Alphabet Earnings Report Q3 2022 [pdf] | Hacker News Reader

Alphabet Earnings Report Q3 2022 [pdf]

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177 pointsmfiguiere349 comments

My initial takeaways:

- Alphabet is experience massive decline in revenue growth. (Only 6% YoY growth vs 41% YoY growth in 2021)

- Internal costs are sharply increasing (Only a 25% Operating Margin vs 32% last year). A 7-point swing is massive. To put this into perspective, outside of tech, most companies only have ~10-point Operating Margin. So this swing of 7 points in margin, for most companies, could be the difference between being profitable vs not.

- Even though they are generating more total revenue than last year (same quarter) - they are considerable less profitable overall ($14B this year in Net Income vs $19B last year same quarter). This is related to the previous bullet.

Alphabets stock is -6% in after hour trading.

I think it's dofficult to compare 22 to 21 and 21 to 20 given COVID.

True, but earnings are earnings. And a substantial drop in organic earnings is nothing to ignore.

Disclaimer: Googler here but opinions are my own.

I think what happened was a the perfect storm: remote working made people be more at home and so more time spent online. Additionally, stimulus checks were juicy targets for advertisers that tried to sell people stuff to spend time.

Now, we are having inflation due to all those stimulus checks that forced central banks to hike interest rates. Moreover, energy prices and supply chains disruptions exacerbated the situation by driving more inflation and the cost of doing business. Advertisers understandably prefer spending less money.

Under these circumstances such a drop in unsurprising IMHO. Similar to the drop in Q1/Q2 2020.

EDIT: I wrongly used stimulus checks as an umbrella term. I really meant all the actions that pumped a lot of money into the economies.

Friendly advice: As a current googler, you should refrain from posts like this, even with the “opinions are my own” disclaimer. You have access to internal info that shapes your opinion, etc. Even an innocent post such as this is potentially a breach of your employment contract.

Thanks!

"Potentially" is doing a lot of work there. If the lawyers get involved, marcyb5st is going to have to explain themselves and their comment, but their lawyer is going to ask about what material information is in the comment. The social media policy requires the disclaimer, btw.

Current Googler, opinions are my own.

At Apple, you could get shown the door if a cranky VP catches you opining on why revenue is down.

All I’m saying is: best to avoid any post that is related to company internals in any way. The “New York Times” rule and all that.

It's probably slightly less risk, yes. But Google has a specific policy about this and they are following it to the letter. This is pretty low-risk as far as things go.

Apple has very, very different policies on this than Google. Google is getting more conservative, but it's still a long way from Apple.

Apple is also very famously way out on their own with these kind of policies. That’s not real life.

> You have access to internal info that shapes your opinion, etc. Even an innocent post such as this is potentially a breach of your employment contract.

As a Googler also, I question is this really true? The only thing I can think that you are referring to (internal info of something I'm not directly working on) is...memegen. Anything secret I'm exposed to is much more technical than business directions. When we are talking about the general economy, we really are just talking about the general economy.

It is. You also tend to tarnish your company's brand with the ad-hoc remarks. Let your Marketing, PR, and CFO handle the comms on this.

> Let your Marketing, PR, and CFO handle the comms on this.

Yes, Google doesn’t expect or allow SWEs to handle comms on anything. But we are also allowed to express are opinions on anything unrelated to our work. I can imagine that you work or live in a much more strict/stifling environment?

Don’t let your corporation muzzle you out of fear, especially one like Google which 1) has a specific policy about this and 2) is big enough that no post on HN is going to move the needle.

Disclaimer: I don’t work at Google and my pseudonymous internet opinions are all definitely correct.

Ah of course, the stimulus check story. Indeed, 1200$ one-off checks caused this recession. /s

It was like $5T in total stimulus.

You're correct! I used stimulus checks as an umbrella term, but it's not correct. But I meant all the measures that pumped a lot of money into the economy. Here in Italy loans were frozen for 2 years which equals to a much bigger injection.

1200$ x 320 million americans = 1 trillion dollars [1]. Meanwhile less work has been produced.

[1] It’s the official number, not a mistake or a ballpark. https://www.gao.gov/products/gao-22-106044

Where did the other $616 billion dollars go?

That’s the problem with the governments.

No but $500k PPP loans all over the place probably did affect the economy.

Didn’t those mostly just mean that people kept getting their same salaries?

When supply remains the same or declines at the same time demand goes through the roof through a combination of lockdowns and helicopter money (as the other commenter points out, government sources show nearly $1T in direct payments), big time inflation happens.

Said inflation is most likely the biggest culprit behind this (or upcoming, depending on how you define it) recession. Disposable income is evaporating and people are adjusting their purchasing behaviors. After all, who wants to buy anything they don't have to, when they feel that everything is so much more expensive than it should be?

> Now, we are having inflation due to all those stimulus checks that forced central banks to hike interest rates.

Stimulus checks are not causing inflation. Corporations raising prices to increase profits are causing inflation.

inflation is a giant beast with multiple causes, one of which is definitely stimulus. There are others too, including the cause you listed. Most things have multiple causes

Corporations raising prices that people are more willing to pay because they have more available spending money because of all of those stimulus checks...

What changed? Corporations who raise prices to increase profits isn’t exactly a revolutionary never before seen business strategy.

> Corporations raising prices to increase profits

Well, not Alphabet.

Stimulus checks did not cause high inflation. It's a relatively small factor. The major impact was supply chain issues, changes in how people chose to spend their money, and two major impacts to oil (people suddenly commuting much less and then starting to again, and Russia).

Interesting. I didn’t know this was settled. Have a good reference on the relative attributions? Mostly curious about methodology for doing so.

All of that money is long spent. FRED has data on it. Inflation continues unbaked.

"supply chain issues" -- I think there was a Dilbert about that. The all-purpose excuse for everything.

"Supply chain issues" don't just happen, like an earthquake. They're caused by government actions.

Supply chain issues like the workforce being sick, factories shutting down due to the pandemic, and a giant ship clogging up the ocean for a while.

Its not about the inflation rate, its whether it's controlled. The fed reacted slower than expected to inflation, and claimed it would be transitory for a long time.

Hiking is meant to take heat out of the economy, doing so while the government was still pouring covid stimulus money into the economy would've been counterproductive.

Covid stimulus went on too long (later stimulus checks, mortgage forbearance, eviction bans), well after people had returned to their lives. And we are only beginning to see just how much of that money had no productive impact on the economy (PPP fraud, theft of unemployment benefits, scams around fake tests and masks).

Billions of dollars have been spent without contributing to GDP, governments need to cut back fiscal policy to control inflation.

https://www.justice.gov/opa/pr/us-attorney-announces-federal...

If it was all supply side we would have seen a accompanying reduction in national income. It’s a combination of both a reduction in aggregate supply and an increase in aggregate demand.

It's fair when profit margin is lower than pre-covid.

I agree, it would be more interesting to see these numbers for the last 4 years.

Comparing today's revenue #s to 2018 - GOOG: 106% - MSFT: 69%

Using last quarter to corresponding 2018 quarter because these haven't released yet. - AMZN: 130% - META: 118% - AAPL: 55.8%

> costs are sharply increasing

Operating costs ballooned $7.9bn, nearly 18%. That's nuts.

What is this attributable to?

Basically the entire business I guess. Cost of revenue, R&D, ales/marketing, and general are all up around 15%.

Those developer salaries have to come from somewhere I assume.

Headcount almost double since the Pandemic.

There it is. This makes sense, I must have missed this. That is bonkers.

So many engineers but still shut down products every few weeks.

EDIT: Still FURIOUS they shut down Stadia. I hate you Google

Many are still furious about Google Reader.

>Still FURIOUS they shut down Stadia

You're the first person I have ever seen with this opinion. I want to know, back when this was released, what made you ignore all the people that said that the product would be a failure and that Google would shut it down quickly? I always saw that as the majority opinion.

I thought that they would be serious about it given how much investment it took to get it off the ground and also how they were actively seeking relationships with indie devs to maintain vast amounts of quality titles.

Obviously I was wrong and have been actively ending my own usage of Google products because I have been burned for the last time.

In what way were you burned with Stadia? I thought they reimbursed folks and you got some entertainment while you subscribed.

Ultimately, they couldn't convince enough people to sign up, but that's a whole different story about product strategy.

I'll never get to finish Cyberpunk lol I'm not playing that again. Sure, the refunds are nice.

