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Google's $19B Black Box Is Worrying Investors

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Re: Google's $19B Black Box Is Worrying Investors

#11

Post by gumby »

tyingq wrote: post #4

I can't help but have a bit of schadenfreude here. Part of what happened was that Google used to send a fair amount of organic traffic to smaller sites. And many of those smaller sites had Adsense ads. Google's changes in search shifted much of the traffic that went to smaller sites to larger, more established sites. Ones where the cost per impression/click are higher for Google. So, part of it is self inflicted. The…

> Google's changes in search shifted much of the traffic that went to smaller sites to larger, more established sites. Ones where the cost per impression/click are higher for Google.

Do you have a reference that Google detuned their search for profit purposes? I'm happy to believe that Google did do evil, but I would like some evidence. This kind of change sounds short sighted.

Re: Google's $19B Black Box Is Worrying Investors

#12

Post by shubhamjain »

I wonder how worse it'll play out if Google pulled the plug and stopped paying these fees. These companies would be left with nothing but inferior alternatives (Bing, Yahoo, maybe DDG?). Mozilla tried this by cutting out Google for its default search engine and I don't think it made any meaningful difference.

I think, in a certain sense, Google is a risk-averse company. It simply won't gamble with its user base, no matter how high the costs are. Considering the cash arsenal the company has, I don't think it's a bad use of capital for Google.

Re: Google's $19B Black Box Is Worrying Investors

#13

Post by gumby »

mankash666 wrote: post #2

It's rather sad that Google needs to pay Android makers a fee for installing it's apps, given how Google gives away source code that makes Android exist in the first place. On the contrary, Apple's ecosystem is completely closed, app cut fairly high and non-negotiable at 30% and app store rejections arbitrary at best and blatantly anti competitive at worst. In the name of user centricity, their platform places arbitr…

> On the contrary, Apple's ecosystem is completely closed

Their App Store is a monopoly, but I have friends who use iPhones and use Google's Inbox, Google's search app, Chrome browser, Google Maps and Waze etc and don't use the built-in defaults. I guess they like the hardware. So maybe I'm not interpreting "completely closed" correctly.

> ... In the name of user centricity, their platform places arbitrary restrictions on code execution and access.

As a software but non-iOS developer I like these restrictions. Yes they can be annoying (you can't use your iPhone as certain kinds of portable network scanner because they restrict access to the MAC) but they also stop shitty and malign developers from screwing me in certain ways (jerks were using the MAC as an illicit user tracking device).

I see it like various sorts of regulation: everyone us better off if the paint factory can't simply dump its waste into the river, even the paint company.

Re: Google's $19B Black Box Is Worrying Investors

#14

Post by gumby »

josefresco wrote: post #3

Why is it a "black box"? Is it because Google doesn't break down the number or elaborate on the details of each contract? Also, an increase in share price (Yandex) doesn't necessarily correlate to a change in actual usage.

It's material enough on earnings to need reporting but the precise numbers are of competitive value.

Probably if more than 2/3 of it were paid to one company the CFO might consider that material and then we'd learn.

Re: Google's $19B Black Box Is Worrying Investors

#15

Post by tyingq »

gumby wrote: post #11
tyingq wrote: post #4

I can't help but have a bit of schadenfreude here. Part of what happened was that Google used to send a fair amount of organic traffic to smaller sites. And many of those smaller sites had Adsense ads. Google's changes in search shifted much of the traffic that went to smaller sites to larger, more established sites. Ones where the cost per impression/click are higher for Google. So, part of it is self inflicted. The…

> Google's changes in search shifted much of the traffic that went to smaller sites to larger, more established sites. Ones where the cost per impression/click are higher for Google. Do you have a reference that Google detuned their search for profit purposes? I'm happy to believe that Google did do evil, but I would like some evidence. This kind of change sounds short sighted.

>Do you have a reference that Google detuned their search for profit purposes?

That's not what I said at all...I was saying their costs were higher as a result. They detuned it to reduce the number of low quality sites appearing in Google search results. I am speculating on one particular side effect that had. I have no proof, because only Google would have the data needed to prove that.

Re: Google's $19B Black Box Is Worrying Investors

#16

Post by tryingagainbro »

shubhamjain wrote: post #12

I wonder how worse it'll play out if Google pulled the plug and stopped paying these fees. These companies would be left with nothing but inferior alternatives (Bing, Yahoo, maybe DDG?). Mozilla tried this by cutting out Google for its default search engine and I don't think it made any meaningful difference. I think, in a certain sense, Google is a risk-averse company. It simply won't gamble with its user base, no m…

>>Google is a risk-averse company. It simply won't gamble with its user base, no matter how high the costs are. Considering the cash arsenal the company has, I don't think it's a bad use of capital for Google.

If ain't broken...plus who knows, MS or Apple might just jump in and the they do have the cash. Would you want to be the Google exec that started the downfall?

