Google proposes moving ad business to Alphabet to keep regulators at bay

https://arstechnica.com/gadgets/2022/07/google-proposes-moving-ad-business-to-alphabet-to-keep-regulators-at-bay/

by pseudolus • 4 years ago

105 58 4 years ago

arstechnica.com

seydor• 4 years ago

And what will be google 's business?

BbzzbB• 4 years ago

Funnelling customers to Alphabet's advertisers.

etempleton• 4 years ago

I was going to say, isn't 90 percent(ish) of Google's revenue advertising and 80 percent(ish) of that search advertising? What is Google's business if not to sell ads?

Zondartul• 4 years ago

Collecting and selling user data is a business.

corrral• 4 years ago

License some kind of IP to Alphabet for a rate that happens to be exactly what their operating expenses are?

impulser_• 4 years ago

They would split the exchange side of their ad business from platform side, which is Google.

That's the whole reason they are being sued because they run both sides of the ad marketplace.

Google's business would be the same. Sell ad space.

strongpigeon3• 4 years ago

To add to that, the exchange is specifically for the display network, so websites and app that aren't Google properties.

This part of Google, while still worth a couple billions in revenue, is an increasingly smaller part of the whole.

hassanahmad• 4 years ago

There should be some sort of rules that consider subsidiaries to be part of the parent company for regulatory purposes.

xhkkffbf• 4 years ago

Absolutely. This doesn't seem like it would be any real change.

charcircuit• 4 years ago

So have a completely separate company and then make a deal with that company to find them and give them office space in Google's office and give them access to their intranet.

happyopossum• 4 years ago

There are. There are also rules about how subsidiaries can and can't cooperate, self-deal, and collude under various circumstances.

blibble2• 4 years ago

somehow I think they'll be able to see through that one

hackernewds• 4 years ago

and yet they can't do anything about it. that's the gambit

blibble2• 4 years ago

countries are literally writing legislation to explicitly target google

they are more than capable of modifying it to come up with whatever corporate laundering they can invent

nojito• 4 years ago

more info at the WSJ https://www.wsj.com/articles/justice-department-ramps-up-goo...

telotortium• 4 years ago

https://archive.ph/L9NwY

outside1234• 4 years ago

do they really think we are that stupid?

rdudek• 4 years ago

Us? No. But regulators probably...

amelius2• 4 years ago

Will they keep the data siloed?

lokar• 4 years ago

Depending on the "bet" (alphabet company) there can be little to zero separation between them and Google (full access to internal systems, etc) or it can be run as a fully separate company with no special access. This will depend on the details.

amelius2• 4 years ago

I mean, what will regulators think if Google Search and Alphabet share user data, but not responsibilities?

Willish422• 4 years ago

Am I missing something here? Ars Technica article from OP is dated 7/8/2022 but the referenced source is from February 2020

The US Justice Department is gearing up for a possible antitrust lawsuit against Google's ad business, and a new report from The Wall Street Journal [1] outlines a "concession" Google is proposing in response to the investigation. Google might split up some of its ad business and move it to Google's parent company, Alphabet.

Even the archive link [2] shows this is from over two years ago from when archives were taken

[1] https://www.wsj.com/articles/justice-department-ramps-up-goo... [2] https://archive.ph/L9NwY

strongpigeon3• 4 years ago

Indeed, I can't seem to find the crucial part from Ars in the WSJ article, namely the : "As part of one offer, Google has proposed splitting parts of its business that auctions and places ads on websites and apps into a separate company under the Alphabet umbrella, some of the people said. That entity could potentially be valued at tens of billions of dollars, depending on what assets it contained."

jefftk2• 4 years ago

Ars accidently linked the wrong WSJ article. They meant to link today's https://www.wsj.com/articles/google-offers-concessions-to-fe...

As part of one offer, Google has proposed splitting parts of its business that auctions and places ads on websites and apps into a separate company under the Alphabet umbrella

Willish422• 4 years ago

aha! Thank you for figuring this out and taking the time to reply

AnotherTechie2• 4 years ago

I'm genuinely shocked at the lack of quality discussion here. Did anyone actually try reading the article? The concept here is not to obfuscate things but rather to de-couple Google's search engine and Google's Adwords products.

Most opinion in this thread is "lol alphabet is google" which is apparent to everyone. Of course they are functionally the same entity, but someone whose job depends on it has proposed this as a solution. Are we really to assume that they just woke up and decided to turn their brain off? There's clearly going to be some actual change that attempts to satisfy regulators here.