I'm pretty sure you can transfer your save game for Cyberpunk off of Stadia to PC or consoles. It's not true of every game, but I think it works for Cyberpunk if you plug it into your search engine of choice.

hangs head in shame I still use Google search :monkey_hiding_eyes_emoji:

regarding stadia, What did you think they would happen? They have a graveyard of great projects that should still be used by millions. The only things I see continuing are android, ads, search, I even feel with the severe losses their cloud unit is seeing even GCP could be shut down. Hell I could even see them abandoning Waymo, I mean this is google after all :)

They're not killing chrome. I doubt they kill their office suite either, it has really good numbers among young people, and microsoft's entire business is built on the back of its enterprise productivity software. It's a trillion dollar market cap business.

The Office suite is used by every Googler every day (and that's every Googler, not just eng). It's what the company runs on.

There's no way in hell it's getting shut down when it's that critical to business operations.

They could shut down the public facing product and make it internal only.

But why would they? The Google Docs suite is a billion+ user product, which is monetized through Google Workspace and Google for Education (with many millions of paid user subscriptions).

This is just not remotely plausible of a shutdown target. It also dates back to 2006. I'm struggling to think of even five Google products I would name as being less likely to be shut down.

...they killed some productivity apps. Don't say never. Hangouts, dead. Keep App, dead. Enterprise Search, dead. etc

Keep isn't dead. I use it everyday on my personal and business account. I love keep. I will be sad when the inevitably kill it though.

Keep is dead?

Hangouts functionality basically still exists, just under a different name. It's still integrated in Gmail, with the same contact list, and all the previous conversations from Hangouts were still there. It's so similar that I bet many people don't even realize anything changed.

This is unlike, say, Reader, which was canceled with no replacement to this day.

I very much agree with you, and think it will hurt the company in the long term

But to give some credit where it's due: reimbursing all Stadia purchases is a very customer friendly way to shut it down

Gmail probably has legs

>GCP could be shut down

I'm I dumb for assuming that google must use GCP internally? Therefore making it pretty much immune from being shut down. I guess they could go full internal tool with it?

I believe I've read here that it is not pervasively used internally.

I don't think they'll ever shut down GCP. But I could see them discontinuing services within GCP over time.

Google does not use GCP internally. If they did they'd be bragging about it.

It's got some decent usage internally, but it's small potatoes next to Borg.

>Hell I could even see them abandoning Waymo

That seems less improbable than even a lot of other cuts. A science experiment that doesn't have a clear path to an assistive driving revenue opportunity much less something transformational? I'd probably make an argument that they have to keep plugging on GCP but could cut Waymo loose without much collateral damage.

Waymo has taken a fair bit of external funding. Google could in theory cut them loose which would effectively kill them, but I'm not sure they could just shut it down.

makes you wonder, what exactly the headcount is going to. Double the headcount, but sure doesn't feel like double the innovation/product-growth.

It's also wild internally. It feels like headcount is incredibly tight, and even tighter now. Like 20% of my time as a manager is spent being asked to propose large new projects only to be told "nope, no HC for that." But somehow the company is like 4x larger than it as when I joined.

Wow, really? So where is it all going?

I suspect it is a property of subexponential growth. If every team gets new HC then the entire company grows at ridiculous pace. But it does feel disempowering to see the company grow like mad while we are told "not you."

Honestly as an end user, the growth seems to be backwards. Search results are worse than ever, YouTube recommendations are broken, and for the first time in years, Google Maps is showing me weird as hell routes.

People are so quick on HN to say "why does company X need 1000 employees when clearly it could be done with 10?" but I find people tend not the ask the even more obvious question "Why does company X need 100,000 employees when they seemed to be doing just fine with 50,000?"

I do get that there is a lot of extra complexity that goes from a startup solving a hard technical problems to a pre-IPO company that is solving a bunch of business problems as well as technical challenges. Yes companies gain less efficiency per hire as they grow, and many do grow for growth's sake these days, but it does make sense that some companies need a thousand people to do what a startup thinks they can do with 10.

But it certainly doesn't seem like Google is making great use of doubling headcount. On a product by product basis, at least for me, it feels like most Google products are worse than they were pre-pandemic.

If they had shown revenue growth highly correlated with headcount I would see strong evidence that my view is wrong, but the facts don't seem to point that way.

There's diminishing returns as the company grows in headcount.

When you hire large number of engineers, you need to hire engineers to support those engineers. Then you need to hire people to support the engineers that are supporting the engineers and so on...

This is pretty common in most large companies. Remember the mini-msft blog? This doesn't happen as much on product teams but in all the support functions which don't hire world class people like they do on software engg.

Basically as companies revenues grow, every cost center gets to put in a request to grow headcount. If you don't your colleagues will and you'll be looked down upon. then you take on shiny new non-essential projects and find ways to justify it. Launch it get promoted and leave. The next person comes in- decides it is crap- shuts it down and starts their own new project to reinvent the same thing . Org politics.

In a way we are lucky this is true. If there were only economies of scale and no diseconomies we’d end up with only a few dominant conglomerates.

> On a product by product basis, at least for me, it feels like most Google products are worse than they were pre-pandemic.

I dunno, MSFT products seem to have only gotten worse since 1995 - and their profits are doing just fine.

The quality of a product and its ability to make money seem to almost be inversely proportional.

In Google's case - what matters is - they're doubling headcount (largest expense) and revenue has barely budged.

It'd be nice if the products got better - but all they should really care about is if they're making more money.

Or: what part of this isn't attributable to inflation?

How much do DEI initiatives, directly related staff (Director of 'Belonging' etc), and non-meritocratic hiring practices impact profitability?

What about the alienation of staff and users considered part of 'legacy' demographics?

https://about.google/belonging/

Hiring 55,000 new employees in the last year is a big part of it.

I always put this into perspective. Google hires about 2 Uber sized companies in employees every year.

R&D costs: went from 7,694,000,000 to 10,273,000,000 quarterly 2021 to 2022.

whereas revenue went 65,118,000,000 to 69,092,000,000. Somewhat less of an increase.

You'd assume R&D is mostly fully loaded costs of engineers, but I suppose someone who really knows the financials could tell us for sure.

Google is getting deeper into silicon, both datacenter and device. That R&D has substantial capital costs which I think are still included in R&D top line.

I guess we could both read the part of the report where they explain it :)

If it's capitalized, then it's not R&D, which is all expensed.

The silicon would be to save money compared to general purpose compute. The savings should overcome any fixed cost. Doubt it's having that great an impact to R&D cost growth.

that was one of the reasons for TPUs- they are far cheaper (TCO) than large numbers of GPUs if you're doing massive amounts of training.

One subtle deception in such reports is that dollar v22 is 30% smaller than dollar v21, so $14B x USDv22 is way worse than $19B x USDv21, about 2x worse I'd say.

> dollar v22 is 30% smaller

They seem to be using the same font size for both years.

Or by smaller, do you mean that there was a 30% inflation from 2021 to 2022?

A USD is a USD, how did you arrive that I can only purchase 70% as much of something in 2022 compared to 2021?

Most dollars printed eventually find their way back to the fed through taxation.

Financials are often reported in "constant dollars" and inflated dollars so you can see the impact of both.

It means pip is coming big for Googlers

Further:

- headcount from 150k to 186.5k (!)

- EMEA + APAC largely driving slowdown in growth as both regions were -2%, USA + Americas are still at +12%

Feel like this might be a pattern this quarter - declining margins + growth as companies over-extended themselves last year not foreseeing just how bad things are outside of the USA + Americas

they keep iterating that foreign exchange is a big part of the non-US decline, but I fail to find how much in the PDF

“Our third quarter revenues were $69.1 billion, up 6% versus last year or up 11% on a constant currency basis.”

Constant currency means excluding impacts of FX.

11% growth (constant currency) vs 41% growth last year is still has huge slowdown in growth.

Stupid high dxy makes international markets tighten the purse strings. Whowouldathunkit.

revenue outside USA will be taking a hit due to current forex trends

This points to what an anomaly 2021 was.

Alphabet was seeing around 15% YoY revenue growth prior to 2021. Then 2021 hit and the growth rate jumped to 41%. Now with the 6% YoY growth this year, it's evening out to ~22% annualized growth over the last 2 years.

What we can’t point to yet is what comes next? Continued growth or are we nearing a peak? Hopefully cloud can turn on profit mode soon

If I'm reading the financials correctly, ads constitute just shy of $54b in earnings while Cloud just $6b.

