Hey everyone! A note before we begin: I wrote this newsletter on Thursday, and then Friday night, news dropped that the US DOJ is preparing an antitrust investigation against Google. Wow-ee. I’m busy over the weekend so I’m not going to be able to update it till when you get it Sunday morning. So, this post may either look better and/or go out of date in real time over the next coming days! Happy reading, and if you come across any particularly good takes about this whole situation, please email them to me.
Which of these tech products is most deserving of antitrust scrutiny, and arguably the best candidate for forced divesture in a Big Tech Breakup?
A) Apple’s App Store
B) Amazon’s Third Party Marketplace
C) Facebook’s Algorithmic Feed
D) Google Chrome
The more I think about it, the more I think the answer could be Chrome.
This may seem like an odd choice, for many reasons! After all: 1) There are plenty of other web browsers. Users have choice: they can use Firefox; they can use Safari; they can even use good old IE if they want, or Microsoft’s new browser Edge, which you’ve totally heard of. 2) Chrome is built on open source software, and anyone (including Google’s competitors) can build their own browser on top of the Chromium open source engine. 3) Chrome is free. Users can’t be price gouged by a monopoly supplier if they’re paying nothing.
To the average non-tech user, web browsers seem like they’re more or less the same. Websites don’t usually look or act all that different depending on whether I open them in Chrome or in Safari. To a lay audience, web browsers give the appearance of being a simple gateway into the internet; what we see is 100% the content of the web pages, and the web browser is neutral. But that’s largely an illusion, for a couple reasons; the biggest being that there really isn’t much choice anymore.
For a brief period of a decade ago, there actually were multiple browsers with meaningful market share that competed with one another for users. But since the turn of the century, the Internet has been dominated by one of two browsers: Microsoft Internet Explorer in the 2000s, and Google Chrome in the 2010s. Internet Explorer at least had some existential competition: Netscape in the early days of its reign, and Firefox in the latter half. Chrome, on the other hand, pretty much stands alone. The only real competition on the western web seems to be Safari, largely on iPhone. Suggesting “Google Chrome has plenty of competition” rings just as hollow as “Google Search has plenty of competition”.
Share of web browser usage, 2008-2019. From StatCounter.
Now why does your web browser matter? Well, it matters a lot to web developers, first of all: they have to make choices about how they bu
ild websites and internet applications, what tools they’ll use to do so, and whether everything will work together. The web browser is the forum where they must function. If there’s one dominant forum, like IE or Chrome, then that’s it’s going to shape the agenda for how the web works. They’re the biggest voice in the room when it comes to setting standards, to specifying technical roadmaps, and just generally setting the course for how the internet functions.
The more technical you are, the more you probably care about this stuff. As Chris Beard of Mozilla put it last year: “This may sound melodramatic, but it’s not. The ‘browser engines’ - Chromium from Google and Gecko Quantum from Mozilla - are 'inside baseball' pieces of software that actually determine a great deal of what each of us can do online. They determine core capabilities such as which content we as consumers can see, how secure we are when we watch content, and how much control we have over what websites and services can do to us.”
Google has been working and lobbying for several years to standardize many of the internal plumbing components that make modern websites work, and the main standards body that matters here is the World Wide Web Consortium (W3C). As you can imagine, an entity like Google who controls the dominant web browser is incentivized to push for further consolidation and standardization of the Internet’s internet machinery in a way that technically cements its dominance. This matters a lot for anyone building on the web today, or wants to in the future.
It also matters a lot to users, although many of them may not really know how so. As your gateway to the Internet, your web browser plays a huge role in how you as a person interact with the outside world. The team at Chrome should be specifically commended for some of the great work they’ve done around making the internet more secure, for instance, with ubiquitous HTTPS and other initiatives that go completely unnoticed by the average user but have done a lot to clean up important security holes and keep things safe. Don’t get me wrong; Chrome has done lots of good things for the internet here.
Chrome is also Open Source. It’s built on top of an engine called Chromium, which anyone can download, play with, and even contribute modification suggestions to the source code. Other people have built their own custom browsers using the Chromium engine: both newcomers like Brave, long-time standards like Opera who’ve moved over, and even Microsoft’s Edge browser which is making the jump over to Chromium this year. (This isn’t unusual. Chrome was originally built on WebKit, which is Safari’s engine.)
