Alphabet's earnings miss profit estimates as spending grows
reuters.com
reuters.com
Only big brand advertisers (like Clorox/PG/etc) evaluate ad spend on the impression/click level. This is not the norm (unless you want to lose your shirt to bots/fraud). We have made it a long way from the blunt-instrument advertising of past years. Full disclosure: there may indeed be a 'changing-of-the-guard' happening with regard to brand advertisers waking up to the available tech, but that is a different story..
Overall, this is a non-story. Many corporations were slapped with a massive bill after the passage of Trump's tax cuts. Not just Google. So with that liability, of course PROFIT dropped. But the REVENUE is what you want to look at for these 'bubble' discussions (and that is strong), so nothing to see here...
Google paid $9.9B in this one-off tax payment, which is larger than their entire margin for the quarter.
Typically, the profits are held in tax havens, with low or zero tax. So effectively they are not being taxed already, due to loopholes in the tax code.
It reduced many tax rates and it sort of eliminated corporate taxes on income earned outside the country. It added a corporate alternative minimum tax on global income that will mostly apply when income is taxed below 10% in the country where it is earned. It also added a one time tax on any earnings held overseas from prior tax years.
The one time tax is hitting companies that were holding earnings overseas. The corporate AMT will hit companies with very low global taxes.
Yes.
Since 2018, as a US corporation, earnings earned overseas are not taxable in the US in the general tax (20%ish); they are taxable in the alternative minimum tax (10%ish), but there is a credit for taxes paid overseas.
As a transition, in the 2018 tax year, any prior earnings earned overseas and not previously repatriated are subject to a one time transition tax.
That only happened to companies who weren't booking deferred tax liabilities this entire time. Apple on the other hand has been conservative about their accounting, so the $38B tax they're paying has already been accounted for.
Apple's profitability has been understated for years because of that (or you could say everyone else has been overstating their profitability).
Increasing revenue further would mean that product would need to increase ads, or somehow increase ad efficiency, but either case seems likely to deteriorate the user experience which could end up counter productive for all involved, at least in the long run.
I'm certainly oversimplifying things, but it seems like ad driven models have a very clear ceiling. Or is the endgame to simply to continue increasing costs to advertisers?
I work mainly in the health/wellness space and I’m able to effectively target people who will be legitimately interested in the services the companies we represent sell. There seems to be this idea that advertising is “shoved down our throats” and while I certainly agree in some cases, people who buy from our clients are buying because the products or services improve their lives in some way and they only buy because they want to. I think that google and Facebook (whatever your feelings on their other practices) do provide an unprecedented avenue for small businesses to find customers efficiently and profitably.
For me it's not that ads are being "shoved down my throat". Even 'unobtrusive' ads are fucking annoying. They are a waste of space and bandwidth.
I have never bought anything because of an advert. If I want something, I search for a variety of competing products, compare the prices and features etc. and then choose the one that best suites my needs.
Showing me a product that exists, will never make me want to buy it. That information is completely useless to me. If I want something I will go look for it. It mustn't find me, and then assume I want it, because then I will hate it.
Please know that the more advertising I see for a product, the less likely I am to ever do business with your company. If you want my business, just provide easily accessible and clear information about all your products/services on _your_ website.
advantage of product discovery << lying and inappropriate product suggestion noise
I appreciate the discovery aspect has some value (to customers), but I'd assert that it's always less than the latter two detractors
Of course I am of two minds on this. On the one hand, it’s useful and ads value to my business. On the other hand, I agree that in the main ads are intrusive annoying and slow down pages, serve malware etc etc. Plus the privacy implications. But for Instagram specifically, I find many ads I see useful and they are never intrusive since they are native to the platform. Instagram is a product I enjoy using and it’s free. I don’t see why the company that runs it shouldn’t make money on the product, esp since the ads they serve are (sometimes) relevant and useful and reasonable in number.
I will continue to run ad blockers on every other site though because I do not find this to be the case anywhere else besides Instagram.
It may be products floating in Amazon searches because of fake reviews, sites with great SEO, and most ads online really.. none of those correlate to quality of product.
Then entire point was to make finding things easy, but I find that advertising just makes that harder.
In September I was looking for a Volleyball club in Paris for people in their 30s, as I wanted a fixed team with whom I'd share interests. My searches failed me horribly. Google and Duckduckgo mostly fed me news articles, competition stuff and some big club websites. Then my local mayor's office site had a totally out of date page, and did not list clubs closeby but outside its district.
