a means to set the terms of how they're shown advertising that Google both controls the placement and pricing up. They're not worried about somebody using the other product. Facebook has really not got any competitors, let's be honest.

Gmail kind of does, but does it. It's just it's a big mess. But you know, if you're looking for an alternative product to something you already own, well, there's a great place to go to and it's whatever the next thing you hear is. And I'm sure they're very trustworthy and they would never ever embarrass me. And you should take your wallet and just fastball it at them so hard you require Tommy John's surgery. Please buy the thing or dimond, I don't know. I can't make you,

and we're back. As I was saying, Google doesn't have to worry about losing you to another search engine, nor does it worry about you leaving Gmail or Google Docs or any of its other products, because leaving is hard and advertisers simply do not have another choice. Google has such a large market share of so many markets and just one easy ad platform to use them, ah, I would be painful. And also where else do you find

this many customers? It doesn't even have to as Microsoft, Amazon, and Apple have had to diversify its business or add other revenue streams besides the big two of search and online advertising. Yes they make money on cloud, yes, yes, yes, but that's not going to replace the search revenue. Don't take the piss. I'd even go as far as to

say that Google can't diversify, at least culturally speaking. When it was a young company, Google had a policy where engineers could spend at least twenty percent of their time on projects that in rested them. This in turn led to the creation of beloved things like Google News, which was a passion project of Krishna Barat, and Gmail from Paul Boushett. And what's crazy about this is Google has kind of moved away from this model. I'll get to it in a second. It's extremely blood boiling in the

twenty tens. As Google entered this adolescence, it began to resemble sadly the kind of stodgy corporate behemoths it once for cutting perks and ending permissive workplace practices, and one, it seems, was this twenty percent time. Whether twenty percent time still exists is genuinely a hot debate in the Valley.

While Google insists it remains a policy, some Google employees claim it no longer exists, although it's effectively become one hundred and twenty percent time, meaning that you effectively have to do it on top of the rest of your work. In a report by Quarts from a few years ago, one engineer blamed the death of twenty percent time on stack ranking, where you fire the bottom percentile of workers

based on their performance every quarter or so. And if you want to know it, blaming for that idea is Jack fucking Welch, who I went into detail with about and just every time I think of Jack Welch, you need to listen to the Shareholder Supremacy Series. By the way, it just makes me so angry because you can see his influence everywhere. It makes me so no, no, anyway, Google's rock continued in twenty fifteen when they hired former

Morgan Stanley financial executive Ruth parat Is at CFO. Porat's arrival was celebrated by the markets, which added sixty billion dollars to Google's market capitalization as the share price went up, in part because they expected parat to bring Google to a level of fiscal discipline it sorely lacked, by which I mean that Google made over seventeen billion dollars a

year in profits, which was not enough for them. And as The Information reported in twenty twenty one, this involved killing products that from the outset didn't appear to be going anywhere. But you know, things take time. Products take time. Gmail took time. I don't think Gmail made much money for the first few years they were still working out

how to make money off of it. Sometimes you need to experiment, and I don't know innovate and man though, man, they love killing products though Google they claim to invest in innovation, but they really don't. And their reputation is so good that there is an entire website called killed

by Google that lists everything they've killed. While some of these products had a decent run, like Google Domains, which made it nine whole years, others were terminated in a matter of months, like game Builder, which was a beginner friendly tool for building multiplayer three D games that lasted wow, five whole months before Google got out the bolt Gun. The reason I bring this up is because it's very illustrative of Google's biggest threat that they have from antitrust action.

Their cultures moved away from innovating and creating things and experimenting to make things. And what sucks is they didn't have to do this. They've all they've been profitable for what decades now. But I think there's three reasons why they can't innovate anymore. First of all, employees aren't really provided the opportunity to work on promising ideas without fearing

that well they'll get fired for not doing their main job. Secondly, even if they manage to create something new and interesting, Google has shown a total lack of patience and they won't let things mature and grow over time, which kind of echoes a wider financial problem. You see it a lot in media and indeed podcasts, where podcasts are given what three months to sing for their supper, and if

they don't survive, they're killed. Same with TV shows. And guess what, it's something that tracks very precisely with the management consultants like sund Up A shy coming in. But the third thing, by the way, is the most obvious, and that's Google does not need to innovate, or at least they don't believe they need to. Google makes an absolute killing from search and advertising, So why would it bother? Why bother trying to make something interesting or unique, something

that might make oh ugh, disgusting. Only fifty or one hundred million dollars a year, h your big nasty monopolies gushing billions of dollars without you doing anything. You just mess with the customers. Every day more money comes out. Why would you possibly try and make a new business line?

hearing from you. I will protect your identities. They're furious. They're furious of what has been done and what is being done to a company that used to be synonymous with innovation and experimentation, and this is why I want to emphasize how dire things are for Google. Keeping the lights on in Mountain View. It isn't cheap, and I'd argue that Google is only capable of operating its current scale because of its bullshit dominance of search and ads.

If it's forced to, for example, divest its lucrative advertising business, which would require them cutting off pretty much the most profitable business of all time, or sharing data with competitors which would allow their competitors to compete, or jettisoning its Android or Chrome businesses, I'm just not sure that Google, both culturally and financially, is capable of competing. I don't think they are a competitive business in the way that

most business. Let me give you an example, my PR firm, right, or any real business. I have competitors. If I'm shit at my job, if it gets around, if people are saying I'm shit, if I do a bad job from tons of people, someone else can be hired in my place. The same thing happens from many small business owners and just regular people at jobs. If you're shit at your job, you get fired, and in turn, you would lose money.

Thus you try and do a good job so that you're kept at your job or your business keeps getting money so that the business keeps going. I know this sounds very obvious, but Google, on the other hand, has never really had to compete with anybody on quality, not of search results, not of ad product, nor have they had to compete with I don't know other advertisers. Searches are monopoly onto itself. They bullied and used mob like tactics and just swards of money to get people out,

but on the advertising side, they've never had competition. They built the marketplace, then they shut the fucking doors behind everyone, I guess in front of them.

it's profitable anymore? Let me put it simply. Google is not a company built for competition, and I believe it will collapse if it's ever forced to compete. I don't think this company is capable of the kind of adaptation or reinvention it would need. I think it's lost that ability, and it's lost it through tens of thousands of layoffs and being run by a guy whose only job is to make number go up. The vibrancy and culture that once existed in Google is dead and gone and isn't

coming back. And while Google is significantly more profitable, well, there's a chance to it ends up shattering and turning into several different Yahoos. Hey, that reminds me of something their current search head, Propa gard Ragavan, when they used to work.

to see them burn. If you're a big company and you do a good job, I had no problem with you none, But if you must exploit to get rich, fuck you. I'm coming for you every week, every goddamn day. Thank you, listeners, Thank you for listening to Better Offline.