Chrome is often held up as an example of “Strategic Openness”; a tactic that we’re seeing a lot recently from Google and Microsoft. Google’s core search advertising business is crucially dependent on a healthy, functional internet. Their business isn’t selling web browsers, but they sure care an awful lot about web browsers, and it makes sense for them to contribute data, code or other resources in their self-interest. Open source projects are a great way to do this while remaining in the good graces of the community, and on the right side of antitrust law.
Over the past several years, Google has gotten very good at releasing certain very large products and code bases into the public domain, and then benefiting overwhelmingly from their “openness”: both in terms of public contributions from the developer community, and also in terms of adoption by the mass market of a freely distributed and well-supported product. Android is the biggest example, but so is Chrome, along with more technical code bases like Kubernetes (software orchestration tools) or TensorFlow (machine learning) that are getting broadly adopted by the software development community.
They’ve also gotten very good at maintaining control.
“Nice software you’ve got there, shame if it didn’t work"
Chrome’s market dominance in recent years is a great example of how Google has used its scale and influence to draw the back-end plumbing of the internet more tightly under its control, all under the banner of “it’s all open source; how could we be bad guys?” It’s not like we haven’t seen this playbook before: an Android phone may be running open source Linux (cool!), but without Google Services and the Google Play Store, it’s a brick. They’ve mastered separation of the strategic openness of Android with the accompanying strategic closed-ness of everything that runs on it and makes it actually worth something.
The biggest fight here recently is over standardizing the rules around DRM: the Digital Rights Management framework of laws and restrictions that came into being through the Digital Millennium Copyright Act and govern the rules around digital access and permission. (The free software community, as you might guess, absolutely hates DRM. I’ll probably write another Snippets issue soon about this.) Google has done something sneaky here: by successfully lobbying for DRM standards in web browsers across the whole internet, Google has made it so that anyone can build or modify their own Chrome-based browser as they want to, just like before. But in order for it to be able to play video (a pretty big prerequisite of the modern internet), they have to license a proprietary DRM plugin from Google called Widevine.
This isn’t the first time Google has used this tactic, and it’s a good one: “Oh, nice open source project you’ve got there! You’re free to do anything you want with it, which obviously makes us the progressive good guys of the Free Internet. However, if you want it to actually work in any real-world conditions, then you’ll need to license our proprietary stuff and play by our very particular rules.”
Unsurprisingly, web developers and other internet-builders are rebelling against this. But unfortunately for them, Google owns the audience. Their stranglehold over the majority of the world’s web traffic, most of whom doesn’t know or care about any of these issues, effectively means that Google is able to make strategic decisions about how web browsing works in ways that serve its own empire, all while “outsourcing” the actual implementation of these decisions to open source projects and third party builders that have no choice but to comply with Google’s edict.
It’s a brilliant move to evade any kind of antitrust scrutiny: their near-total monopoly over web browsing (our interface to an enormous amount of daily life) is cleverly masked by the compelling logic that “if a project is open source or third-party, it can’t be a part of an evil monopoly!” And if users aren’t aware or can’t articulate how they’re being harmed, well, it’s going to be hard to mount an antitrust case that rests on consumer harm. And American Antitrust law, unlike in Europe, is pretty much entirely based around consumer protection: if you can’t clearly demonstrate how consumers are being harmed, you’re probably in the clear.
No one likes ads, though
However! A crack may have just formed in their facade: Chrome’s recent decision to hamstring Ad-blocking for its users. Unlike DRM management or video codec plugins, which few users have ever heard of or care about, Ad-blocking is something that regular users are actually familiar with, and can intuitively grasp: “I don’t like ads, and (for the savvier ones) I don’t like malware. If I want to install an Ad-blocker on my open-source browser, then I ought to be able to do so.” Free software, after all, means freedom for the user to use it the way they want to. This certainly falls under that category! But Google, after having allowed Ad-blocking plugins for years, appears to be shifting course. And their primary identity as the world’s largest digital advertising company hasn’t escaped anybody’s notice.