As long as consumers are buying stuff, companies will advertise to them. As long as Google has a captive audience and they can continue to mint keywords for advertisers to bid against, I think this flywheel continues.

And yet their search product results are declining rapidly in terms of quality. So much so that people in HN report having to write "reddit" at the end of their queries to get reasonably interesting results.

Sure HN notices this first, but for sure the "regular people" are not far behind.

Still, there are no good alternatives -- yet. You can bet if Google is the new Altavista, then the new Google is just over the Horizon waiting to steal their ad revenue...

The declining quality we notice is likely because Google is getting better at serving everyone else. It's only going to get worse for handling off-mainstream queries, and it won't matter for most people who aren't looking for an obscure forum post from 1997.

It was peak of VC-bubble or whatever we are going to call it, and now we are going to probably see similar period as post dotcom bubble.

It was also peak COVID, so anything involving spending money online had a field day.

2020-21 were just weird as hell and no one should be making long term decisions based on these glitches in our timeline.

Advertising margins are very high and cloud margins are very low, so the expectation that their cloud platform will grow and the expectation of high margins are sort of in tension.

Isn't AWS's margin something like 35%?

Search advertising margins are more like 80%.

Sundar took the easy way of trying to force revenue growth at all costs and achieved it in 2021, but the tactics are not long term sustainable and have slowed growth and profitability. Even more concerning is Sundar has no product vision. He focuses on technological capabilities and not value to people.

That is pretty general, but more important seems untrue. All I ever heard Sundar say both internally and externally was about making Google “more helpful”. He said it so much and it was such a boring and bland statement that it really frustrated and nearly angered me. So yes, he lacks vision and specific product strategy here, but I think he is trying (badly) to move the narrative away from technology towards people

Your statement isn’t entirely incompatible with the one your’re replying to.

Sundar may think that “more productive” is a technology statement, which would reflect a serious lack of product vision.

He may even think he’s focusing on people despite having exec planning sessions all framed as “technology that lets people do ______”.

The only thing I am refuting is his focus on technology. By beating the constant drum of “be helpful in peoples live” he is making the help explicit but the technology is implied. My point is he doesn’t _focus_ on technology. He is trying to get the company to focus on people

it's interesting to me that anyone would try to consider absolute results over the last few years.

I feel like there should be some kind of consumer behavior/overall market beta factor that normalizes results with respect to the extraordinary conditions that have played out over the past few years.

comparing year vs. year over the last few years seems to make no sense to me.

I don’t understand the second point. That’s still 2.5x most companies. That sounds great.

The trend is concerning, and this is graded on a curve. If you want to exceptional valuations you need exceptional numbers (or exceptional sentiment).

Most companies also trade at a much lower P/E to reflect their lower margins.

Revenue is down for YouTube, compared to last year. Maybe this explains recent increases in ad placement [1] and the choice to gate 4K quality behind the YouTube Premium subscription [2].

[1] https://www.theverge.com/2022/10/4/23386782/youtube-premium-...

[2] https://9to5google.com/2022/09/16/youtube-ads-unskippable/

They seem to have walked back both of those and instead have just lifted the price of YouTube Premium as a whole [1]

[1] https://techcrunch.com/2022/10/21/youtube-premiums-family-pl...

>Revenue is down for YouTube, compared to last year.

Maybe this has something to do with becoming the defacto censorship arm of the government and banning/blocking/demonetizing/driving away many customers and viewers.

Maybe it has to do with extraterrestrial viewership being down. (If we're just making stuff up.)

You sure they seem to be up by my metrics?

It’s not made up, a favourite YouTuber was banned so I signed up for Rumble and shift my viewing to alternative platforms as much as possible.

Oh wow, did Alphabet disclose this in their Q3 earnings?

I'm sure at least one kid who said their dad worked at Nintendo was telling the truth.

The main negative I have is just the opposite: YT’s algorithm persistently pushing crazy alien theories, Joe Rogan and Jordan Peterson garbage into my feed, or worse. I wish they would censor that stuff more, because I’m not interested and no matter how many times I say “not interested”, it finds its way back in.

To clarify, I don't consider YT's algorithmic choices to be "censorship" one way or another. Censorship is blocking, banning and/or demonetizing videos and preventing consumers from proactively deciding what they want to watch. I fully agree that allowing users to curate what Youtube suggests to them would be a massive improvement over the current system. If you are interested in learning more about actual Youtube censorship, Matt Taibi has been covering the issue for almost 2 years.

https://taibbi.substack.com/p/meet-the-censored-ford-fischer

I either get "<Ideogogue> destroys <ideology>" videos or some really insane things, my favorite being videos from instructors who say they can teach you to fly if you give them thousands of dollars. By fly, they mean levitation and not airplanes.

To clarify, you are saying that private corporations should be forced to pay for and carry whatever content your favorite political party wants?

Because the evil censorship that you believe the government is forcing does not exist. There is no legislation and there is no planned legislation from any us political party banning content, but there’s a hell of a lot of “conservative” legislation aimed at forcing YouTube etc to host racist, homophobic, transphobic, anti-Semitic, and literal nazi content - in other words the exact BS the 1st amendment is meant to prevent the US gov from doing.

Wait I lied, I forgot the GOP has got huge amounts of legislation that tries to ban acknowledging that LGBT folk are human, that slavery happened, that conservative states are to this day doing everything they can to limit which Americans get to vote, etc

Given every time I see you commenting on HN it’s the same bigoted BS, that you then try to pass off as caring about treating things “fairly”, im going to stick with what I thought initially: you’re a bigot, and any time you claim that you are just interested in fairness it’s just another bit of bad faith BS rather than owning up to you being a bigot.

It’s America, and HN has no rules against being a bigot, but I’d rather you just preface your arguments with “I don’t think lgbt people deserve equal rights, I believe that anyone that doesn’t let people use their services to spew forth claims of straight white Christian superiority is is somehow censorship violating the 1st amendment, and I think anything that counters this view is propaganda”

JFC

They should just adhere to their own stated TOS.

>To clarify, you are saying that private corporations should be forced to pay for and carry whatever content your favorite political party wants?

I don't have a favorite political party, they are all trash (in the United States). But that isn't what I was saying. What I was saying was very straightforward: If you are a corporation that wants to maximize profits, driving away a segment of potential customers is a poor strategy.

That's too simplistic of a statement. Sometimes you have to drive some segments out to keep others or to keep advertisers happy. If HN didn't put effort in curating the community would a lot of us still be here?

The limited, mostly consistent curating done by Dang and the staff from HN bears absolutely no resemblance to the widespread censorship on Youtube. For example, many interesting and substantive discussions about various Covid issues happened in HN comments that were completely banned on Youtube, Twitter and other government-compliant platforms in recent years. Certainly it is beneficial for a commercial platform to drive off those who are so offensive that they actively reduce demand from the network by driving away users, but it is absurd to think that has been the rational for Youtube's censorship policy. I would suggest that if HN implemented a Youtube-like censorship policy they would lose far more viewers than they would gain.

Unless that serving that segment drives away another.

For example: I could be a shop in LA and say "I'll happily serve the nazis", but I'd be dumb if I thought that wasn't going to result in other potential customers going elsewhere.

> I don't have a favorite political party, they are all trash (in the United States)

This is BS - you can say that neither party is great, but this is acting like they are equivalently trash, which is objectively false, regardless of your politics. If your politics are "LGBT people are not people", or that only a specific type of person should be allowed to vote, then the liberal parties are trash, and the GOP is your savior. If your viewpoint is that all people should have the same basic rights then there is no way you can look at the GOP as being an option, no matter how fiscally conservative you might be.

But as I said later on, you have repeatedly taken the stance that LGBT folk aren't human, and then proclaimed you don't have a political viewpoint, which is BS that I'm tired of putting up with or ignoring.

Look, I do not care if you're an asshole in real life or just online, as we are unlikely to ever meet in real life. Even if we did, we are unlikely to agree on this topic because you've repeatedly taken the position that you think that "should this group of people have the same basic human rights as other humans" is a reasonable question, and that is only the case if you've already decided that that group is subhuman.

Like I said, I am just tired of reading your BS comments in which you try to act like you don't have politics, or that you aren't at the very least transphobic, when that's very clearly BS.

HN needs a way to "fork" branches of comments that have clearly gone astray, but have value on their own. Maybe turn comments into a red-black tree of some sort: black for regular comments, red for semi-related thoughts, collapsed by default.

