When Average Joe’s beat Globo Gym in the championship match to shock the dodgeball world, Cotton McKnight uttered the timeless phrase on ESPN 8 The Ocho!, “Do you believe in unlikelihoods?”

You don’t remember that? OK. How about when the Americans beat the Russians in that pre-cursor to the gold-medal game at the Olympics in 1980 and Al Michaels said, “Do you believe in miracles?”

Do you believe in justice?

For years, a rag-tag fleet of ad techies has fought Google’s ad tyranny. With the help of D.C. business-busters, last night, they took down their goliath. It’s somehow poetic that I searched Google to find the story on Yahoo!.

To quote Cotton, “Ladies and gentlemen, I have been to the Great Wall of China, I have seen the Pyramids of Egypt, I’ve even witnessed a grown man satisfy a camel. But never in all my years as a sportscaster have I witnessed something as improbable, as impossible, as what we’ve witnessed here today!” I’ve never seen such giddiness in my LinkedIn and X timelines.

Topplers are in a kissing-random-people-in-the-streets-on-VE-Day level of euphoria. They’re about to carve up the known ad world.

To an outsider like me, the war was over. But, nope. Far from it. “It’s quite disappointing to not see a call for disgorgement of YouTube and Waymo in the DOJ’s filing. It sends the message to the market that the largest players are free to parlay their ill-gotten gains into the monopolization of other markets.”

This was only VG Day. A cataclysmic ad war still wages. V-A day, so to speak, is still a ways down the road.

I went to bed thinking about war. Maybe that’s why I woke up thinking about Georges Clemenceau the Prime Minster of France during the tail end of World War I and his quote, “generals always prepare to fight the last war, especially if they won it”.

Fight the last war

The Great War introduced new tech and new strategies. It took a staid landscape dotted with small farms and naïve peoples and left a postapocalyptic hellscape. The winners redrew the maps. Empires were ripped apart. New countries were created.

Ditto The Great Ad War. New ad tech and new ad strategies obliterated small businesses; made us more worldly to our privacy, misinformation, and media biases; and winners will dismantle Google and create or elevate a new field of ad players.

We can say it out loud now, “Google doesn’t just dominate search, they monopolize (with) it.” The part no one says comes after, “…on the open web.”

The dominion of Google are the domains of the open web. The realm of sites and apps you go to because Google escorted you there when you searched for something or the other. You know them because they – at best – they show you ads for SUVs you’d never buy among a trash heap of grainy, low-quality ads for products you’ve never heard of that are only barely evolved from homemade 1980s cable access promos.

Today’s media isn’t alive where Google lives. It’s in wall gardens like Facebook and Instagram and TikTok. And Google isn’t welcomed or needed there. 23% of TikTok users search for something within thirty seconds of opening the app. That stat comes from Alek Asaduryan via e-Marketer. TikTok gets those search ad dollars, not Google. And, even that’s chump change. In 2018, Amazon had 13% of ad revenue from search. Today, they’re at 24%. And growing. TikTok, all that Facebook stuff, along with Microsoft, Walmart, Netflix, and you can see from your own search history why the “Others” category becomes significant.

For the first time since the exclamation mark in Yahoo! meant something, Google’s share of revenue from search will fall below 50% this year. As recently as 2018, Google had 78% of search ad revenue

unConglomerating

Today, we think of CBS as a TV network. But, in 1972, CBS was a media conglomerate. They owned Fender guitars. They published books. They were in the magazine business. They pressed vinyl records. Hell, they owned the New York freaking Yankees. Glomming all those parts together were supposed to mean that some area of the business would have a crushing good year to offset the laggard parts.

Yeah, you get the savings that stem from centralizing services (accounting, HR, and the like), but it’s hard to manage a far-flung empire. Ask the Romans. How hard? Under CBS management, even the Yankees sucked. From ‘65-72, they won 49.3% of their games. It’s that hard to manage each part of every subsidiary business to optimize it when they’re all designed to synergize the corporate earnings hypercube.

Let me say that last part pretending I don’t have an MBA. CBS sold off the parts. And, mostly, each of the parts got better.

Unless you’re a glutton for poorly constructed economical mathematical punishment, feel free to skip this section.

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Thanks to the savings and to the synergies that accrue from conglomeration, 1972 CBS should have been worth more than the sum of the parts. In math terms…

But it wasn’t. Under focused management, the parts were worth more than the whole.

The same should hold for 2024 Google. Google should be worth more than its component parts.