Now, there may be many different reasons for Google to proceed with their controversial decision to clamp down on ad-blocking; some of which are more legitimate than others. But in retrospect, if we look back from the vantage point of someone in the future, this decision may be come to be seen as a critical misstep by Google, because it exposes two crucial and overlapping things:
Chrome’s reach gives Google the power to influence how all web browsing works, far beyond what most people realize.
Using that power to clamp down on ad-blocking (which consumers explicitly like) when your primary business is serving ads sure smells like the right ingredients for an antitrust complaint that might actually get somewhere.
Ghostery, an adblocking and user privacy company that builds on the Chome ecosystem, certainly feels that way. As they wrote in January, following Google’s adblocking move: “This would basically mean that Google is destroying ad blocking and privacy protection as we know it. They pretend to do this for the sake of privacy and browser performance, however in reality, users would be left with only very limited ways to prevent third parties from intercepting their surfing behaviour or to get rid of unwanted content. Whether Google odes this to protect their advertising business or simply to force its own rules on everybody else, it would be nothing less than another case of misuse of its market-dominating position.”
Obviously there’s a certain amount of hyperbole here that is entirely reasonable, seeing as Ghostery is real mad about this (and appropriately so). But what’s completely correct here is that Chrome is, quite explicitly, blocking users’ freedom to use their web browser the way they would expect with a piece of open source software; and they’re doing so in a way that sure feels all too coincidentally consistent with Google’s business model of serving ads. This is pretty distinct from other main sources of “break-em-up” angst towards big tech.
We may not like algorithmic feeds because they rot our brains and foster extremism; we may not like Amazon’s third party marketplace because it’s hard to compete with Amazon when they know all your secrets; we may not like the iOS ecosystem lock-in because we’re just really upset about how many dongles we’ve had to buy and we’re projecting. But in all of these cases it’s pretty hard to articulate what is the deliberate, coercive behaviour on the part of the company that specifically hurts the user. Not here though. So we’ll see what happens, but I think there’s a non-zero chance Google may come to rue this seemly small decision as a crack that let in water in precisely the wrong place.
Just to take the wide view, though, think about how funny but oddly satisfying it would be for Google’s Achilles heel to turn out to be… its web browser? I’ll bet that if you surveyed 100 people off the street and asked them “If you were tasked with breaking up Google, which product of theirs would you go after first?” I’d be surprised if more than one said Chrome. (I’d bet that a full half of them wouldn’t even think to say Chrome if you asked them to list Google’s products with over a billion users.) But Chrome has quietly reshaped a significant chunk of how the web works, it’s about as close as we really come to a genuine monopoly in tech, and it may not be so out of reach from Google’s search advertising denizens as we think.
Perhaps the best way to gauge Google’s intentions with Chrome will be to see what protests and arguments they raise if such a possibility gets seriously proposed. "If Chrome is truly as Open-Source as you all claim it to be, why should it matter if it gets divested?” Could Google be making these recent decisions purely out of concern for their users well-being? Maybe! But appearances matter, and these appearances aren’t great - especially among people who never otherwise would've given this issue second thought.
Permalink to this post is here:
In this week’s links:
It’s been a rough week for global agriculture, especially in North America. In the US, extremely bad weather in the midwest has effectively cancelled the bulk of the corn planting season; famers can’t get their crops in the ground, and a crucial window is closing for them to do so. You can follow the hashtag #noplant19 on Twitter as it happens.
Joe Beef and the excesses of restaurant culture | Hannah Goldfield, The New Yorker: Joe Beef is one of Montreal’s most legendary restaurants, and its next-door sister restaurant Liverpool House is one of my personal favourites. Its owners, Dave McMillan and Fred Morin, were legendary restauranteurs and hosts in Montreal; the rare kind that burst beyond the culinary scene and into general popular culture. During the time I was living there (2007-2016) they were genuine cultural heroes. They’re the rare kind of hosts who simultaneously could welcome Barack Obama for his quasi-State Dinner with Justin Trudeau, but also host Anthony Bourdain in a booze-filled 72 hour binge with when he filmed Parts Unknown in Montreal. It’s got range. This excellent piece in the New Yorker tells the melancholy, but hopeful story of what happened when the two of them went sober: a very difficult thing to do in restaurant culture, and in Montreal generally.