Eventually I went to a local sports fair to meet up with clubs, but almost none of them offered adults teams, because that's typically a young people's sport.
I the end, I did find a place for me, by talking to people at the mayor's office, and random players at the fair.
And often when I look for an object, it takes a very long time because quality products rarely float above the rest. It's excrutiating.
So now I hate advertising, and I hate ratings. They are noise designed to mess up with human psychology.
As someone who works in advertising I try to do my part by only taking clients that I trust sell something quality and do business with integrity. I could make a lot more money if I just sold anything and everything. I know people that market tobacco products on Facebook, for example. Those contracts are extremely lucrative, but I simply could not feel good about promoting those products.
I would not be able to do what I do (from a moral standpoint) if I just advertised for everyone. I enjoy what I do because I am able to promote people and companies that do something positive. There are a lot of scammers in my business, and I was tired of watching the least honest people get the best results (because they can afford top agencies) and the smaller clients actually doing something positive get screwed by dishonest marketing people.
You're in the toothpaste aisle at the store. There are 47 different brands that all cost $3 for a tube. It literally doesn't matter what you buy, they're all fine, and if for some reason the toothpaste is awful in some way, you are not out much money... and even then, even the most avid tooth brusher is only affected for four minutes a day. So you probably buy whatever the manufacturer paid to have placed at eye level, or what you have a coupon for, or what you saw an ad for. Yeah, you're being manipulated, but does it really matter? The only thing it really does is raise the barrier of entry for new manufacturers of toothpaste; until they can make their manufacturing process as efficient as the competition, they will not be able to spend as much on advertising. It is unfortunate, but what can you do? The tubes of toothpaste have to be presented in the store (or online) in some order, and the store makes more money if they just order it by amount paid. I just don't think there's any way you could ever get around it. And, of course, if you have strong feelings about toothpaste you'll just ignore the ads and buy the kind you like.
It also works for things like online stores. If you have a specific product in mind but you're searching for it, you probably don't super care where you buy it from. Especially if you look at something like cameras -- the manufacturers all specify minimum prices, which everyone sells it for, so it doesn't cost you money to buy it form store X instead of store Y. So you just go where you're told to go. Again, some stores have enough profitability to be able to keep the lights on AND buy an ad, while some don't. It's not really your problem. If all the camera stores went out of business because ads were too expensive and they couldn't get business any other way, you would just buy from the manufacturer. The ads just serve to make a decision for you that you obviously don't care about.
Then there's a third category, things you actually care about. Say my keyboard broke and I wanted to buy a new one. I didn't forget everything I know about keyboards. I know I like Topre switches better than Cherry switches, so that pretty much limits my choice to a handful of manufacturers. If I was searching for a Topre keyboard and saw an ad for Cherry keyboard, I probably won't give it a second thought. I already know what I like and no advertising is going to change my mind. And indeed, if I search for "keyboard" and click through to shopping, all the ads are targeted at people that don't care what keyboard you get. One is a piano. The next is some glowy thing that connects to your iPhone. Then there's one for $2.99. If you don't care, this probably helps you get the decision over with and some sort of input device in your hands. I wouldn't enjoy a $3 keyboard with free same-day delivery (how can that possibly be profitable, btw), but the ads aren't for me. For someone that literally doesn't care, the $3 keyboard is probably the right choice. I'm sure the $3 keyboard that doesn't have an ad is slightly better than the $3 keyboard that does have an ad... but it probably doesn't matter.
I dunno; the TL;DR is that I don't really care about ads. Either something matters enough to spend hours reading forums, asking friends, shopping around, finding somewhere to try before you buy... or it doesn't matter enough and you just take what you're given. Either way, I don't feel that advertising is ruining my life in any way. Yeah, we should probably spend the money inventing some sort of cure for all known diseases or feeding the poor... but I doubt that if advertising went away that's where the money would go.
One of my personal highlights was an AdWords campaign was where one conversion delivered 14x ROI for the entire campaign, even though we were a small player - if we couldn't attribute that, getting sign off would've been nearly impossible.
I mean it's difficult to quantify advertising. Most retailers can't depend on just click through rates. If you see a ad for Vans, you might not purchase it online, but like traditional ads, it could make you think about it when you're near a shoe store.
