Google suffers from a digital petro curse
world.hey.com
world.hey.com
Nobody wants to say it, but Google is basically internet government at this point, and when government starts building products instead of just directing traffic, it's going to be anti-competitive and destroy opportunity in general.
How do they get out of the way and benefit while enabling growth? Move everything new into Ventures and whatever products survive on their own should be taken public in the markets and vertically dis-integrated from advertising and search. If they want to create growth, they're going to need to open it up to public markets, otherwise, they're going to be an anti-competitive monolith.
It's not a charity, and it will still make bazillions, but leveraging their incumbency means they are both risk averse themselves and opportunity destroying for everyone else.
Is that actually true though? Googles forays into many markets were usually so horrible and clumsy that better companies could just use the media attention garnered to push their superior products.
Most Google beta products usually lack fundamental features, are geoblocked and completely ignore user voice. I haven't seen many of them really thrive over their better managed competition.
But the number of sites, and the easy availability of readers for it (it was built into all of the major browsers at one point), have both decreased dramatically since the early naughts. If 10% of sites offer RSS feeds, I'd personally be quite surprised.
Websites tend to not like to have RSS support due to it directing traffic away, and thus, denying ad revenue. It also allows easier aggregation from competitors/third-parties, which also denies ad revenue. Therefore, RSS is, at most, implemented as a short excerpt, with the intention to direct the user to visit the website.
A small company with a successful, functioning project is getting a little bit of traction when Google crashes into the market. Google bids up staff costs, uses free advertising to get customer mindshare, scares off the small company's possible investors, and acts as a huge distraction.
After stumbling around for a while, Google gives up, but in the meantime, they've put the small company out of business.
Of course, the small company might get extra attention which they can use to their advantage, but it will be hard.
Depending on the market and the company’s resources that kind of image shift can have a big effect.
I doubted that but you're right:
Company, Market Cap $billions
Alphabet, 1,368
Facebook, 737
Apple, 2,296
Microsoft, 1,773
Twitter, 53 Amazon, 1,528This would severely dilute their brand though. All of these tech companies are implicitly promising unknown future magic through the power of technology, eventually. If Google admits that the peak of their business has come and they are now a boring mature company ("nothing but rabbits come out of the hat"), I can't see their stonk price nor their mindshare with early adopters doing well.
There is an inflection point the OP makes about resource cursed economies, which is that when you have money coming out of the ground, you don't need to provide anything to your citizens in exchange for their tax base, and you get tyranny, because you don't need to pay anyone except the army to keep you in power.
By extension, Google could just flip the EVIL switch that they so strenuously tried to protect, and it would have zero negative effect on their bottom line. They don't have to produce anything else to maintain their dominant position, and this is the danger the OP I think has illustrated.
The FAANGs become pernicious, and I don't see them all being around in a decade.
Their power also comes from employees that can do intelligent (albeit evil) things with that data. Nobody thinks it's hip to go work at IBM. Microsoft had a bit of a mindshare resurgence because they pivoted from their Big Evil brand into more of an open company, but that's in spite of being a boring company rather than because of it.
Eventually when the shine wears off, big tech will be forced to give up the pretenses. But I think it has to happen memetically first, rather than vice versa.
> I think producing loss leaders into the market is a form of dumping that wrecks the markets
You'll get no argument from me about this. I'd state it a bit differently, being more concerned about Free/Secure options, rather than a "market" of competing centralized (inherently surveillance-based) products. But I do agree, and I'm really just trying to explore what's keeping them in their current state.
The things they're great at by simply being such a behemoth with a ton of infrastructure willing to give away a lot for free or where their AI expertise comes in handy.
Search, obviously. The ads network. Competitors for Gmail are way smaller but they exist, since you don't need network effect, thankfully. Google Photos – I knew a startup that was developing a similar product for a year and then Photos launches and they decided to give up, because they couldn't match the free tier or provide enough justification for a paid product. Of course you need to be giant to take a shot at something like Stadia.
But you can compete with almost everything else. Notion, Airtable and Coda are fine, even though it'd be smart for Google to finally add a new, more modern product to Workplace. Google Tasks hasn't killed a single task manager. Google+ killed neither Facebook nor Snapchat.