The extended internet universe | Breaking Smart A fun romp from Venkatesh Rao exploring all the Four Quadrants of the extended Internet universe, including a new term I like a lot, the “cozy web”.
Some of you may have seen this new study which recently came out by Marotta et al., walking through whether or not behavioural ads that follow people around the internet are actually generating any kind of real ROI for advertisers. I don’t understand this stuff very well, but fortunately, Antonio García Martínez (the Chaos Monkeys guy) does, and he put together a very helpful tweetstorm that you should consult if you too are an ad amateur like me.
Unsafe Notes | Fred Wilson: Fred Wilson of Union Square Ventures has always been pretty negative on SAFE notes, and for good reasons: deferring the dilution conversation is dangerous, and the point that it’s always better to have the conversation up front rather than later (even if it costs you an extra $5-10k early in the life cycle of your startup) is one I sympathize with. Come for the article, stay for the interesting discussion in the comments.
Blood stem cells produced in vast quantities in the lab; the secret ingredient was glue | David Cyranoski, Nature Researchers at the Princess Margaret Cancer Centre stumble across an interesting breakthrough in producing blood cells out of mouse hematopoietic stem cells - and the answer may have been a component of glue. If we can replicate it in humans, it has pretty big implications for anyone with leukemia or other blood-borne illnesses. Full paper is here.
Finally, I’ve thrilled to have received so many responses to last week’s issue on housing affordability. (Also quite pleased to see an approximately ~50/50 split between people who generally agreed, and people who didn’t. Perfect!) I’ve included a few comments and emails I received that I thought were particularly interesting.
Reader Eugene Lim helpfully added that there is one way that this cycle could break, which is a housing crash. (While I agree, the 2008 financial crisis, which certainly looked and felt like a housing crash to a lot of people, did not seem to have had such a long-term consequence!):
"I’m Singaporean, living in London, and in both those places there’s been an ongoing belief (almost a mantra) that property is the way to go, everyone must have a home etc and as a result, property prices (naturally helped – as you point out – by a steadily falling cost of mortgage credit over the past 30 years or so) have been steadily rising. The response, similar to what you’ve noticed, is more and more construction, yet the new build properties come up and lo and behold, they are equally if not more expensive than existing housing stock.
The harsh reality that I think no one really wants to articulate is that everyone believes blindly that property can only go up, forgetting that there were probably generations in the past where property values did come down. And as long as that belief is perpetuated – especially by property agents who are terribly under-qualified to sell highly-leveraged products to retail clients by tapping on their emotional desire for a “dream home” – then the problem will continue: build more in London, SF, LA, NYC, Singapore, HK, and investors with their spare cash will pop in with leverage and buy it all up. The worst thing – some of these “investors” aren’t even greedy speculators, they’re normal people with average jobs who genuinely believe that a property is the best savings account for their children, even though by all measures – liquidity, fungibility, ease of transaction, fractional withdrawals – property is a terrible savings account.
Basically everyone has an anchored returns expectation on real estate that’s too high, but no one adjusts that return expectation even as prices go up, simply because in reality no one has a clue what “fair value” is. It’s extremely emotional – I ran some simple regressions on the UK historical property price data a couple of months back to try and isolate the “equity” vs “fixed income” components of the property price and at the mean property asking price, a piece of residential real estate is about 70% equity and 30% fixed income (at risk of gross oversimplification of course!). Imagine a stock that everyone believes only goes up – issuing more stock via rights issues only makes it go up more. Until it doesn’t.
So maybe the only way to break the myth is for everyone to suffer a protracted housing price crunch. The suffering that will cause would be immense but I personally can’t think of any way you change the minds of the masses (investors and normal households alike) on something they’ve been taught to believe for generations."
Meanwhile, Charles Rubenfeld on Twitter summed it up this way: “The simple model I have is the professional wage premium you get in a city will be arbed away by the land prices. Building more housing may not change this arbitrage (prices may stay the same) but it will give more people access to the wage premium.”
There were also lots of comments on Hacker News, apparently, but I don’t read Hacker News comments because I’m not a masochist.
Have a great week,