>This is BS - you can say that neither party is great, but this is acting like they are equivalently trash

In my opinion both the Democratic and Republican parties are so worthless that they are indistinguishable. From their uniform support for endless war, US global military empire, the police state, ubiquitous surveillance and the endless transfer of wealth from working people to Wall Street rent-seekers, the two parties are the same in substance.

>you have repeatedly taken the stance that LGBT folk aren't human

This is a slanderous statement. I welcome you to quote and link to any comment where I suggested any such thing.

We have a serious mental health crisis post Covid lockdowns, and I hope you can get the help you need.

> potential customers

YouTube’s customers are mostly advertisers and their clients. And advertisers don’t want their adds next to content that will drive away their customers.

What about the Hunter Biden Laptop story censored by social media companies after the FBI told them about it?

A possible factor, but a drop in the bucket. Gilder's book highlights structural factors, ex-economics that will deflate the ALPHA bubble.

Downvoted, but seems like a reasonable comment to me. YouTube is still king, but their policies are unfriendly to creators and viewers alike. Over time, that will eat away at your audience.

Could that have started a downward spiral? I noticed that when I am casually browsing Youtube that the increased amount and length of ads let me stop browsing Youtube quite often. Especially when a second ad starts at the beginning of a video or if a video is interrupted too frequently or at the "wrong" point, I close Youtube altogether at that point and do something else. And while the short occasional ads before the videos did not bother me much in the past, now I stop browsing Youtube earlier because it is no fun to watch the same stupid clip a dozen times. Thus, the increase in advertising on YouTube has probably led to my seeing less advertising there overall than I used to.

Yes.

At a previous gig we had alarms that would fire when we were making too much money, because it probably meant something had gone wrong and we were over-serving ads, which was bad for long term user engagement.

Long… term…? Do you mean setting OKRs every half instead of every quarter?

Silly you

With annual bonuses, you set everything to max KPIs and leave when the house burns down next fiscal year.

It's the Dick Fuld method(tm)

My biggest pain point is the ads at the end of the video (on TV). they are completely unexpected and hold the 'related videos' hostage until you finished watching so you cannot jump to next. sure you could hit back but then YT takes you to home screen and you've lost all history. overall a poorly designed navigation but agree that basically its not fun to watch on TV anymore. its too bad because YT's main selling point was casual viewing.

Definitely. It's so much harder to watch now - seems like many companies have made myopic choices about monetization in the last year, making a plethora of services less useable.

Get µBlock Origin on Firefox, also works on android.

Brave browser does good ad blocking by default on iOS and desktop.

uBlock and uMatrix are unable to block ads on Chrome/Chromium, it only seems to work on FF. I can't imagine how much worse things will get once manifest v3 limitations kick-in.

Of course, when I switched to the 13 pro max last year because my wife bought it for me I just didn't install the Youtube app at all, I understand that's how the creators make money etc. etc. but I just chose to not use it and it's ok...

Then switched to the Samsung z fold 4 last month and installed Vanced, first thing I did to be honest, got the apk from the wayback machine, then realized they offer 4 months of free premium if you bought a z fold or z flip so I subscribed and will cancel it 3 days before it ends.

Just put a cheap audio only plan without subscription, say pay 2$ for 1 month of audio without ads, and if video then 1 short ad at the start maybe, people don't want to subscribe, it's a commitment, and audio is cheap to stream, and people would pay for background play.

Honestly this is what the canary in the coal mine was for me.

As soon as it happened I said to myself "This is juicing of short term metrics at the expense of long term success and goodwill, the final triumph of management over engineering."

It was obviously such a user hostile obnoxious move that I will never understand why no one ever pointed it out.

Googles hey day is past it may stick around for a long time but it has become the new MS, while MS is the new IBM.

It's funny I always assumed Amazon would become MS before Google.

Amazon is the new Google. Google the new IBM. MS seems to be doing fine. What is Google's next cash-cow? Google's Cloud pitch sure reminds me of IBM's "Big Data" push.

The ads lately have been painfully excessive. I installed Brave on iOS just a few weeks ago to avoid the spam. I used the Youtube app for years and didn't have an issue giving them their ad revenue. Now I am gone forever.

What you describe it's sort of a Laffer curve for our time/attention, and I totally believe that it has an effect.

I use ad blocker on my computers so never have to see any ads. But on my TV, without ad blocker, YouTube is completely unusable. I have to sit through 2 unskippable ads just to watch a 2 minute movie trailer.

The alternative is to get YouTube premium, but that’s priced higher than Disney+Hotstar here (which has live sports along with Disney and HBO shows) and I just don’t see the value.

I just assume the people who demand ad density increases don't even use Youtube, much less experience the ads. Out of touch upper management: a tale as old as time.

Also the announced 50-200% price increase to Youtube Premium for most current customers.

*on the family plan

Where are you getting 200% from? Hell, where are you getting 50% from?

Almost up by 300% in Argentina

https://techcrunch.com/2022/10/21/youtube-premiums-family-pl...

Come on, Argentina has rampant inflation, and an individual plan is tripling to $2.53. Not a great example.

And killing adblocks next year ;)

How do they propose to do that?

latest Chromium Manifest V3 changes

https://arstechnica.com/gadgets/2022/09/chromes-new-ad-block...

Hope they try to pull it off asap, so that adblocking community will strike back ;)

I am betting Google will never ever be able to prevent adblocks

> Also the announced 50-200% price increase to Youtube Premium for most current customers.

Approximately half of Youtube Premium subscribers are in the US, which saw no increase for individual plans and a 28% increase for family plans. The increase in Canada was (as a percentage of prior prices) identical; in the UK it waa again no increase for individual, but only 11% for family plans.

So, no, it was not 50-200% for most current customers.

I'm even getting ads on YouTube Premium when casting to a Chromecast now.

I’ve never seen that and I do it regularly, but I do know that if you cast to a device (like a Smart TV) with its own YouTube app it uses the recieving device app; it would make sense to get an ad if that app is not logged in to an account with Premium.

I don't know if that is what happens (and in my experience it does not - the receiving app takes its authentication from the source-of-cast).

Regardless, if it ever comes to that, we should ask for more as customers. It doesn't and shouldn't make sense if a paid / pro user had to watch an ad before casting (a fully supported functionality) to a new / unknown device. Corporations are fully allowed and equipped to make money, but the benefit of doubt in unexpected / grey situations should largely be with the user. The alternative allows any entrenched party to arm-twist users for even more money, and while market forces cause an eventual course correction, the interstitial generation has to suffer along the way.

It's a known bug that Google seems unwilling to address. This happens on a months old Chromecast v3 by Google. Unfortunately they disabled the (standalone) login feature on the Chromecast so you cannot prevent this by logging in. Ads show on the next video when autoplay is on. Unless you play from a playlist. All in all quite annoying.

Another TikTok casualty...

As someone who consumes a lot of YouTube and pays for premium, I could never go back to the ads. The experience of no ads easily justifies the cost for me.

I also am one of the rare people who uses YouTube music, so win-win

This. Given how diverse and high quality content on YouTube is, it's by far the top streaming service that it's worth paying for.

You do that, in the meantime I am going to just use uBlock origin and not reward their user hostile behavior.

have fun with that on a TV or other devices

nice engineering challenge to port adblocker on tvOS or implement adblocking through pihole

I personally feel that Google is letting us all down with the Youtube product. It works well, but its so behind what it could be. They could take a lesson from tiktok on how to actually surface content people want to see.

The increase in adds feels like they are taunting me into signing up for premium. I won't comply. I'm using YouTube less too.

They definitely are. Remember they're going to kill adblockers next year and they are going to up the prices of YouTube premium.

I think it will just take a few big names to popularize a different platform so they better be careful.

There's always piracy too, that could easily make a comeback.

Frankly YT Premium pricing is ridiculous. It's not worth $23/mo for my family. That's way more than Netflix and Google doesn't even produce its own content... If it was cheaper I'd subscribe.

It's worth pointing out that Google Cloud here is not just GCP but also includes Google Workspace (Gmail, Docs), maps API, and probably also enterprise Chromebook sales. The growth rate is not necessarily indicative of GCP adoption.

Wouldn't this suggest GCP growth is higher than the 38% growth number for Google Cloud? Well engrained services like Google Workspace probably aren't seeing growth like that.

GCP revenue growth accelerating at 38% though still not profitable. Probably see the first quarter above water in Q4.

Google Cloud != GCP. Google Cloud also includes Maps Enterprise and Google Workspaces.

GCP changed its name to Google Cloud (Your point still makes sense)

How does this compare to AWS and Azure?