Just read some stories from the founder of Waze: https://marker.medium.com/why-theres-no-such-thing-as-a-star...
Adsense/Adwords spews tens of billions of dollars in profits every year. No new product launch can come to close moving the needle on revenue or profits for Google. Google's political economy incentivizes groups to build new products not for their revenue streams but to claim larger bonuses of the ad-revenue pie. The users who buy into these "new" products are just cannon fodder in that game. Remember Google+? Vic Gundotra made off with probably tens of millions or more to launch a failed product because it was seen as strategic for Google. Anything and everything in Google happens as an internal battle between groups jockeying for bigger share of the adsense/adwords pie. We are just pawns in the game.
I can't believe I am saying it but almost anything MSFT releases in response to Google or competitors is inferior but MSFT's products are preferable due to implied longevity. MSFT has inoculated themselves against this parasitic political economy while Google's users are held hostage by it.
Most Google project launches are akin to MBS's dreams to turn Saudi into a tourism/research/commerce powerhouse. Brand new Cities in the desert etc. They would have more success dumping cash into the ocean and catching the fish that come to feed on the paper.
Ditto for google.
Yes, precisely. MSFT spent the better part of 50 years honing its selling strategies to companies, and knows how to deliver products. They may suck (and they do), but you know if you build upon them, they will not (generally, with few exceptions) disappear tomorrow. You simply cannot have that faith with google.
Gmail, could literally disappear at any moment. How screwed over would we all be if that happened? It won't, because it is the gift that keeps on giving with regards to intelligence gathering. For their real product.
Reams of data means both depth and scale. Missing either one would mean an early death.
People have been predicting the downfall of Google for a very long time now and yet they have never been bigger growing every year at astounding rates.
I remember hype around the Facebook Phone and Facebook Email, but that's about it really. Email didn't really feel like a death either as the rest of Messenger continued to evolve to what it became today.
And while Waymo might have an insane potential, it is just that, a potential.
Why do you say they are in a "pretty rough spot"?
Your argument (that Google currently has a portfolio of products that are a net loss) shows that they at least try. In particular, GCP and Waymo are really long-term and strategic investments.
Some analysts I follow (I think Ben Thompson was in this camp) have been long speculating that it was actually operating at a loss.
[0] https://www.cnbc.com/2020/02/03/google-still-isnt-telling-us...
Youtube is profitable, GCP isn't.
https://abc.xyz/investor/static/pdf/2020Q4_alphabet_earnings...
I think the issue is that Google, at the high level, is incapable of thinking long term. It wants to see runaway success in a quarter or two.
If that's true, then Google can't really compete with AWS.
"Google Cloud lost $5.6 billion in Google’s fiscal year 2020, which ended December 31. That’s on $13 billion of revenue"
"On the one hand, losses are mounting, up from $4.3 billion in 2018 and $4.6 billion in 2019, but revenue is also seeing strong growth, up from $5.8 billion in 2018 and $8.9 billion in 2019. What we’re seeing here, more than anything else, is Google investing heavily in its cloud business"
"includes all of its cloud infrastructure and platform services, as well as Google Workspace (which you probably still refer to as G Suite). And that’s exactly where Google is making a lot of investments right now. Data centers, after all, don’t come cheap, and Google Cloud launched four new regions in 2020 and started work on others. That’s on top of its investment in its core services and a number of acquisitions."
https://techcrunch.com/2021/02/02/google-cloud-lost-5-6b-in-...
I would say that YouTube, GMail, and Google Maps are all direct funnels into the Adsense machine.
Android, Chrome, and Chromebooks see success only as instruments to have infrastructure to more efficiently push users to use the Google products to direct data into the Adsense machine.
Any Google product that does not sufficiently funnel user data into the Adsense machine is canned. GCP exists as a covinient way to make some side money on their existing infrastructure.
I think only Waymo is the true outlier in this case, but I think that lives as it's own thing, given that's under Alphabet instead of Google proper.
HN may have differing opinions, but Google’s Cloud business is likely their next big business. They’ve been growing quite rapidly, I doubt it will join the graveyard.
I thought it was AWS Azure GCP
Oracle Cloud /s
Alibaba Cloud?