In fact, the case should be stronger. Because, in addition to savings and synergies, Google monopolizes. So, really, the equation is…

← the math is over, come on back

You’re going to hear two things over the next few days, weeks, and months. One is that the world is better off not having Google in one piece. More on that later. The second is that Google’s component parts will do better individually than they will in their current monolithic form. Hand-waving about innovation due to competition will follow.

Pause for a moment every time you hear or read that. The math will cease to work. They’re going to tell you that all those things will be worth more than Google PLUS ITS monopoly. Balderdash.

My very sloppy, very unscientific math says that using the new math shows that the value of Google’s monopoly isn’t worth anything. So, what’s was the point of this?

Yikes. This is like watching any time travel episode of any sci fi show and trying to figure out how the talking apes from the future taught the apes from the past how to talk without losing your mind or needing one more hit of acid.

Remedial reckoning in a Jif.

The fix isn’t in, but we do know some things.

Like, for example, if Google indexes your site so it appears in search, they also ingest your content to train the large language model that powers their Gemini AI. Elsewhere, publishers are being compensated for handing over content. Google is just taking it. Not cool. This is a simple fix. The DOJ will likely require Google to let publishers get indexed and opt out of being extracted.

There are a list of items like this that include new ways to force Google to share our private data with more ad tech companies (what could possibly go wrong with that?). Frankly, even if it is overreaching, tough. When you lose a war, you lose land and your armies are forced to stand down.

But, there are other items the DOJ may want that are a little overreach-y.

Like the one where Google pays to be the default search engine on Apple and Samsung devices. Feel free to call me a luddite, but I still don’t get what’s offsides about this.

To say a search engine can’t pay for premium positions is the most ironic possible twist.

When I stroll the peanut butter aisle of my neighborhood grocery superstore, I see a lot of peanut butter brands. And, more often than not, Jif is in my eyeline. That’s not happenstance. Some teenage stockperson didn’t just randomly put jars of peanut butter on shelves. Every product in every grocery store pays for the best position on supermarket shelves.

Cue gasp. Feel free to unclutch your pearls. You mean Coca Cola isn’t in the best spot just ‘cause? No. And, Google isn’t in the premier spot just because it IS the best search engine. Don’t take my word for it, Judge Mehta flat out said it.

This is the norm for supermarkets. Brands pay to be seen. It’s why you see promoted cars as you walk around stadiums. It’s why, the Yankees sell their “office supply” rights to W.B. Mason to be the Official Office Supply partner of the New York Yankees. P.S., W.B. Mason is also the Official Office Supplier Partner of the Boston Red Sox and Philadelphia Phillies.

Breaking up is hard to do

Some assets naturally attract. Not because they’re Boris and Natasha or Bonnie and Clyde. They’re not villainous, they’re just drawn to each other. In 1911, the ancestors of the people who will break Google broke Standard Oil up in to 34 little pieces. Those parts reconstituted themselves into Chevron, BP, Exxon Mobil, and Marathon Oil. You can break up Bell into Baby Bells and they’ll just glom back into a bell operating companies. You can break up East and West Germany, put a wall between them, put armed armies on the wall, and they’ll still find that a way to re-unify. Hell, CBS and Viacom have broken up and gotten back together more times than Ross and Rachel.

Tomorrow’s ad market

I was asked where ads go from here. So, here’s my answer.

The new media ad market is dominated oligolopistically by a few platforms that are so large they simply don’t need or want Google or other ad tech platforms. The new search ad market is retail. In Q2, a retail media click cost about $1.19. That’s up 11% from Q2 last year. And, it’s about double the 61¢ a search click costs. They don’t need Google either.

Google’s businesses are based on Google’s business model. Google’s vice president of regulatory affairs, Lee-Anne Mulholland pointed this out, “We’ve invested billions of dollars in Chrome and Android. Breaking them off would change their business models, raise the cost of devices.” I searched Amazon :-). A new Asus Chromebook is $68.99.  The cheapest new Asus Windows Laptop is $224.99. And, you’d have to pay another hundred bucks for Office.

Which brings me to this final point.

My gut tells me that the DOJ is going to erect (he, he, erect) walls to separate areas of Google AND force divestures. But, regardless of whether Google is shattered or just splintered, most of the pieces will find natural ways to reform. Because…

…In the end, as jubilant as last night was for the ad tech crowd, it’s a new media world. And, they’re all fighting over the scraps of a diminishing pie. It’s hard to hear folks, but breakups are a lagging indicator of business largess. The DOJ closed the doors well after the horses left the barn. The ad/media market they’re trying to protect isn’t the market it once was. In fact, it’s been in descent for years.