A distant third.

Since their revenue is driven by advertising doesn't that mean they're indirectly driven by the health of the economy?

When the market tanks so does their revenue. People buy fewer things and ads are less effective.

You can generally say that about most companies. The economy is one big feedback loop, and every disruption reverberates to everyone participating in it.

The degree of correlation varies; for some cos it even runs the other direction. Web ads are such a critical part of commerce that the correlation for a co like Google is extremely strong.

The price hike on Youtube premium is insane. I guess it makes sense when every other product you try to bring to market ends in failure. If Google is the creme de la creme of software engineering companies, full of absolute geniuses, why can't they think of a product that people actually want besides charging more/putting out more ads for the products they have?

Google engineering team is supreme but product team is subpar.

I thought they are famous for their "APM program"? Is it simply overrated?

“Signs point to yes”

But for real… it’s prestigious because it’s hard to get into, not because Google is great at product development.

In practice Google’s product muscle has proven to be pretty weak

They've been riding off that "fame" for like 20 years, but it's a completely different situation today vs. when the program was at its peak.

The house that Marissa built.

While I don't necessarily disagree, my understanding is that engineering tends to drive more of the product decisions. I question how much power the product team actually has.

That has ceased to be true in vast tracts of the company. Cloud, for example, is chasing feature parity with its competitors and engineers are told to implement things because AWS or Azure have them, not because they organically grew out of the architecture of the existing system. In fact, quite a few features annealed poorly onto the existing architecture (which users of Google Cloud may have memory of).

Huh, citation? :) I'm not saying you're wrong, but as a GCP engineer I have never seen us (well, my org) implementing something because of "AWS or Azure has it".

Memory's a little fuzzy, but I'd put IAM and workspaces in that category.

IAM, in particular, was a huge undertaking in jamming fine-grained access rights onto existing resources where none such existed before, and it was pretty much marching orders from above: "Potential clients can't migrate off AWS because AWS has this and we don't." And it caused more than its fair share of "Why is this API suddenly throwing errors" tickets from existing users who were accustom to the pre-IAM permissions model.

ETA: Re-reading my initial statement, it was over-broad. There is room in Cloud for bottom-up engineering and product design. However, especially relative to the rest of the company (where Google is an industry leader, not entering a market already heavily dominated by an elephant), Cloud spends a lot of its time chasing "table-stakes" features to enable new customers to be on-boarded who can't subscribe to Cloud because they can't migrate their existing flow off AWS without X Y or Z analogous feature available in GCP.

Online disk resizing was the one I tracked as it slowly trickled through alpha/beta. To be fair, pretty much every virtualization product had online resizing before GCE, so it could have been a matter of prioritization.

Whatever the heck Vertex AI is compared against the Sagemaker+Ground Truth pile that AWS has. By no means is any of it groundbreaking from either company, just piling open source software and buckets behind UIs, but it seems GCP is doing catch-up there.

I have been interviewed multiple times by GCP product managers seeking to understand how my team used specific AWS services that Google lacked at the time to learn how to implement Google's competing service.

I would be more concerned if your org wasn't doing this. AWS does it all the time too. The parent post is wrong to paint this as a negative. And GCP has some unquestionably industry leading products too (BigQuery, GKE, Spanner, AI/ML services)

Yeah I think this is rather disconnected from my experience building products inside of GCP.

I'd be curious where you think we could have done better on the annealing with specifics :)

IAM rollout was a chore (and introduced a whole layer of abstraction that users who didn't need fine-grained resource management now needed to be aware of / care about) and workspaces interacted with the existing billing infra in a messy fashion, if memory serves. On the plus side, that was years ago and AFAICT Cloud learned the relevant lessons from those stumbles.

But are engineering teams not focused on getting the best product out to customers supreme engineering teams? Hardly so imo.

I spotted this in my account. I was originally under the impression youtube premium would be 15 bucks a month... some how it's now up to 30 bucks a month. 6x AppleTV and 2x Netflix.

It's 30 bucks because you're paying via Apple. Google hates the Apple cut so they are now charging an extra 8 dollars a month for not giving them direct access to your credit card info.

Are they wrong to do so? It makes no sense for them to make less money on a competitor's platform. There's also no real alternative to YouTube Premium on iOS (see: sideloading limitations) so they could arguably charge $50 a month and retain most of their iOS customers. This is your reward for locking yourself in a room with two hungry corporations.

> so they could arguably charge $50 a month and retain most of their iOS customers.

Source?

It's hyperbole, but people would still buy it. On iOS, Google is allowed to monopolize YouTube and it shows us a dark vision for the future of platforms that enable this kind of lockdown. Google can treat the platform like a second class citizen, buy up latent iOS advertising, force people to use an inferior app and still profit handsomely off it, all at the same time.

This doesn't have to be the case. But Apple's lockdown enables Google's tyranny, so there's really no other choice. On other platforms, I can install apps like NewPipe on watch YouTube in the background without needing to download anything from Google besides the videos I want. Google is not the savior of this story by any means, but they're not afraid to play Apple's game of turning iOS users into hostages.

They got to make up for that $18B+ a year they pay Apple to be the default search engine some kind of way.

That seems reasonable?

They charge more because Apple takes an enormous cut. What kind of insane bias is your comment about CC data

I'd rather give my CC info to Apple than to the world's largest personal data and ad farm tbh.

Yes, and you pay a 30% fee for that

This really is the crux of the problem - I don’t think Apple “deserves” 30% cut[1], but I would rather pay with Apple Pay if necessary, or through iAP than give my CC, name, address, email, … to more companies, certainly not any of those ones that have sketch approach to security, or explicitly sell your info for profit.

[1] I think that there is an argument to be made that the store fee subsidizes everything that people don’t generally pay Apple for explicitly, which makes it possible for free/cheap apps to exist. I don’t personally feel like that argument reaches 30% however.

Good news, you can have your cake and eat it too. Get an Apple Card, buy it through the web, and then request a new CC number from the wallet App.

I wish every subscription service did this. Make it very clear you subbing via Apple so you get charged 100% more. I can't think of a more parasitic rent seeking piece of trash policy then Apple's fucking 30% cut. Google too but you can at-least skip them without them banning you.

You can skip Apple too. Plenty of streaming apps don’t allow you to pay within the App Store including Netflix, Spotify, Hulu Live TV, etc.

Every retail outlet gets a “cut” when you buy from their store.

I hope the consumers know that. It would be a real shame if they accidentally clicked Apple's happy-path IAP and paid twice as much for their YouTube Premium subscription.

Or Google could just not allow in app purchasing at all like Netflix, Spotify, etc.

Are you also as outraged when consumers can buy cheaper goods online than at a BestBuy?

Apple TV+ and Netflix are not comparable products to Youtube Premium.

Just comparing Apple Music to YouTube Music Premium, Apple Music is $11 for individual and $17 for family.

YouTube Premium is $12 per month for individual (with an option for $10 per month if prepaying for a year) and $23 per month for family.

So you are basically paying anywhere from -$1 to $6 for no ads on YouTube compared to Apple Music.

> some how it's now up to 30 bucks a month

YouTube Premium is $11.99 individual or $22.99 family (the latter recently increased from $17.99.) Where do you get $30 from?

I've always been surprised that YouTube has been that profitable to begin with. 40k hours of video uploaded every hour and all the watch time is pretty mind boggling.

I don't think they've ever released how profitable YouTube is? Only revenues. I've always assumed it's unprofitable given what must be ridiculous operational costs.

Geniuses in their underwear at home resting and vesting no make you money.

You'd think the largest tracking machine humanity has ever built would be able to tell whether their 'underwear'-clad engineers are implementing the assigned tasks as expected.

The assigned task is not working for the competition

This is different from pre-2020 when they were in their underwear in the office.

(... I've heard stories. ;) )

Huh? For individual plans there's no hike ($12/mo.). Family plan went from $18 to $23, hardly insane.

But now if you purchase via iOS instead of the web it's $30 because of the Apple 30% tax. So... don't do that. They are literally pushing you to subscribe via the web, so do that.

The only thing insane is that Apple still takes a big cut of streaming/media subscriptions.

$15 to $23.

A bit insulting, TBH.

No, all news sources reporting the hike say it's been $18 previously, not $15.

$18 to $23 is not insulting. It's still less than the price of two individual subscriptions.

I have a family plan. I can confirm I pay $14.99 per month right now and received an email stating it will increase to $22.99.

Perhaps I'm grandfathered into a cheaper plan, but that's my data point.