OVH?
https://www.bmc.com/blogs/gartner-magic-quadrant-cips-cloud-...
that was just consideration :P
Once you get past the big two, it also probably depends what you consider part of their market share. Like some include Office suites and some don't, so it probably gets less accurate.
I've gone back repeatedly. I keep accepting the free trial for three months without their incredibly annoying and hostile ads, and then cancel before it charges me because I'd rather walk on hot coals than give Google or it's ilk money.
90% of the YouTube ads I get are just for a freaking keylogger[1] anyways.
[1] Grammarly is a keylogger, it logs every keystroke you make and sends it to their cloud service. Fair warning.
They are good at camouflaging inequality and other things. The lower classes get enough to get by, so it isn't obvious. The rich don't brag, wear cheap suits and look like regular people.
But the old-money royalty is obvious, and probably just very good at hiding corruption.
Most lists I've seen rank the Dutch as having low levels of inequality and high standards of living.
I keep seeing this, and it isn't true. (Not yet at least.)
Google shut down its game studios (which never released anything anyway), but is continuing to support 3rd party developers releasing their games on Stadia.
Google didn't have the patience for their own studio to bear fruit, so it doesn't bode well for them to have patience with the platform, much less invest in it.
This but also: what signal does this send to the consumer to whom Google abandoning services is already a running joke. Would anyone knowing about this now buy a game on Stadia that they can only play on that very shaky platform?
Note: Terraria for stadia is uncanceled[0]. Sadly, Terraria devs nor Google has said anything about what happened (in any kind of detail), but accounts were unlocked and game is back on.
[0] https://forums.terraria.org/index.php?threads/terraria-state...
This is especially true given Google’s poor reputation for support even with paid products. Right now would be a key moment for a post mortem response detailing what they’ve done to ensure that developers don’t have to worry about being locked out and customers don’t have to worry about losing access to their purchases. This is an unproven service and anyone who is at all worried has multiple safer options available so trust is especially critical.
https://forums.terraria.org/index.php?threads/terraria-state...
Disclaimer: I work at Google, but don’t work anywhere near this.
Even though it might not be true that they're shutting it down, it for sure sends a strong signal that they intend to.
There are few organizations that make it past any long range of time and when they do they’re well past their hay day, whether is Std Oil, Dutch East India, Exxon ,etc. Folks at Basecamp will lose their steam similarly when DHH leaves too and stops giving a fuck. It’ll happen to Apple, Amazon and Google. It’s the natural cycle.
Nintendo isn't a tech company, they're a publisher which so happens to publish their properties mostly as games, and do a remarkably good job of producing consoles which you need to buy to enjoy their properties. This is why they'll still be around in 100 years, and Microsoft and Apple most likely won't.
I wasn't restricting myself to thinking about tech companies.
> This is why they'll still be around in 100 years, and Microsoft and Apple most likely won't.
You never know. Just like Nokia once made rubber boots, maybe 100 years from now Apple and Microsoft will be doing something entirely different than now. That's my point - companies survive by adapting.
This creates the hilarious situation where most millionaires in the US don’t subjectively feel wealthy. Because we are taught that our subjective feelings are the truth, this creates an interesting political situation where we have a built-in assumption that no one will ever be satisfied.
If you are supporting a family, you probably still can't stop working.
If you've got no dependents and you're willing to go lean you could sell up, head out to the sticks and live off your capital. It would not grant you a lifestyle conventionally described as "wealthy" but you'd be doing OK.
Or am I just in the trap?
It's expensive as hell to do the whole "2.5 kids, a house, and 2.5 college tuitions" thing while still having a life of your own.
I also realize this comes from a place of privilege (many people can't even really expect to ever retire, much less retire comfortably or lavishly).
The middle class has really eroded away to basically not having any lower or middle segment. You're either working poor (whether you self-identify that way or not) or you're upper-middle-class (where you might start to externally seem "rich" but if you lose your job you still have to find another one pretty fast.)
Last year, my savings had reached over 60x annual expenditure so I felt more than safe even with allowances for self-insurance for long-term care and higher education for my children. How much more do you need?
In my case, I way overshot my savings needs: my current net worth is about 60x my typical yearly expenditure.
