Google is splitting apart. The European Union has talked about splitting Google apart. Are the two related? Is Google trying to cleverly preempt whatever the Europeans decide to do?
Nope. At least not according to four legal experts who spoke to Business Insider.
The main indication?
As Iowa Law professor and European antitrust expert Herbert Hovenkamp told us, “The division lines are in the wrong place.”
Under the surprise Google plan announced yesterday, the core businesses of Google — search, ads, YouTube, Android, and the like — will become a subsidiary (called Google) of a larger entity called Alphabet. That larger entity will also contain more speculative businesses like Nest (smart home devices) and Google X (incubation and research labs), and Google’s investment arms.
So what about the EU?
Last November, the European parliament passed a non-binding vote that recommended splitting Google’s search engine from the rest of its business if necessary. (The resolution never mentioned Google by name, but it was clear who the legislators were targeting.) In April, European antitrust authorities issued a formal statement saying that Google had used its search results to favour its own shopping sites, but didn’t discuss possible remedies like a split-up (that part of the case would come much later).
In other words, all the parts of Google that Europe is worried about would still be contained in the new organisation called “Google.” And it wouldn’t necessarily be any easier to split out search (for instance) and put it into Alphabet now than it was before.
“The core problem, from the EU’s perspective, is that Google enters into ‘vertical search’ markets while at the same time running the dominant search platform,” said Keith Hylton, a professor of law at Boston University and contributor to Antitrust Law Journal. “The new structure doesn’t address this question at all.”
Michael Carrier, a professor of law at Rutgers who specialises in antitrust law, agrees that the EU won’t be fooled — and that any order to split Google up would still be immensely disruptive: “While there is now a different overarching name on top, the activity is the same and [regulators] can see that. And it still would be very disruptive to the company if search were splintered from (even a slimmed-down) Google.”
Ben Edelman, a Harvard Business School professor who has done extensive research into Google’s practices, agreed: “Some kinds of splits would address the EU’s competition concerns. For example, if Google Shopping were an entirely separate company, separately owned and managed, Google wouldn’t have an incentive to favour Google Shopping in search results. Same for Google Local, Maps, YouTube, and on down the line. But Alphabet doesn’t promise to do anything quite like this.”