You're both right. It was $15/mo, then the price went up to $18 but they didn't raise the price for existing subscribers, but this time they're raising the price for existing customers as well, so for the oldest customers, it's a 50%, $15->$23 hike, and for newer customers, it's a 27%, $18->$23 hike.

Most problems Google is trying to solve now outside their core competency and existing offerings are not, fundamentally, software engineering problems.

Consider the saga of Stadia. The tech is rock-solid. That fact did nothing to address developers not wanting to risk a platform that might not have customers, customers not wanting to subscribe to a platform that may not have long-term support, game development itself being the world's biggest game of craps, entire swathes of the world lacking enough internet bandwidth for realtime streaming, and nobody trusting Google to lean into something at an operational loss for more than a few years anymore (with the exception-proving-the-rule of Cloud).

In theorie, I was interested in Stadia, but a subscription but I still have to buy the game WTF. So of course I did not even try.

Yeah, that's high on the list of things that harmed the platform.

Hypothetically, if they'd wanted to go a totally different direction, the could have courted game developers willing to create games for them that would have been offerable at a pure-subscription rate. But they chased AAA games and hit a major market issue: there was no way AAA publishers were going to under-cut their per-unit sales in other channels by offering with-subscription access to their product and trusting Google would pay them enough to make that worth their while.

See, that's why I think Stadia is an example of their failure in marketing.

You didn't actually need both the subscription and the game. Subscription is just for > 1080p streaming and other 'pro' features. You could just buy a game without any subscription.

I think this is really interesting.

Stadia didn't require a subscription. You could just buy games and play them. But loads of people came to the conclusion that you needed a subscription. My going hypothesis is that this was caused by the free trial of the subscription service (higher resolution, cheaper games) that everybody got when they launched. So since people couldn't access the games without getting the free trial they assumed that this meant that they couldn't access the games without a subscription.

Stadia definitely had software engineering related issues. The latency and stream reliability might have been better than competing services, but I found the UI and store to be quite lame. Features that were promised at launch (e.g. YouTube integration) took years to show up and weren't as good as advertised. Launching a game took too many clicks and way too much waiting. It should have been instant and that alone would have been huge. Porting games to Stadia was too hard leading to an anemic catalog; meanwhile Valve knows that the catalog is everything and engineered Steam Deck to run unmodified Windows game binaries on Linux! Google engineers ultimately failed to take advantage of the unique advantages that streaming should have given them, and without any compelling unique features Stadia was just a worse version of consoles with a subscription fee.

The pricing model was probably the biggest single issue, but I believe better engineering could have made a huge difference. This is a common pattern for Google products: a technically impressive core is held back by bad engineering and business decisions at higher levels. Duo is another good example IMO.

The YouTube integration launched after one year. The games were a single click, had direct links and could be launched by voice assistant on any compatible cast device. It was also as easy to port games too as any Linux port would be. Online play was free, subscription unnecessary unless you needed 4K and more than 50 games in the subscription on sign-up.

Launching a Stadia game was never truly one click for me. It always required several, and then you'd have to endure the same old load screens and splash screens and menus as any other platform. The load times should have been faster, and they should have had platform requirements to make it faster to jump into gameplay without nagivating menus after load. I heard them talk about deep links directly into gameplay but I never saw it, it must not have been implemented in many games. But I did see a bunch of Stadia account related clickthrough BS that added more clicks and more load time (and sometimes bugs) when all I wanted to do was play.

> It was also as easy to port games too as any Linux port would be

And nobody bothers to port to Linux either. It isn't trivial in many cases. And I believe Stadia wasn't just as easy because of a Vulkan requirement along with other platform integration and certification stuff. An unhappy medium of too many platform requirements to be trivial to port to, but not enough to actually make Stadia a better experience than other platforms.

> Online play was free

Only if you bought games at full price, trusting Google to run the service forever. Clearly a risky bet, and the risk was obvious to everybody at the time, not just in hindsight.

> more than 50 games in the subscription

The selection was not compelling compared to other platforms' subscriptions. If they had had a larger catalog to draw from, that could have helped.

I think they really failed to deliver on the core promise of Stadia: making games a part of the internet the way YouTube videos are.

If they really made it the case that AAA gaming was just another type of content you might bump into in a pre-roll ad, or in one of your social media content streams, I have a hard time imagining how that would not be a massive success.

It's an incredibly rich form of content, and they would have been competitive in so many ways. Think about all the kids and teenagers out there who would love to play games and for whatever reason can't get access to gaming hardware.

If they could somehow get a free taste of AAA games on their phones, it seems like you would be able to find some way to make that profitable over time.

Instead it ended up being a worse console which nobody knew existed.

I never heard that was the ambition for Stadia, but it’s a very powerful idea to make gaming more “ambient”.

It was part of the initial announcement. They talked about for instance being able to watch a streamer on YouTube, and press a button to pick up in the game right where they are.

>Most problems Google is trying to solve now outside their core competency and existing offerings are not, fundamentally, software engineering problems.

Their problems are mixed bag problems. First of their problems is lack of vision. No clear backlog/roadmap and UX vision of their products.

Second set of problems are software related problems as of technical debt, maintaining codebase of their software products and lack of understanding of how their algorithms actually work e.g ranking algorithms, recommendation algorithms etc.

I think GCP, YouTube and Google maps are pretty good products. To answer your question. I don’t think it’s that easy to create a product that people love.

I don’t understand why anyone would pay that much for YouTube premium- isn’t it just no ads, and background play? In what universe is that worth £16/$12 a month?? You could get two “real” streaming services for that if you pushed it a little.

No ads and background play are great though. YouTube music also means you don't need a Spotify subscription which is $10 by itself. Altogether it is worth it to me

No ads is worth quite a bit to me. I wish more platforms had this option to opt out of them legitimately. I would gladly pay another 25% on top of my YouTube Premium subscription if they would also enforce no in-content/native ads from the creators (just ask them to tag the beginning and end of the sponsored section, and auto-skip for premium subscribers). I basically lose my shit every time I have to hear "this episode brought to you by square space" lol.

This is yet another instance where piracy provides the better product.

Installing uBlock Origin and SponsorBlock makes Youtube a much better product than simply paying for premium. If you haven't used it, SponsorBlock is a crowd sourced browser extension that identifies and skips sections of videos like "This content is brought to you by..."

I used to pay for premium and use YT Music, but after getting fed up with YTM I cancelled. I'm noticing a much MUCH better experience using UBO and SponsorBlock. Unfortunately, this setup means the creators don't get any revenue from me.

If only YouTube offered such an experience at a reasonable cost.

I do rock ubo but hadn’t heard of sponsoreblock. Problem is 50%+ of my YouTube consumption is on a tv where extensions can’t help

I watch YouTube more than all other streaming services combined. The ad-free experience is absolute bliss. Most of my music listening these days is DJ mixes on YouTube and having ads in the middle of those would drive me insane. I also watch a ton of hobby YouTube with the kids and I love not having ads in the middle of all that. (Of course, the videos themselves often have product placement and other stuff, but at least that feels more essential and organic.)

You're forgetting the music streaming service that's a part of it. Spotify is $9.99 so how is this not comparably worth it?

There's more entertaining, educational, and just plain useful content on YouTube than cable ever offered. The value proposition is certainly there. I don't consider Premium to be a bad deal at all.

If there's a threat to the value proposition, it's increasingly-intrusive sponsorship messaging. But that's outside Google's ability to control.

And those "real" streaming services have much lower quality and diversity of content.

There's no match for YouTube, as long as you are not after movies, but very broad "video" content. Nothing even close to it. 4 coffees per month so my whole family can enjoy it without ads? It's a bargain for me.

That, and to support their favorite Youtube creators. LTT has said the watchtime payouts from Premium are worth more than ads.

It is quite punchy for an online service, but you would have to prise YouTube Premium from my cold dead hands. I visit YouTube multiple times per day for work, entertainment, research etc. Without Premiun there are so many ad units it’s painful.

> every other product you try to bring to market ends in failure

Pretty difficult to square >$250B of annual revenue with “all of your products are failures” and “can’t think of a product that people actually want”

> If Google is the creme de la creme of software engineering companies, full of absolute geniuses, why can't they think of a product

This question seems to answer itself? Engineering skills are not product skills, and Google kinda sucks at product

Oof. Curious to see Microsoft and Apple. I guess if you’re a Google investor you’ll be happy with cloud continuing to grow. Profitability is inevitable.

