Was this move unexpected? Of course not.
We have all been waiting for it for years. In fact, I enjoyed watching a video posted by legendary investment banker (and comedian) Terry Kawaja of LUMA Partners earlier this morning on social media of a talk that he gave at a Google event 10 years ago. He led off with jokes about the likely presence of DOJ folks in the back of the room -- since every major digital publisher and advertiser was there, and inevitably tied up with its DoubleClick and other owned and controlled ad-tech platforms.
Most expect that the desired outcome of this week’s lawsuit will be the separation of Google’s ad-tech businesses -- DoubleClick for publishers, Google Ad Exchange marketplace, and Google Ad Manager and Google DB 360 digital ad-buying platforms -- so that they can’t cross-subsidize each other and be used in tandem to force advertisers and/or publishers to adopt Google tools and potentially pay anticompetitive rates.
Hanging over everything is the enormous market power of Google’s parent company’s ownership of so many other businesses that could either impact or cross-subsidize its ad-tech businesses, including its offerings in streaming video (YouTube), storage (Google Cloud), email (Gmail), content (Google News), navigation (Waymo), insights (Google Analytics) and many others.
Will an ad-tech breakup actually happen? I don’t know.
When the DOJ went after Microsoft in a similar fashion back in 2001, hoping to force it to break up its personal computer software, business enterprise software and consumer gaming businesses, it won the suit but ended up settling with Microsoft to just change some of its business practices, including unbundling its Explorer Internet browser, which was being bundled in its Windows software.
My sense then was that Microsoft and its shareholders would have been better off with unbundling. Each could have grown differently -- likely faster – and probably could have each been stronger alone than together. Given the fact that Microsoft’s stock price and performance was pretty poor for a long time until Satya Nadella finally took over as CEO in 2014, that sense probably was right.
I think the same for Alphabet today. Sure, there is some strong synergy between its ad tech and other businesses. And its dominant search and YouTube businesses are big parts of that. However, I am convinced that the ad-tech assets are held back as much or more as they are benefited, and that they would be better as a standalone company singularly focused on serving its advertising and publisher customers, separated from all of the internal and sometimes conflicting and compromising Google and Alphabet pressures.
So, if I were Alphabet, I would take a page out of Br'er Rabbit, and not mind so much if I had to break up some of my advertising technology businesses
What do you think?