I was well paid in my career and saved and invested at least about 70% of my income.
I wonder if a part of that longevity is the org/incentives structure.
And (cynically) maybe just that regulation entrenches existing finance players and there isn't anywhere near as much anti-trust conversation over there.
That said, the analogy breaks down. Petro-states have other issues: weak institutions, corruption. Their lucrative revenue steam, unlike online ads at least so far, is also very volatile with boom and bust cycles. It also creates all sorts of weird economic distortions, like exchange rate effects that make it hard to invest in other industries.
And finally, GCP, Waymo, Android and many others beg to differ. Yes, Google still depends primarily on Ads, but it's far from being the Venezuela or Iraq of companies.
GCP is still flailing around trying to find solid ground. After multiple fits and starts, with Kurian at the helm they're at least making an attempt to attract enterprises, but their inability to commit to a product in the consumer division has ABSOLUTELY tarnished their reputation with the enterprise.
>Waymo, Android
Waymo and Android have only survived because they feed the advertising beast. Don't kid yourself into believing either one would still exist if they didn't.
The reason google can't make a decent messaging app is because by definition, people want their messages to be private. Google can't data mine and let you have privacy - it's why allo literally died DURING the product announcement because someone caught wind that they were going to do encrypted chats that couldn't be data mined. And instead they're trying to push RCS - without encryption - that nobody wants besides them and the mobile companies who also want to data mine.
Everything about a petro state seems to apply here. As for google not having weak institutions and corruption, I'd say they just do a better job of covering it up than most petro states. See: Andy Rubin.
Anyway, petro states depend on a single source of depletable revenue. They even fail at all attempts to expand up the value chain around services or refining of their oil. Even if Google's only successes are around furthering their ads revenue, that's still a far cry from petro states.
What are you talking about? Saudi Aramco has extensive refining capabilities.
https://en.wikipedia.org/wiki/Saudi_Aramco#Refining_and_chem...
They got into exploration, and shipping as well.
So they ABSOLUTELY build successes around the cash cow, just like google.
One of Google's new products (Google Cloud) does more than 100x in revenue more than Basecamp and it's likely growing much faster too. Android is on billions of handsets. Chrome is the most popular browser. These are all new, non-search products.
It’s definitely sad to see some products shut down. But it seems that that’s a natural consequence of experimentation. And I’m grateful for so many of the experiments that ended up sticking around.
YouTube though is video ads, and Maps is local ads. I think that reinforces the author's point.
(Open source projects like Tensorflow, Flutter, K8s are nice spin-offs but they're not going to command the same amount of attention or resources as revenue-generating products.)
Maps knows where you are and where you (regularly) travel. I get email updates from Google on this. Drive enables you to work on documents and files, and provides this implicit access to google to provide them training data (unless they changed that clause of the user agreement).
While Gsuite is an "enterprise" product, that you pay for (and I did, for years), getting "support" out of google was damn near impossible. This seems to be a common theme with them. They stand something up, put up FAQ pages which don't cover what you run into, don't have a human you can contact, or a site you can email, or a ticket system you can report a problem into ... and leave you to figure out workarounds on your own.
And, should your data masters decide that you are a bad company in any way, shape, or form, you can be completely removed from (all) their platform(s), with absolutely no recourse.
Put another way, it is a huuuuuge risk to use them for anything in the critical business services path. FWIW, Microsoft seems to know how to sell/support services. Doesn't matter if their stuff is inferior in many regards, you can reach them if you have a problem. Though, quite likely, they can pull the plug on you quickly as well. But they are far more business friendly than google.
My understanding is that the underpinnings of Google Cloud were built to support their own technology needs supporting their ad empire. It's also worth noting that Google Cloud indirectly supports their ad-based ventures. It gives them access to a higher economy of scale which makes serving ads cheaper, and customers are subsidizing development costs for things Google uses as well.
They're complaining that Google is built on data-mining and selling that to advertisers, not specifically about search. Anything that fails to compete with the crazy profit margins of targeted advertising gets killed, which is pretty much everything at the moment.
Google Cloud is somewhat of an outlier, I don't know why it's still around. They're still losing money on it, aren't they? I have a hard time believing the tangential benefits to their other products are enough to offset that, but I could be wrong.