And most normal (non tech/IT people) don't run ad blockers. But at some point there's got to be a low of diminishing return. People are earning less, and in some ways buying more to distract themselves .. yet like any industry, you simply cannot have infinite growth.
What exactly will an advertising bubble bust look like? Or would we not see it directly, as it would be more of an effect of fewer goods being sold due to something else that kills jobs and stifles wages?
How will a dot com break in the 2010s/20s be different from the one in 2001?
I also want to add that the huge focus on marketing and advertising in general really comes from a shift in the business that occurred in the 1970’s at the major business schools. At the time, there was a feeling that the US was overproducing products that weren’t needed, and the only solution was to more innovatively inform customers of what they needed, since cutting back on production would hurt the job market. One thing this led to was very specific marketing segmentation, among others. For instance, all older Americans used to be classified as 65+ in most marketing programs, maybe with race and gender added on as well. Obviously that was a very general category that now has been split into dozens of subcategories.
Anyway it seems like their plan wound up working out to well with the numbers we’re seeing out of Google and FB...
Facebook has had a bunch of issues where their metrics either are inaccurate or don't make sense. Google has cornered advertisment on what people intend to search but probably can't grow much bigger unless they go beyond the United States (the problem is that they are probably already saturated in the top 20 economies). This leaves Video advertisement and that is either getting increasingly harder to monetize or you have to make your own content which basically means you become Netflix, Amazon, Crunchyroll or Youtube (which Google already has). Not to mention the amount of clickfraud that is already happening.
So what will happen when this ends is that we will see a bunch of AI promises that can't be fulfilled not occur and a drop in AI investment. Also, any small startup in AdTech will either rise to the occasion or die trying.
And it seems like advertising is yet another industry (alongside payment processors, legal services, and real estate) that have managed to 'insert themselves' in the middle of all other commerce, skimming vastly outsized portions of profit off of the entire economy, by being intrinsically 'needed' to do business.
It seems to me that all of these things should be driven by competition to infinitesimal profit margins, because everyone needs them and there should be a big payoff in undercutting each other to take everyone else's business. In practice that's not true at all, which I think means that 'everyone else' severely lacks high-level bargaining power to force these industries down to reasonable cuts.
I fantasize about a scandal in which it emerges that click-through rates all lies and advertising barely actually works and the whole industry goes belly-up as a result.
... okay that's enough cynicism for today.
This is one of the many reasons that interfering in an economy to prevent "recessions" is a bad idea. It prolongs the problem and worsens the inevitable side effects.
"Market corrections" might be less of a tragedy if societies like the USA could muster the moral courage to pick up the slack for the market and make people's lives not literally depend on it.
Looking after people who can't look after themselves - be it for reasons of market correction, injury or infirmity - is an entirely orthogonal concern.
In other words yes, I agree with you - but think that picking up the slack is the job of charity, and shouldn't involve interference with the market just because it's giving you prices you don't like.
This is fundamentally the reason I (cynically) cannot trust charities (especially religious charities) long-term. The charity machinery requires people to be poor and miserable. Poor and miserable people are the products a charity sells (to donors)! We are the product. A charity is a band-aid. It cannot be as long-term infrastructure.
I agree that we should not prop up failing industries for fear of layoffs. That's just kicking the can down the road. However, I strongly believe a charity has no place in a functioning society.
If you're opposed to charity but also opposed to market manipulation, how do you propose to support people who can't support themselves?
The only alternative is forcing people to do it.
Yes, this is a pretty common position: govt charity funded by taxes is precisely forced charity, which many people are in favor of (myself included).
Yes, I know. I thought my meaning was obvious, but I'll be clearer: "Forcing" people to provide an alternative to charity is simply called "taxation" (to the extent that taxes are spent on things whose benefits are not distributed in proportion to taxation).
My point was that I don't understand your claim that you don't follow the GP comment's point, since you're surely aware that taxation and gov't spending are well within the Overton Window.
The market exists for us, we don't exist for the market. If distortions are all that's needed to make sure we have the society we want, then that's great! Nothing inherently just about a market.
Gravity makes things fall, but it doesn't mean that we let everything crash to the ground because we don't want to mess with the laws of physics.
There's no need to let people suffer because the market has judged their labour now to be worthless. That's what charitable support is for.
But arguing that we shouldn't let the market deem someone's labour worthless is like arguing that we shouldn't let physics determine g to be 9.8ms2.
