[CydeWeys]

They would be owned, operated, and governed separately, and Search could have the different ad providers compete amongst each other to provide the best rates. Add it all up together and it'd be a huge difference. Each of the two separate companies would have separate management and a fiduciary duty to maximize their own profit independently, even at the expense of the other.

Consider that Verizon and AT&T, the two largest mobile phone providers in the US, are both Baby Bells resulting from the break-up of Bell Telephone Company in an anti-trust action. They compete strongly against each other, in a way that would absolutely not be true if they were still the same company.

[shajznnckfke]

Agreed that breaking up a company horizontally into two competing companies creates competition between the two companies. Here we’re talking about breaking up Google vertically into two companies with a supplier-client relationship. The supplier and the client aren’t going to be competing with each other because they are in two different businesses.

[CydeWeys]

It frees up the supplier and client to compete against each other by patronizing other suppliers/clients in the industry. Right now no one else can sell ads on Google Search; after a break up, other competitors would now be able to.

[shajznnckfke]

If I had to guess the outcome, we’d probably see Google Search keep its present market share (splitting Search and ads wouldn’t help Bing Search beat Google Search). Google Ads and Bing Ads would both bid for space on Google and Bing, in addition to other players. Disrupters might be able to take some market share here by having a cheaper cost structure, or Google might dominate because they have the best tech.

[checkyoursudo]

I just want to note that there is no fiduciary duty in US law to maximize profits. That is permitted, but not required. E.g., https://www.lawschool.cornell.edu/academics/clarke_business_...

[TheCoelacanth]

Courts will generally not second-guess the judgement of management, but they are obliged to act in the interest of their shareholders, primarily, because shareholders have the ability to fire the board of directors.

If someone who owned a share of Search Google managed to get a controlling interest in Ad Google and was operating it to benefit Search Google to the detriment of Ad Google's minority shareholders, that would be one of the rare cases where a court would intervene.

[CydeWeys]

I'm more referring to what the shareholders will do if the company is clearly not acting in the interests of actually making them money, but rather, cozying up to an now-unrelated company in a way that leaves lots of potential money on the table for no reason.

[vonmoltke]

> I'm more referring to what the shareholders will do if the company is clearly not acting in the interests of actually making them money

That's fine, but "fiduciary duty" is a specific legal concept and you are misusing it. Making shareholders angry enough to vote you off the board is not the same thing.

Also, it's worth noting that institutional investors often rubber-stamp the board's recommendations in shareholder votes. One side effect of the rise of passive funds is that there is less shareholder opposition to board moves nowadays.

[Sander_Marechal]

Countless shareholder lawsuits say otherwise though. So it may not be their fiduciary duty, but if there's a good chance they get sued if they don't maximize profits, they will anyway.

[vonmoltke]

> Countless shareholder lawsuits say otherwise though. So it may not be their fiduciary duty, but if there's a good chance they get sued if they don't maximize profits, they will anyway.

No, they don't. In fact, I can't find any that involve maximizing anything.

Also, filing a lawsuit is trivial. Succeeding is a whole other kettle of fish.

[magicalist]

> but if there's a good chance they get sued if they don't maximize profits

That's exactly the myth the above link is about, btw.

[bdcravens]

The Baby Bell breakup was 36 years ago, resulting from antitrust action brought 46 years ago. Moreover, AT&T and Verizon have consolidated six of the seven Baby Bells into the 2 companies.

[C1sc0cat]

But it left the local monopoly in palace instead of mandating Local Loop Unbundling which is why the US and Canada has such poor competition for highspeed internet.

[CydeWeys]

2 is still more than 1, and there was a lot more competition in the intervening decades when there were more than 2. So it sounds like it worked for the most part? Certainly more so than doing nothing.

[srtjstjsj]

No, the "breakup" was a nonsensical geographical partition. I live in NY. Why would I event consider buying a phone line in CA?

[salawat]

The issue is that the baby Bells were allowed to reconsolidate at all, or allowed to avoid competing in other provider's coverage areas. I agree some good came of the breakup, but the hands off position taken by subsequent administrations has allowed most of the Good to get undone.