Frankly even a nice chunk of Android development is a sort of traffic acquisition (Search bar for one.)

Re: Google's $19B Black Box Is Worrying Investors

#17

Post by mankash666 »

psykotic wrote: post #10
mankash666 wrote: post #2

It's rather sad that Google needs to pay Android makers a fee for installing it's apps, given how Google gives away source code that makes Android exist in the first place. On the contrary, Apple's ecosystem is completely closed, app cut fairly high and non-negotiable at 30% and app store rejections arbitrary at best and blatantly anti competitive at worst. In the name of user centricity, their platform places arbitr…

> It's rather sad that Google needs to pay Android makers a fee for installing it's apps, given how Google gives away source code that makes Android exist in the first place. This is a very innocent view of Google's business practices in this area. Google has a tight hold over most device makers through anti-fragmentation agreements and other contracts if they want GMS and want early access to the non-public AOSP tre…

You're free to run your own app store, like Amazon fire devices, and not subscribe to GMS. Why shouldn't Google get something in return for enabling phone makers with an OS and app store? They're a for profit company after all

Re: Google's $19B Black Box Is Worrying Investors

#18

Post by tryingagainbro »

gumby wrote: post #11
tyingq wrote: post #4

I can't help but have a bit of schadenfreude here. Part of what happened was that Google used to send a fair amount of organic traffic to smaller sites. And many of those smaller sites had Adsense ads. Google's changes in search shifted much of the traffic that went to smaller sites to larger, more established sites. Ones where the cost per impression/click are higher for Google. So, part of it is self inflicted. The…

> Google's changes in search shifted much of the traffic that went to smaller sites to larger, more established sites. Ones where the cost per impression/click are higher for Google. Do you have a reference that Google detuned their search for profit purposes? I'm happy to believe that Google did do evil, but I would like some evidence. This kind of change sounds short sighted.

During the FTC investigation it came out that Google started with a goal and then kept changing the questions for raters until they got the data they wanted. Apparently they needed the rater data to approve the search algorithm.

There is a sweet spot where results don't suck and are better than Bing so users don't leave and ad clicks increase. Personally, I am 100% sure Google has found it.

Re: Google's $19B Black Box Is Worrying Investors

#19

Post by freehunter »

colechristensen wrote: post #8
mankash666 wrote: post #2

It's rather sad that Google needs to pay Android makers a fee for installing it's apps, given how Google gives away source code that makes Android exist in the first place. On the contrary, Apple's ecosystem is completely closed, app cut fairly high and non-negotiable at 30% and app store rejections arbitrary at best and blatantly anti competitive at worst. In the name of user centricity, their platform places arbitr…

Apple sells Apple phones with Apple iOS. Notgoogle sells Notgoogle phones with Google Android. Futzing with what another company does with it's product can get you anticompetitive interest. If you want to talk about Apple being anticompetetive talk about how you can't buy/rent movies on Google Play, Amazon, etc. apps on iOS. Even so, Apple has a much better legal stance for curating it's own market than Google (Alpha…

>you can't buy/rent movies on Google Play, Amazon, etc. apps on iOS

Isn't that a choice Google and Amazon make because they don't want to pay Apple's fees for sales going through their marketplace? If that's the case, it doesn't seem anticompetitive, since everyone is charged the same fees no matter what. Google and Amazon just don't want to pay it.

Same thing as the Kindle Store, you can't buy Kindle books through the Amazon app but you can buy them through the browser. Because if you buy them through the app, Apple takes a cut, but they don't through the browser. So Amazon made the choice to not sell books through their app, even though many other merchants sell digital goods through their apps and pay Apple the fee.

Re: Google's $19B Black Box Is Worrying Investors

#20

Post by tyingq »

tryingagainbro wrote: post #18
gumby wrote: post #11

Earlier quoted context omitted.

> Google's changes in search shifted much of the traffic that went to smaller sites to larger, more established sites. Ones where the cost per impression/click are higher for Google. Do you have a reference that Google detuned their search for profit purposes? I'm happy to believe that Google did do evil, but I would like some evidence. This kind of change sounds short sighted.

During the FTC investigation it came out that Google started with a goal and then kept changing the questions for raters until they got the data they wanted. Apparently they needed the rater data to approve the search algorithm. There is a sweet spot where results don't suck and are better than Bing so users don't leave and ad clicks increase. Personally, I am 100% sure Google has found it.

I agree with this. Another tactic they've optimized is pushing the organics down for many searches such that only ads and Google content remain above the fold.

I think they may be at the point where the obvious dramatic optimizations are all played out. It also doesn't help that the high margin desktop traffic (versus lower margin mobile) is waning.

Eventually, that slows the trend where their ad revenue growth has been outpacing general internet growth.

The trouble is that investors are still expecting the same trajectory. Reverting to revenue growth solely driven by traffic growth will be a bitter pill.

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