We can look at history and possibly speculate how this looks, and we can also identify a few things.

1. Google is a search engine

2. Google the company sells AdWords as a product to advertisers.

3. Google benefits tremendously from owning both of these things.

Here's my take: Google wants to decouple their search and ads teams, move ads to a separate entity that works as an advertising marketplace, generate revenue there. Search will now sell its advertising space, likely in a way that can also be taxed, to the highest bidder rather than itself.

I also predict that google will want to pressure other platforms, which will enable them to break into other markets. META is the second largest advertiser online, but they do all of their advertising on two platforms, Instagram and Facebook. If google can push for the forced decoupling, then it will likely also apply to META. They can then swing their AdsWords product on top of FB/IG and start to eat back some of the traffic that they have been losing in recent years[1]. It's a bit of a gamble, but Google is betting on their AdWords software to be stronger, and a lot of the history would agree.

Also, now that I think about it, this has pretty big implications for user data sharing cross platform. Now you have to formalize the way that personal information is exchanged for the purpose of advertising.

[1] https://www.statista.com/statistics/242549/digital-ad-market...

blfr• 4 years ago

Yeah, a Chinese wall like that worked pretty wall for journalism back when it was a profitable endeavor. Google certainly is.

dylan604• 4 years ago

yes, because no Alphabet employee will ever talk to a Googs employee where one happens to work in ads and the other in search. Those conversations will never happen to discuss things that could work for the betterment of either/both.

do you really think that Alphabet would do anything to lower their profits by making ads less viable and search less ad driven?

marricks• 4 years ago

Corporations have so much more slack than people. If got caught serially robbing banks I don’t think the justice department would accept my personal 5 point plan to cut down on heists.

I think people are understandable my skeptical that a megacorp with a known history of anticompetitive behavior will propose a solution that is effective at stopping its only monopoly.

jefftk2• 4 years ago

It's very rare for corporations to do things as clearly illegal as robbing banks would be. Instead, this sort of dispute with regulators is typically around borderline activities. Since the final word on what is allowed or not in any given situation belongs to the regulator, it's common for companies to propose various solutions to see if a regulator would find them sufficient.

(Disclosure: I used to work for Google, in the part that this is talking about separating)

strongpigeon3• 4 years ago

[...] but rather to de-couple Google's search engine and Google's Adwords products.

I don't think this is what this is about. From what I understand, this is specifically about Google Ad Exchange (which is for display ads not on Google properties).

The problem that a lot of people have is that Google both runs the auction for many ad networks, and puts bids in the auction as part of Google Display Network. The accusations are that Google's Ad Exchange favors Google Display Network.

The proposal is about spinning the Ad Exchange as another Alphabet company.

not2b• 4 years ago

We get it, but many think that this is an attempt to appear to decouple the search engine and the Adwords projects. People on both sides of the divide will be partly compensated with stock in the parent company, so everyone's financial incentives will still be to maximize profit for Google plus Alphabet/AdWords. So the "independent" company may still favor Google products.

But I suppose putting AdWords in a separate division might make it easier for antitrust regulators (US, EU or both) to pressure the company into a true spinoff (into a truly independent company).

deelowe• 4 years ago

Did you read the article? This isn’t about not maximizing alphabets profits. The issue is with how the current add exchange favors Google’s web products despite not all ads being ran on google. This solution moves the ad exchange to its own business entity which would decouple it from .com

spaceman_2020• 4 years ago

You have too much faith in companies that set up elaborate offshore entities in tax havens just to escape paying any taxes in the countries they actually operate out of.

Ever wonder why all these honest and upstanding companies seem to have their HQs in Ireland of all places?

s1artibartfast5• 4 years ago

You say that like it is a bad thing?

They follow the law. If you find fault with the law fix it.

If you don't like tax deductions, don't begrudge people for taking them. Remove them.

danaris• 4 years ago

Are we really to assume that they just woke up and decided to turn their brain off? There's clearly going to be some actual change that attempts to satisfy regulators here.

Though I don't claim to fully understand what the genuine legal ramifications would be (partly because the proposal, as described in the Ars article, is quite vague), saying that the only reasons someone would propose this would be if it's Totally Obviously Fine or if they need their heads examining seems quite naïve.

First of all, we've seen plenty of instances of fairly high-profile companies trying to get around regulations in ways that are (effectively) laughed out of the room by regulators.

We've also seem similar instances where we the tech-savvy (and largely non-lawyer) public would laugh them out of the room, but the regulators took them 100% seriously and didn't question their (to us) obvious deception at all.