It is 9.8ms2, just like the value of a skilled buggy whip maker is now $0/hr.
The question in both cases is, now what do we do about it? Presumably, we give to charity to support the buggy whip makers, and we build our buildings such that gravity doesn't cause them to come crashing down.
And we are also the folks who create the market - deliberately or not. Its our collective decisions which results in corrections. We need a safety net for the people - the jobs however, are lost for the rest of eternity.
It's simply a collective action problem, in which there's a global equilibrium that is effectively unreachable (outside of legislation, which has its own complications in the case of advertising because of 1A protections).
Advertising isn't a crazy form of mind control where people are hypnotised into handing over money. Sure that might happen, but the vast majority of people I've met don't know they have a problem until it is pointed out to them.
For example, in '07 I didn't find out about smartphones by word of mouth. I found out because Apple put a lot of effort into some very effective marketing. And there is pretty good evidence that the advertising industry is one facet of a larger apparatus developed to make sure that messages make it to the local word-of-mouth circles.
I see so little advertising these days that I don't care at all anymore.
I think the very real fear is that we haven't even begun to scratch the surface of how we market to humans, and the bubble has not yet to even begin.
Then ad spending has increased by a little over 6%/yr.. In comparison, the worldbank says world gdp rose 2.5% + 2% inflation = 4.5%... so 1.5% higher than the average industry. That doesn't sound like a bubble to me.
If google is growing faster than 6%... then that would mean its just taking market share from traditional advertising. I would expect that, since TV and radio are losing their share of time to online sources.
0. This is a worldwide number.. since google is a multinational, so this is probably the most appropriate number IMO
And the risk here is that we're seeing companies post strong revenue growth, and they attribute some percentage of that success to ad spend, when in reality their revenue growth may be completely decoupled from how many impressions or conversions they're seeing from ads.
That brings up an important question here - how many companies are still measuring the ROI of their advertising via "impressions". Because when you purely measure ad performance as a function of increased conversions (which is just another word for someone signing up for your newsletter, or buying one of your products, or subscribing to your service, etc) then you can get a clear picture of how that ad spend is flowing into your revenue. But when companies just spend $20 million a year hoping to get tons of impressions from pricey Super Bowl ads, they can't trace that ad spend back to revenue.
So the risk here of a bubble is mainly - are companies spending more on ads than they really should be to secure more sales? And will companies realize they could be spending half as much on awareness campaigns and get the same results? If they do, then you can expect ad spend to go down and the internet (which is largely funded by its success as an advertising channel) can expect to contract.
Even if they are, will they continue to do so as humans learn to better ignore the newer forms of advertising? They might be in, not exactly a bubble, but a... temporarily working technique, maybe?
https://www.economist.com/news/business/21735029-stockmarket...
"Imagine if advertising spending really did rise to 1.8% of GDP in America by 2027. Most firms’ costs would have to rise, cutting total corporate profits (excluding those of ad platforms) from about 6.5% to 5.7% of GDP, the kind of drop normally associated with a recession. Alternatively, imagine if the firms in the S&P 500 index (excluding ad platforms) bore all the additional cost of the advertising boom. Their combined return on capital would drop from the present 10% to 8%, at or just below their cost of capital. America Inc would go from being the world’s greatest profit machine to flirting with Japanese-style financial-zombie status"
American advertising revenues will rise from 1% of GDP today, to as much as 1.8% of GDP by 2027—a massive jump. Since 1980 the average has been 1.3%
So here we are at 1%.. and the historical average is 1.3%... Can you be in a bubble, if it's currently below the historical average?
If anything, I would say this is evidence that we are NOT in a bubble.
The rest of that article is just speculation, based on growth that we may or may not see.
If the bottom drops out of advertising we will have mass death of tech companies
We will also have a massive VC funding freeze as they aren't going to want to fund companies that don't have a non advertising framework for revenue and neither I nor anyone I think really understands how to fund most b2c tech companies outside of advertising (yes there are some solutions but they are so much less effective than advertising)
So yeah I find this pretty terrifying. It will probably be way worse than the 2001 bubble because the amount of the economy that depends on tech advertising now is much much greater than the amount of money invested in tech in 2001
Uh, no.