Android and Chrome make sense in terms of defending all of their web-based offerings from a hostile mobile OS or browser monopoly.
Their advertising dominance obviously is the only reason they had the money to throw at those problems, but a “search monopoly” isn't the only reason it made sense.
GCP is a way to monetize excess capacity. The excess capacity in their data extraction machine.
Search is not their product. Advertising is.
They can say that all they want, but it doesn’t make it true.
In many ways it’s a pretty odd denial.
It seems pretty likely that in the absence of Gmail, Hey would have a bigger market.
Many people just wouldn't pay for email so it's very hard to say.
And again, they talk specifically about not competing with Google because they realise the disproportionate scale here: https://world.hey.com/jason/an-alternative-to-competition-ff...
> They can say that all they want, but it doesn’t make it true.
I've been following them for years and read most of their books. If this would be IBM or Oracle I'd understand (and agree with) your skepticism, but this is really unwarranted.
Yeah, they spend some money to build random things but that is just that lay people have illusion that Google is not an ad company - ie they are inventing something.
In short, releasing these products is necessary so that there is a perception that Google is not an ad company.
Through and through their business is advertising revenue.
This comes off as criticism, but it's not intended as an insult. Simply dispassionate.
It's a great problem to have...for a while.
Because, in theory, antitrust should prevent Google from obtaining market dominance, and therefore differentiation is necessary at that scale.
In theory.
But is this really a matter of discipline or being well-functioning? I believe that this kind of behavior is to be expected on any publicly-traded company, given the pervasiveness of the Friedman Doctrine. I.e. if the company is run to maximize the shareholder value, it becomes extremely hard for executives to justify support for any product, if the profits/benefits it provides cannot be quantified as shareholder profit.
Google isn't going to suffer this fate anytime soon though. RadioShack's peak revenues were $6.3 billion in 1996. If you crudely model a company's trajectory as a parabola in a gravity well, that $6.3 billion allowed RadioShack to coast through the air for another 20 years. Google has about 30x the revenue, and they have significant influence in multiple and related segments of the internet market.
Google could, tomorrow, make changes to email policy which would leave hey.com dead in the water, because between 40% and 60% of email traffic goes through Gmail, and email is extraordinarily sticky. If you can't send or receive email to Gmail users, Gmail users will tell you it's your fault, even if it's not. (Speaking from experience here.)
Chrome likewise is hovering around 65% market share. If Google decides they no longer want to tolerate ad-blockers, they can make a subtle change to Chrome that will boost their search engine revenues significantly (where they currently own about 91% of the search market).
Google's not going to follow a RadioShack trajectory, but they're never going to be anything other than an advertising company either, and that's going to leave some opportunities available for startups in Google's market.
There are all these smart people making things, inventing projects, coding, optimizing, etc. Google hires them, and they make things at Google. Google could fire them, directly reducing the churn. Or Google could change its incentives, take away the internal rewards for making new things. Either way, that would push smart people out, and they take their knowhow and understanding of how to google-scale with them.
What helps Google more? All that innovation happening inside Google, even though many products get discontinued? Or having all those folks wander out, raise some capital, and 1% of the time their effort ends up seriously disrupting Google’s core businesses?
My theory is: this kind of thing happens inside Google, and inside other tech giants (perhaps less visibly), because it is the closest there is to a sustainable equilibrium. Pay a lot of really smart people high salaries to keep them around, making things, rather than disrupting from outside.
Because it is a complement to your shoes and drives more sales of your shoe brand specifically. (Unfortunately, that band-shoe integration didnt arrive in time.) Same way as AppleWatch+iPhone (vs AppleWatch+Android)
@dang Is this happening?
Like a Lambhorgini, it's very fancy, absolutely excellent first impression. You're impressed. And then a few weeks later it becomes the new normal, and you are more hobbled by things like how low the car is, how limited you are in driving it, how nothing else fits in the car. A few people have gotten tired of hey.com already because it is too controlling.
Again, I actually haven't used it myself so I don't want to just state these as facts, I just thought the analogy was even more apt.
Search, email and maps are essentially all search products, just with different domains, that's why google invests in them.