Hacker News Reader

Comment by filereaper | Hacker News Reader

Does anyone know what's happening at Google? Have they grown to the point that the huge profits from web search aren't enough to sustain them or something?

I'm seeing Google ratchet up its monetization across all aspects:

- YouTube plays mandatory multiple ads

- Frontpage search is full of ads

- Gmail used to have some Infinity plus storage plan but now after 15gb is used you can't receive email. And they're using Photos towards this quota.

Nothing against paying for services but there's a noticeable and very aggressive drive towards lockin and monetization of its users.

Far more than before, so what happened to Google that's causing this?

View on HN

All these companies (or maybe just the stakeholders), IMO, seem to believe in the idea of infinite growth. And when they start seeing the plateau in front of them, it's the perfect time to crank up those milking dials to maintain the perception.

I think it's change in leadership.

Sergei and Larry seemed to enjoy supporting wild ideas and were happy to put money up for ideas that would very likely never be profitable. They had their run with these bets, none of them particularly worked out and they stepped away (as running the ad business is far less fun than coming up with a breakthrough search algorithm when they started).

Sundar and Ruth are just closer to what you would expect from a normal publicly traded company leadership (a lot like other 2nd+ generation big-tech CEOs). Focus on revenue, profit and cutting loss-making bets. Clearly very good at focusing on profitability, but at the expense of crazy bets, which I very much used to appreciate about Google

Those crazy bets are also a big part of why nobody trusts Google to long-term support a service any more. They came up with a lot of wild and cool stuff that is now in the graveyard, since there was no real way to run them at anything approaching the profit levels of their core products.

Just why do they care about the profit margins? Alphabet has several companies that are not as profitable as Google. If the low margins destroy morale within Google, then they could have transferred all of their experiments to another company that is situated where wages are low and people are eager to work for it.

With some luck, some of their bets would have turned into winners.

They got MBA'ed

Thankfully not Ballmered

They're a monopoly in multiple domains. They can do whatever they want because they can crush competition using their monopoly power. Legislators in the U.S. have been sleeping on their responsibilities for decades now. It's nice to see the E.U. taking their responsibilities seriously with the announcement of the Digital Markets Act. This will allow for much more equal competition across search, maps, phones, marketplaces, and anywhere else these major corporations currently enjoy a monopoly.

Alphabet is so big and so reliant on ads that they're actually using LTE radios in balloons to spread internet access to Africa so that they can get even more growth.

Loon shut down last year: https://blog.x.company/loons-final-flight-e9d699123a96

(Disclosure: I work at Google, speaking only for myself)

The baloon project was actually one of the cool parts of Google. Notice the past tense.

Quarterly earnings have to ever go up.

Taken to the extreme, at some point Google will have to say, “We know you said ‘No’ to having children, but we know better, so we have opted you in to having children. Our lobbyists have made abortion effectively illegal and our merger with Pharmaceuticals Inc has replaced all birth control with placebos. This is for the best for our profits, uh, we mean our planet.”

> Nothing against paying for services but there's a noticeable and very aggressive drive towards lockin and monetization of its users.

Google is an advertising business. Always was and always will be.

YouTube is an advertising supported service. Compared to normal TV where you’d be watching 8 minutes of ads for every 22 minutes of content, YouTube having you watch 5-30 seconds of ads before you can press the “skip” button is a huge reduction in total ad time relative to TV standards.

Yet expectations have shifted so much toward free services that even showing (mostly) skippable shirts ads on the internet seems to make people angry.

> - Frontpage search is full of ads

Google is a search engine that makes money by showing ads. It shouldn’t be surprising that there are multiple ads on search results. That’s the entire deal with a free search engine.

> - Gmail used to have some Infinity plus storage plan but now after 15gb is used you can't receive email. And they're using Photos towards this quota.

This seems fair to me. 15GB is a lot of e-mail.

The company behind the linked blog post will only give you 1GB free and limit your search capabilities. 10GB will cost you 20 Euros per year. Even Google’s paid annual plans feel like a bargain.

Honestly I don’t really see the problem. Google was never a free no-strings-attached provider. There’s a lot of talk about “selling your data” from uninformed critics, but they don’t actually do that. They put ads on services and that’s how they provide them for free. It’s no different than the commercials on TV or the ads covering cheap magazines and newspapers.

The only difference really is that internet users are extremely demanding of free services.

> Google is a search engine that makes money by showing ads. It shouldn’t be surprising that there are multiple ads on search results.