Apple, Microsoft, Cisco, Oracle, Intel, Qualcomm, Netflix, Amazon, IBM, Texas Instruments, nVidia, Tesla, SpaceX, Uber, Airbnb, PayPal, Priceline, Broadcom, HP, Dell, VMWare, Symantec, Intuit, Adobe, Salesforce, Tencent, Didi, SAP, Amadeus, Workday, Micron, HP, Foxconn, Huawei, Samsung, Sony, Panasonic, Taiwan Semiconductor, Hitachi. And on and on the list goes.
VS: Google, Facebook, Alibaba, Baidu, Twitter, Snapchat.
Companies like Oracle and Salesforce I would bet derive a significant chunk of revenue selling advertising and marketing analytics services as well.
Regardless of pedantry olad cratering would be a huge huge huge fucking deal for many people who work in software (at least).
Otoh ad companies will just become even more scummy. I am not sure how that is even possible, but there is probably a start-up trying to figure out how
Similarly, the share of the economy devoted to the legal profession grows in proportion to the number of externalities in the economy (= the chance that some third party unrelated to your transactions will be wronged by your actions), and the share of the economy devoted to finance grows in proportion to the rate of change in the economy (the role of the financial industry is to destroy obsolete industries and redirect that capital into new, more modern ones; demand for its services is proportional to the number of opportunities there are to destroy incumbent industries with new technologies). The gains are at the expense of primary producers (natural resource extraction and manufacturing, and to a lesser extent retail, which is a complement of manufacturing). All of these effects fit observed recent history well.
There's no reason that this is a bubble except for the fact that once the rentier classes - government, finance, advertising, legal, real estate - have consumed the bulk of the economy, those previously employed in the destroyed industries tend to revolt, politically. In other words, the bubble ends with the destruction of society. Note that the usual outcome here is that the new rentier classes end up deploying their capital to hire outside allies and kill all of the people rising up against them, so I still wouldn't want to be on the side whose industries and skillsets have been destroyed. Historically, what tends to happen is that the whole society ends up marginalized, and some other world power who stayed out of the fighting ends up on top. (See eg. the French Revolution, where the peasants succeeded in killing the nobles...and then followed a century of wars and alternating dictatorships & republics, and when the dust settled, France had been eclipsed successively by Germany, England, and the U.S.)
GOOG has already largely solved this problem via in store / online-offline attribution of ad clicks. (https://support.google.com/adwords/answer/6361305?hl=en)
Unlikely.
Online still has a fairly small share of overall advertising dollars.
User behavior continues to shift from traditional advertising venues (e.g., TV) to digital.
Spend continues to lag that shift as well.
In other words, if anything, expect it to increase.
Most of this comes from Meeker's annual Internet report:
Apple's quarterly profit is nearly half of Google's quarterly revenue.
These companies have a very similar valuation.
Is the proper way to interpret this that investors are a lot more optimistic about Google's future vs Apple's?
I've read institutional investors don't see Apple having sufficiently diversified revenue streams to warrant a higher P/E. Something around 60% of their revenues come from iPhone alone.
Not much in total percent terms because of how huge the ads business is, but if you look at it on its own, that's up 50% and $5 billion YoY.
They continually grow, make a boatload of money every quarter, and pay a good dividend.
For reference, P/E Ratios:
AAPL 18.26
GOOG 38.9 MSFT 63.9 FB 35.8 AMZN 350.9 IBM 36.6 HPE 66.7 NFLX 211.9
14,776
Also there's a pretty good argument that the PE is a useless ratio that should be actively ignored, they haven't correlated strongly with anything in like 20 years.
I also find it questionable whether 18.26 is a "low" P/E. I still think of 15 as a normal P/E for the whole market. Although perhaps we will have low interest rates forever.
P/E right now is 23.3 for the S&P, 27.8 for the Nasdaq, and 27.7 for the Dow.
I also think that it is reasonable to consider that the whole market might be overvalued, given that nobody can predict the future and we are at historic lows with regard to interest rates. So it isn't outrageous to consider a historical average P/E for reference, rather than the average P/E right now.
Otherwise, I don’t quite get which cycles you are referring to.
The easiest way to illustrate this is to imagine they had 1 trillion in cash instead of 280 billion. Their market cap would go up 720B meaning their PE would increase.
Conversely, if their cash decreased so would their PE.
Investors may be wrong of course.
Apple is laughing all the way back to private ownership.
iPhone unit sales actually declined for Apple YoY.