Microsoft was a small beat but the stock's currently down, presumably on the slower growth in Azure.

The read I have is more around PC sales declining. Cloud still has good margins across the big 5. GCP is a quarter or so away from profitability after the massive build outs and Azure has probably the largest GP right now of the hyperscalers.

> Profitability is inevitable.

This comment is worth saving ;-)

Heh, I got that reference.

> Profitability is inevitable.

Unless the rise of many viable competitors drives cloud computing down to a commodity service with razor thin margins.

There's no guarantee that the AWS gravy chain is going to materialize for other companies.

Commodities can still be expensive and profitable. Yes it is easier than ever for a company to get into cloud computing, but despite the increased competition retail prices are going up the entire sector is making more money than ever.

The game seems to be to keep IaaS pricing high and tell people that use it that they're doing it wrong, they need to use our cloud-native offerings which will indeed lower their spend but increase lock-in. I suppose the counter to that is Kubernetes and other cloud-native-like abstractions on top of commodity IaaS so at least you can somewhat easily move between cloud providers and seek better pricing.

From what I can tell it's a cat and mouse game of who can lock-in and who can abstract away, and I assume it's been going on for longer than I've been at this.

But we're not seeing that happen, because the initial capital outlay to build a cloud platform is absurdly large.

Google has been at this for a decade and is only now at the cusp of profitability.

With a barrier to entry this high, and vendor lock-in so strong, you can be sure all big 3 cloud services are going to be minting money for many years to come.

There are quite a few players though. In addition to AWS and Azure, there's also Oracle and IBM.

Does anybody really use those for generic cloud projects though?

My impression was that those were geared towards firms who have already bought heavily into the Oracle/IBM consulting/licensing.

They're not clouds where Netflix or Spotify are going to spin up a few thousand servers. Unless I've been misinformed?

So they don't really seem to be in the same category. I mean is anyone not already in the IBM ecosystem ever choosing between AWS and IBM?

WhatsApp, Fitbit, tumblr among many others ran on IBM. Of course none were what I’d consider “generic cloud projects”, they chose IBM bc of specific capabilities not easy to achieve on other hyperscalers. -unless you run your own hyperscaler.

Zoom runs on Oracle Cloud. I guess Red Hat's managed stuff now runs on IBM cloud but they bought their way into that.

> Does anybody really use those for generic cloud projects though? My impression was that those were geared towards firms who have already bought heavily into the Oracle/IBM consulting/licensing.

You could say the same about Azure. I see a lot of click-next-collect-cheque being done in Azure, only with a browser instead of a desktop wizard.

I'd also put companies like Digital Ocean into that space as well, plus other VPS providers, including specialty providers like Vast that focus on deep learning hardware, potentially Backblaze for backups, etc. Even if they're not direct competitors, they're eating into services that might otherwise provide margin (or even just a funnel) for the larger cloud providers.

> Profitability is inevitable.

Cloud computing profit is largely driven by companies that don't make profit themselves.

If we end up with a major tech crunch, which I suspect we will, and a bunch of these big, non-profitable new tech startups/IPOs start to fold, we'll see a massive and rapid contraction in the cloud space.

The last 3 companies I worked at invested very heavily in cloud infrastructure but none of them has made a profit. There's a pretty good chance if you're on HN the same is true for your company.

RemindMe! 1 year

Why have all of these remote-unfriendly tech companies hired so many employees during remote-only Covid? Is it incompetence or something else? Surely it would affect their culture, product, etc. if they have those things.

Because tech went through an enormous boom during Covid, and everyone was bottlenexked by headcount

Nope. Tech companies don't scale like that, especially Google Search or Youtube. Adding more people just makes things worse.

It depends. At a certain scale, strategically adding headcount can absolutely increase profit. It doesn't seem outrageous to think if a team of 20 engineers can improve efficiency by marginal percentage points for one component it can have enormous financial repercussions.

I admittedly haven't been at Google for a long while, but they were headcount-constrained the entire time I was there.

Since everyone was home and spending more time online, online companies got more business, therefore needed to hire more, and since everyone could work remotely, it allowed people to apply for tons other jobs since location no longer mattered, creating a crazy boom and poaching war, where some companies would just hire whoever they could put their hand on.

Doubtful. Suspect Google departments get headcount proportional to the department's revenue. Google over-hired, simple as that. Pausing hiring in a booming economy gives warning signs to current employees. Over-hiring allows leadership to layoff without actually causing workforce impact. It's always better to over-hire than under-hire when you are a F500.

Tech stocks are broadly down 1-2% after hours because of MSFT and GOOG earnings.

Yeah look at the hit QQQ took on those two drops.

abc.xyz - what an incredible URL

my favorite clever google url hostname will continue to be their cdn's 1e100.net

not enough ad revenue. need even more youtube ads. never mind too many ads ruin expierience

Kind of an aside, but I recently signed up for YouTube Premium and find it a very good value.

I often use YouTube as a tool, for instance for quickly learning how to do something by watching, and ad-free makes this a significantly better experience.

Also YouTube music comes with it, and I find it better than Spotify, so it replaced that account completely.

Not to mention that nobody stops to ask where this magical ad-revenue is coming from.

Ad revenue is always taking a slice out of somebody else's profit, and at the end of the day the profit is always taking the slice out some consumers wallet.

But if inflation is high, and consumer debt is rising (which it is), then eventually the consumers wallet is going to get much tighter, which will shrink those companies making things profit margins, which in turn has to hit ad revenue.

And yet every companies solution right now seems to be "we'll increase the advertising!" As if ad revenue was manna from heaven.

Looking like great news for Google

> Our third quarter revenues were $69.1 billion, up 6% versus last year or up 11% on a constant currency basis

"Constant Currency Basis" seems to be the latest innovation in the non-GAAP methods of reporting revenue. The creativity of the financial industry never ceases to impress.

Thankfully we do have a set of "Generally Accepted Accounting Principles" that helps see through the bull.

For those who have never heard the term (like me), here's a link: https://www.investopedia.com/terms/c/constantcurrencies.asp

Along with EBITDA and other funky accounting measures, they likely are warning signs. i.e. presenting fluffed up numbers prominently is indicative of something.

EBITDA is not funky, it's a core financial metric (which has limitations like every other).

Things get funky when you start seeing "community adjusted EBITDA" and its cousins.

Ha, I had just forgotten about "community adjusted EBITDA"! What a laugh that was.

Why do you believe it's impossible for a 'core accounting metric' to be funky?

Just because something is widely used doesn't mean it's guaranteed to be actually correct or reflect reality.

For example: It never makes sense to exclude depreciation for anything physical without adding back on some cost of wear-and-tear, since everything physical suffers wear and tear. I've never seen this happen in reports with EBITDA figures, nor in this report.

i.e. They're effectively presenting 'profit' figures that exclude some amount of real, tangible, losses. So it's really only a pseudo-profit, which is why there's a separate 'Net Profit' figure in every SEC compliant report.

It's not meant to singularly reflect the totality of financial health.

It's a proxy for some things, which as I said has limitations like any other proxy.

You flat out said 'EBITDA is not funky'

Why do you believe it's impossible for it to be funky?

I don't think it's an unreasonable measure. I want to know about the companies fundamental business metrics...not currency changes.

Latest innovation? The concept of constant currency basis accounting has been in use for decades. I searched for 2 seconds... here is the annual report for IBM in 1997. They specifically state that their numbers are adjusted on a constant currency basis.

https://www.ibm.com/annualreport/assets/past-reports/1997-ib...

If I put effort into it, I'm sure I could link you to corporate financial statements from the early 1970s after Bretton Woods when currencies became free-floating, necessitating this calculation.

How else would you report it? Break out separate income statements for all 100+ currencies Google deals with, so you can see how many Peruvian Sols they earned in Q3 2022 and ignore currency exchange rate fluctuations?

Also, it's not that it was picked into use for this specific earnings report to make it look better. They've been consistently reporting the impact of foreign exchange rate changes on the earnings for 15 years, whether that makes for a larger or smaller number.

If a big part of their revenue is in foreign currencies it does make sense to share the adjusted figure as well

Well, yeah, you have to have some sort of smoothing function to deal with exchange rates. Especially over the past year—the USD has been on a hell of a run.

https://www.google.com/finance/quote/USD-JPY?sa=X&ved=2ahUKE...

And…they list the USD-denominated revenues. They say the revenue right there in the sentence you quoted, and further along in the PDF, they break it down per region.