Google grew to be a hugely profitable behemoth having a small number of easily distinguishable ads per search page. I don't think anyone is saying that they shouldn't be hosting ads; it's more the ever-decreasing quality of the product.

Every few months the number of ads goes up and they become harder to distinguish from content. Meanwhile, the quality of search goes down.

Google search now is a significantly worse experience than ten years ago. Despite a decade of engineering advancements and hardware improvements, they keep degrading their own service.

Google grew so big despite (or because of) the fact they didn't try to squeeze every last drop of profit out of their business. This generated a lot of goodwill which has now evaporated and gone into the negative.

And don't forget the increase in GCP pricing announced recently.

“Have they grown to the point that the huge profits from web search aren't enough to sustain them or something?”

The demand of never ending exponential growth pretty much dooms a public company to squeeze money from everything. You can have yearly double digit growth while you are small by increasing your market share but once you get big and already dominate the market, where can you get more profits at the scale you need it?

Did they really make money off search? I was always under impression that search was only a gateway to their services ecosystem and its that what makes them money.

"Search is Google’s most lucrative unit. In 2020, the company generated $104 billion in “search and other” revenues, making up 71% of Google’s ad revenue and 57% of Alphabet’s total revenue.

That “search and other” figure includes revenue generated on Google’s search properties, along with ads on other Google-owned properties like Gmail, Maps and the Google Play app store."

https://www.cnbc.com/2021/05/18/how-does-google-make-money-a...

It pays enough that they're willing to pay Apple up to $15 billion a year so Apple doesn't make their own search engine and leave Google as the default search engine on Safari:

https://gadgets360.com/apps/news/google-apple-default-search...

That's Search Ads, BTW, which does not exist in Workspace for domains (a paid product).

I'm not sure what point you're trying to make. Are you suggesting they're making more money off of Workspace than they are from ads from search? Because that article says otherwise (said search ads makes 57% of Alphabet's -- Google's parent company -- total revenue)

Looks like Google Cloud (which includes Google Workspaces) is still losing money overall, not gaining money:

"Google’s public cloud has been chasing competing services from Amazon and Microsoft for so long, you might think it would be getting winded. But the critical Alphabet division keeps on keeping on, yesterday reporting revenues of more than $5.5 billion for the fourth quarter. That was the good news. The bad news was that Google Cloud accrued operating losses worth $890 million at the same time."

https://techcrunch.com/2022/02/02/with-a-22b-run-rate-does-i...

Assuming they have that revenue every quarter, that still only means $18 billion of revenue per year, which is a tiny fraction of search, and barely more than they give Apple just to keep being the default search engine.

Search and ads are intrinsically linked and the vast majority of their profit comes from ads.

It's primarily due to their competition (Microsoft, Apple, Amazon) and to match their stock valuation.

I think they're reading the tea leaves and proactively locking in (or locking out) a variety of services and behaviors before the various jurisdictions they do business in clamp down. If you know that severing advertising revenue from various products is a probable penalty some time in the future you combat that now by reducing costs (no more infinite storage) and increasing non–advertising revenues. If you know that the "cost" of hosting petabytes of stale data is a relentless stream of GDPR and CCPA complaints and potential fines, you start to factor that cost in in addition to the personnel and capital costs and adjust service levels appropriately.

If you review the history of the tech industry there's many examples of high–flying companies failing to adapt quickly to changes in revenue composition. IBM’s stumbles in the early 1990s, for example, were set in stone by a shift away from leasing mainframes to selling mainframes in the early 1980s (which juiced profits for the 1980s but gave customers a reason to look for alternatives just as the PC and workstation market was ramping up).

Acts of desperation about their bad business practices being less and less accepted in markets, where before they reaped profits from acting in this ethically abhorrent way.

Now they shift focus towards Africa for example, where they compete with Facebook, ah sorry, I mean "Meta" of course, building Internet access, to be able to profit from that population. The giant wants to eat, and so it stretches out its tentacles to all the places it can, while milking other places for as long as it can.

There probably is a hit from increased awareness of ads, and the rise of ad-block.

But what about just wanting to crank up profits? There's plenty of stories now where those that comply with the shareholders wishes see accelerated promotion.

I think it's just a case of profit optimization rather than product optimization

Workspace doesn't have ads.

The above comment and my repsonse was about the broader Google products, not Workspace

Reply on news.ycombinator.com