I am sure for some businesses, the ad spend and placement against search has strong immediate benefit. I am less sure that a lot of ads have anything like that role.
I am completely unconvinced that 'targetted' advertising against keyword or context has any merit whatsoever. My baseline reasoning for this is that very few ads in food magazines make me go out and spend money on a new stove or coffee maker. At best, they get brand recognition and positioning but thats a weak linkage: they would have got that from placement in a magazine aimed at BMW and Merc owners.
No: targetted advertising is stalking and is creepy.
I think its a CFD. Weak linkage to real world events, brokered, and sold forward in a spot and futures market.
I'm pretty sure targeting would win by a wide margin.
Google ad guys are the best in business, and you're basically implying they are in a weird targeting cargo cult.
Google ads: serving me pictures of the shorts I bought three months ago, on a daily basis. Seriously? You say they're the best in the business, and their business is selling to an advertisor "he bought a pair of cargo shorts three months ago" as a reason to sell me .. cargo shorts.
Someone who bought cargo shorts 3 months ago is far more likely than a random individual to buy cargo shorts tomorrow.
You're thinking about this from the perspective of a single individual consumer, but that's not how the ads business works. Ads are bought in the form of aggregate possibilities.
If I were a cargo short vendor, I'd happily pay considerable sums to reach everyone who had recently bought cargo shorts. Maybe they're unhappy with their cargo shorts and want a different brand. Maybe their shorts tragically broke after bending over too far a few weeks after purchasing. Maybe you loved them so much that now you want a separate pair for every day of the week. All of these are reasons that betting you'll buy cargo shorts is a much better bet than betting on a random person.
People buying ads are not idiots. The ones buying digital ads are the smartest ones and many have strong backgrounds in analytical fields. It's arrogant for you to assume otherwise just because you're sick of cargo short ads.
digital ads are better than print ads because print is dying. I think the whole metrics thing, its pretty oversold.
since it was known I visited cargo short buying and advertizing sites, its also known the exponential dropoff in not visiting them. their ageing out algorithm needs adjusting.
As the earnings release progressed, Reuters decided to change the title to, "Alphabet's earnings miss Wall St. estimates as spending grows"
The market reactions however are driven by automated systems that get machine digestible metrics and reactions are programmed in ahead of time. The market literally adjusts at the speed of light.
(Disclosure: I work at Google)
Thanks Gorhill and all the list maintainers out there you're my only hope!
Google only controls Chrome so that they can ensure it never incorporates real ad-blocking. Google controls Firefox by bribing Mozilla with a tiny slice of its advertising winnings. Facebook plays second-fiddle, but has its own influence as the second largest ad network.
Larry Page and Mark Zuckerberg are smart and must realize what they're doing is wrong. They must simply not know how to replace their advertising revenue with something legitimate and future proof. In both cases they're (arguably) one-hit wonders. Google is still Google Search and Facebook's social network is still just a social network.
You can buy Oculus or clone iOS but if your only plan is to stick ads on everything, you're not making any real progress.
They both have a single-point-of-failure in their businesses. I predict this single point is going to fail catastrophically in the surprisingly-near future.
2. It doesn't make sense to suggest that the future will be like the past, particularly in the modern world of rapidly accelerating technological progress.
As long as there are imperfect markets and unequal distribution of information, there will be advertising. How that advertising is performed will continue to change drastically over time.
Non-advertising revenue from Google combined with revenue from Verily and the other Alphabet companies was $15.5 billion in 2017, accounting for about 14 percent of total revenue, compared to $10.9 billion, or 12 percent, in 2016.
>They both have single-points-of-failure in their businesses. I predict this single point is going to fail catastrophically in the surprisingly-near future.
Strange how your predictions of catastrophic failure, in the near future, somehow missed all of the other companies that have single-points-of-failure in their businesses.
2. What other central companies have at-risk anti-technology SPOF business models? Google/Facebook will likely take down the entire internet advertising industry when they fail. What else is like this?
>What other central companies have at-risk anti-technology SPOF business models?
Any other business in which the majority of their profits are dependent on a single revenue stream. It's only the true conglomerates, like Samsung, that could easily react to a SPOF because of how their diversified portfolio of businesses are and non reliant on one core business for their annual revenue.
So say a TV channel only had one popular that would be a concentration.
Google not only has search but also has YouTube and I would guess others also contributing.