Not shenanigans. Commonly accepted. And makes sense, as the US dollar is the de facto world currency, and everything else swings in its wind.

Youtube staff needs to be completely gutted, and the site should undergo a complete overhaul. It's damn-near inoperable on non-chrome browser and that does tend to create a monopoly...

edit: I can't even use the site without overriding my useragent with a blank one... WHY IS THAT I WONDER?

I am using Youtube on Firefox containers and I find it works OK (personal experience). What are the problems you are seeing?

In any case, IF youtube is making sites near-inoperable on non-chrome browsers, I'd imagine that would be one of the requirements from higher ups than anything else. That statement is my guess.

~$14B profit in one quarter. I now totally understand why they have to lay off people. /s

Operating margin went from 32% to 25%. That's a massive swing.

They are considerably less profitable this quarter than last year same quarter ($19B)

There are companies on this planet that can only dream about 25% operating profit.

How on Earth is this relevant? Whatever your salary is, I guarantee there are people on this planet who could only dream of earning that much. Should you earn less because of that?

No, but we're talking about a company, not individual people.

What do you think a company is? A group of individuals.

Sure.... but they are very different things.

So?

Google's corporate culture relies on a high profit margin. The perks, the ability to invest in large bets, all hinge on a high profit margin. If their profit margin shrinks you'll end up loosing the culture. Without the culture, Google would turn into an IBM/Oracle/HP.

Yeah, and value is relative?

Who cares if there’s a consumer staple company with 5% margins out there? Companies are evaluated against their own results and valuation.

I don't really get these takes. Why would any company keep more employees than they need? It's not a charity. Shareholders, who ultimately foot the bill for all those incredibly juicy RSU packages, expect management to pursue to greatest ROI.

And HN has been saying for years that these companies are extremely bloated (insert generic "how does Company X need Y engineers?").

> Why would any company keep more employees than they need?

Why would any company hire more employees than it needs? Do you really think the amount of work at Google has declined?

If Google didn't need them they shouldn't have hired them in the first place.

Same applies to all the big tech companies that hire boatloads of people and then have major layoffs. Exceptions apply to companies that are actually still fighting to survive or who have massive _declines_ in profits but a lot of the time the layoffs are just a "protect profits" measure, not a "we didn't need them" measure.

There is, of course, a separate discussion to be had around "do big companies really need _thousands_ of employees?" but by their own thinking the answer is yes, so they did need to hire them, and thus the question to them is "Why was protecting literal billions in profits more important than protecting the people who you employed? Why do you think you'd be worse off with those people you claimed to need, but 1 billion less 'profit' ? "

> Do you really think the amount of work at Google has declined?

Yes I do. The pandemic changed everything for tech companies. Now it's over. It's not that there are less things to do, but there is less urgency, so there's less to do right now.

> Do you really think the amount of work at Google has declined?

I don't have a clue, but I would guess that Google does.

> If Google didn't need them they shouldn't have hired them in the first place.

If only the future was knowable with the type of certainty you seem to imply.

> I don't really get these takes. Why would any company keep more employees than they need?

To have a talent pool at hand, and to deny that talent pool to competitors.

By definition then these are people that they need, just in a capacity that you're excluding from consideration.

> Why would any company keep more employees than they need?

Well I have an answer to this but it's not related to the conversation.

Employers keep people employed as a bargaining chip with the government.

And (especially in the case of the top tech companies, like Google, MS, and Amazon) as a hedge against the competition.

Employee X may be under-performing relative to their peers, but if they're still going to perform 1.2X the average of your closest competition were they to change companies, you pay them to keep their ass out of the other guy's seat.

> Employers keep people employed as a bargaining chip with the government.

I said this in a comment above, but the question was rhetorical.

If you are using employees as a bargaining chip with the government, then by definition these are employees that you need (not sure I fully understand this hypothetical though).

No, they are inessential staff being kept as a bargaining tool. As soon as the tool becomes ineffective, they will be fired. They are the opposite of necessary.

> Shareholders, who ultimately foot the bill

What bill, exactly, and how?

Dilution. When employees are awarded shares/options, that dilutes existing shareholders, making their shares worth less (ceteris paribus).

> Shareholders, who ultimately foot the bill for all those incredibly juicy RSU packages…

How do you figure? Are the investors not making a profit? Or are you saying that the employees are basically stealing investor profits?

It's arithmetic, not an opinion. RSUs dilute shareholders.

I'm not suggesting they are stealing profit, I'm saying they have earned a share of the profits. That's literally the point of share awards: to align management with shareholders.

There are a bunch of issues that others have said, but my primary one is vaguely semi-moral: is it reasonable to give someone a job, and then lay them off when they become inconvenient even if they are still doing that job? If someone knows that this is what you’re planning on doing, do you think that would impact their opinion on whether they should take the job? Or the minimum comp they’d require?

So while I do think it is reasonable for a company to lay off people if they aren’t needed (product cancellation, etc), I don’t think that makes overhiring is reasonable, if that is your plan. Especially given you’re planning to do this at the same that their options for alternative employment are going to be reduced.

> Why would any company keep more employees than they need?

Because layoffs severely damage morale and make hiring significantly more difficult. Sometimes it's cheaper to just slow down hiring and let people leave naturally.

Between Q3 2021 and Q3 2022 they went from 150k to 186k employees; that's a huge increase over only a year. It makes sense to slow down at some point.

I haven't seen any news about Google layoffs - not sure what you are referring to.

Nominal numbers are meaningless. It’s like when people tout $10B in buybacks like it’s a big deal when the market cap is over $1T.

Everything is relative

They're down to $369k of revenue per employee, down from $434k in Q3 of last year.

Which is still insanely good.

Not when you’re paying them more than that (or close to it) though.

This is a friendly reminder that the only well run companies are led by Satya Nadella and Tim Cook. Alphabet and Meta are like two spoiled children that got rich quick and don't know what it's like to go through an existential crisis.

There are only two well run companies?

Existential crisis here means >10 billion dollars coming in? Must be nice.

What do you mean? Microsoft's profit dropped by 14%

Azure stays afloat because they managed to secure ties with governmental agencies thanks to their strong and suspicious lobby, it's not an organic growth (AWS and Google is an example of organic growth and industry leadership and innovation), what area Microsoft innovated? in Europe for example, Microsoft is a monopoly

- education

- public administrations

They all use Microsoft services, office, windows and now azure

And it's not just with Europe, they managed to secure multiple times billions of cash (questionable Hololens contract with the military)

And lets not forget they have a track record of bribery cases

https://www.reuters.com/article/us-microsoft-settlement-idUS...

https://www.washingtonpost.com/technology/2019/07/22/microso...

https://www.theregister.com/2022/03/25/microsoft_accused_of_...

http://techrights.org/2014/05/28/microsoft-brazil/

Xbox, Windows, HW revenue down too

You think AWS and Google do not employ the same sort of growth tactics as MS and others?

Where do you think all the AWS and Goog sales folks hail from?

Hint - the same places as MS sales folks and every other company!

In enterprise land, AWS and Goog are frequently dismissed as they are still relatively immature in how they engage and navigate large orgs, if they even try.

MS (and Oracle and even IBM still to some extent) walk around and laugh all the way to the bank signing 9 and 10 figure deals.

I'm boxing, a little caress but behind there is a hidden jab coming

It's indeed all rotten and rigged

Alphabet passed Microsoft in revenue and profit since Satya started:

https://www.macrotrends.net/stocks/stock-comparison?s=revenu...

https://www.macrotrends.net/stocks/stock-comparison?s=net-in...

Google's share price has tripled in the 7 years since Sundar became CEO. The company is worth over a trillion dollars. This is apparently considered badly run in your world?

Andy Jassy: https://i.kym-cdn.com/photos/images/original/001/597/520/371

Lol: microsoft is about to destroy themselves with copilot (the damages have already been done). Their government welfare program (22 billion for AR beta test) is already a failure. Nobody wants to use windows 11 unless they are forced. Still DESPERATELY trying to monopolize the gaming market. They're a floating textbook example of antitrust, and about to get flushed. I hope the enabling shareholders all go down with them. Maybe not the textbook example easily explained to a lay-person, but their behavior does in fact tend to create a monopoly, and I challenge you to find a jury that would disagree.

> microsoft is about to destroy themselves with copilot (the damages have already been done)

How do you figure that copilot will destroy MS? It’s one feature of one product. Even if they get sued big time, I wouldn’t imagine this would put a dent in the money they make from Azure/Windows/MS365/Xbox

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