Given how vague the article is, this could even be an attempt to float this idea through the press to see how people and the DoJ react before making the proposal formally.

I think in short, the problem is that decoupling anything from Google by putting it under Alphabet doesn't pass the sniff test, but if you're looking at things from a super pedantic perspective, you could think it might fly to a court.

postalrat• 4 years ago

Are you proposing they change "Google Chrome" to "Alphabet Chrome"?

soraminazuki• 4 years ago

Did anyone actually try reading the article? The concept here is not to obfuscate things but rather to de-couple Google's search engine and Google's Adwords products.

But the entire latter half of the article is dedicated to explaining how the proposed change is superficial and doesn't address the regulator's concerns. It asks, "Is there a difference between 'Google' and 'Alphabet?'" and the article's conclusion is basically a no.

zaptheimpaler2• 4 years ago

Because we have seen decades of organizations lying and bullshitting, they have no credibility whatsoever. There is already a lawsuit against them for rigging auctions[1], and a DoJ antitrust case [2] against them.

As long as both continue to be owned by the same parent organization, there is no trusting that they will not collude when the stakes are high enough.

[1] https://www.benzinga.com/government/20/12/18828093/google-fa...'

[2] https://www.benzinga.com/analyst-ratings/analyst-color/20/10...

zaptheimpaler2• 4 years ago

Heck there is even a lawsuit of independent companies colluding to suppress wages in 2014 that [3]. One of these companies was.. Google. Even after they lost the case, the average payout was around $3800 for a class made up mostly of software engineers.

[3] https://www.seattletimes.com/business/judge-rejects-3245m-se...

1vuio0pswjnm7• 4 years ago

Both enities will be under common owenership. Does the search business share data with the ads business. If yes, I fail to see how this levels the playing field.

Please explain.

Google wants to make concessions before they have even been sued. DOJ has yet to file a complaint. This is a defendant with "limitless" resources to defend itself against meritless claims. To me, this suggests culpability.

mhoad• 4 years ago

Add this topic to the ever growing list of topics that are just blind faith nonsense every time they come up. See also:

- Apple

- Elon Musk

- Electron

- React

- Intelligence agencies

- Cryptocurrency

- Literally anything outside of tech where you just have a huge swath of people confidently expressing what they consider to be fundamental truths without actually understanding the basics of the topic.

gfxgirl3• 4 years ago

there are at least two if not 3 or more ad divisions at google

1) ads on search results

2) visual ads (banner ads), used to be double-click

3) ads on Android apps

personally I want the search ads. If I search for plummer or doctor or even database or jeans or apple pie, I want to see ads

I don't think search and ads based on the query should be decoupled. That will be arguably worse for me, not better

banner ads and mobile ads can die in a fire

paraph1n• 4 years ago

Why do you want to see ads in your search results? Wouldn't you rather see results based on quality rather than who can pay the most?

judge2020• 4 years ago

Would you be fine to pay for a search engine that does that, then? Without a direct payment or ads, that search wouldn’t be possible.

Imagine how many people primarily use Desktop YouTube and have been watching since 2006, but have always had an ad blocker and have never seen a single video ad. There’s probably actual hundreds of millions there that have been ‘lost’ over the decade. It’s basically profiteering with the only difference being that Google doesn’t care because allowing ad-blockers increases their market dominance.

gfxgirl3• 4 years ago

First off, Google already tries to do show quality and the clearly mark the ads so you can skip them and go to non-ads

Second, even a search engine that doesn't take ads does not know that the content it's scanning aren't ads. So you'll still see the ads, it will just be more hidden. 9 out of 10 product review sites are all effectively paid ads AFAICT.

Third, when I search for a product I want to know what's available. Companies tell you what's available via ads. Maybe it's because I'm old but before the internet we all used to buy and subscribe to magazines. We did it not just for the articles but also for the ads, to see what was available. BYTE (https://archive.org/details/byte-magazine) , Compute! (https://archive.org/details/compute-magazine), Creative Computing (https://archive.org/details/creativecomputing), Wired (https://archive.org/details/eu_Wired-1995-12_OCR), PC Magazine (https://archive.org/details/pc_magazine). They were all full of ads and we bought them partly for the ads. Same with gaming magazines.

I don't have a problem with ads, I only have a problem with tracking. Showing an add based on my immediate search or based on the content of the page the ad is one doesn't bother me. (although intrusive ads do bother me)

Google proposes moving ad business to Alphabet to keep regulators at bay

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