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It’s time for Alphabet to spin off YouTube?

economist.com

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Re: It’s time for Alphabet to spin off YouTube?

#171

Post by jfengel »

cm277 wrote: post #166
nindalf wrote: post #115

I respect the Economist’s business columnist (Schumpeter) and tech columnist (Babbage) but this seems to be a case of Schumpeter writing about tech. Leaving aside HN loving the idea of Big Tech being weakened by becoming Relatively Small Tech, I don’t see how this is in Alphabet’s or YouTube’s interest. The article assumes that such a divorce would be simple and it would allow YouTube to focus on taking on TikTok. It…

Well, let's start with the idea of “I wish I could invest in YouTube without investing in the rest of it”. Why not? YouTube is a more focused brand, with a world-beating product that's already active in multiple high-growth verticals (entertainment, shorts/vertical video, education, conspiracy theories). As the article says it can compete against both Netflix and TikTok (and probably Udemy, etc.). Aren't these high-g…

Is Alphabet lacking cash? Unless a spun-off YouTube were to issue more stock, they don't really care what investors would like.

If Alphabet needs money for YouTube investment they can issue more Alphabet stock, and investors can take that deal or not. But I doubt that Alphabet's challenges involve cash flow.

It might well be better for the world if Alphabet weren't a conglomerate. But it seems unlikely that it's better for them.

Re: It’s time for Alphabet to spin off YouTube?

#172

Post by cmeacham98 »

cm277 wrote: post #166
nindalf wrote: post #115

I respect the Economist’s business columnist (Schumpeter) and tech columnist (Babbage) but this seems to be a case of Schumpeter writing about tech. Leaving aside HN loving the idea of Big Tech being weakened by becoming Relatively Small Tech, I don’t see how this is in Alphabet’s or YouTube’s interest. The article assumes that such a divorce would be simple and it would allow YouTube to focus on taking on TikTok. It…

Well, let's start with the idea of “I wish I could invest in YouTube without investing in the rest of it”. Why not? YouTube is a more focused brand, with a world-beating product that's already active in multiple high-growth verticals (entertainment, shorts/vertical video, education, conspiracy theories). As the article says it can compete against both Netflix and TikTok (and probably Udemy, etc.). Aren't these high-g…

> Well, let's start with the idea of “I wish I could invest in YouTube without investing in the rest of it”. Why not?

The preceding parts of the comment literally explain why not.

Re: It’s time for Alphabet to spin off YouTube?

#173

Post by echelon »

EForEndeavour wrote: post #162
echelon wrote: post #155

Earlier quoted context omitted.

Full video automation is not going to take long. I'm working on systems to automate 100% of video workflows (in a good way). We recently launched a 24/7 news channel: https://fakeyou.com/news

What do you mean "in a good way"? How do you control whether someone using your video workflow automation uses it for good (whatever that is) or not?

How does Adobe assure this? Or any tool maker?

Email has problems, yet the good and productive uses vastly outweigh the bad actors. The vast majority of systems humans use have benefit, otherwise they would be unwound by governments (eg. crypto).

People want to be creative more than they want to be destructive. The destroyers will be moderated, just as they are in every system.

I want a world where every kid can make their own Star Wars or Princess Mononoke and create more than Scorsese's entire career within a single year.

Re: It’s time for Alphabet to spin off YouTube?

#174

Post by jpadkins »

jfengel wrote: post #171
cm277 wrote: post #166

Earlier quoted context omitted.

Well, let's start with the idea of “I wish I could invest in YouTube without investing in the rest of it”. Why not? YouTube is a more focused brand, with a world-beating product that's already active in multiple high-growth verticals (entertainment, shorts/vertical video, education, conspiracy theories). As the article says it can compete against both Netflix and TikTok (and probably Udemy, etc.). Aren't these high-g…

Is Alphabet lacking cash? Unless a spun-off YouTube were to issue more stock, they don't really care what investors would like. If Alphabet needs money for YouTube investment they can issue more Alphabet stock, and investors can take that deal or not. But I doubt that Alphabet's challenges involve cash flow. It might well be better for the world if Alphabet weren't a conglomerate. But it seems unlikely that it's bett…

Alphabet cash on hand for 2022 was $113.762B, a 18.54% decline from 2021.

Re: It’s time for Alphabet to spin off YouTube?

#175

Post by Retric »

scarface_74 wrote: post #164
Retric wrote: post #148

Earlier quoted context omitted.

The monopoly practice in this case is subsidizing a business with by leveraging a monopoly. Aka YouTube isn’t paying market prices on unused compute therefore Google is leverage its search monopoly to expand into another business. Historically the concern was that railroads might get into say coal mining by charging competitors more to move coal than they charged themselves.

In that case are you saying it should be illegal for any company to leverage its resources to get into a new business? Should Netflix not been allowed to leverage profits it was making in shipping DVDs to enter streaming?

No, it’s not a question of money but of resources. If Google offers up their compute at market rates and YouTube is treated as any other customer on that compute then it’s not a problem.

Microsoft for example could have spent unlimited money on IE and the justice department wouldn’t have cared as long as it was treated as a business investment. However, leveraging the ability to change windows was seen as problematic.

Long term subsidies can also run into issues, but it’s believed YouTube is inherently profitable.

Re: It’s time for Alphabet to spin off YouTube?

#176

Post by scarface_74 »

rescbr wrote: post #151
judge2020 wrote: post #133

Earlier quoted context omitted.

> but it’s pretty clear that it would be extremely difficult to compete with YouTube if every user has to pay the actual unit costs to upload, convert, and play videos. That's on the user side, though. Like AWS and Azure, chances are GCP/Google's internal hardware division bills internal teams similarly to external customers (especially as Sundar continues to demand cost cuts). Of course users themselves can't go and…

> Like AWS and Azure, chances are GCP/Google's internal hardware division bills internal teams similarly to external customers (especially as Sundar continues to demand cost cuts) Having worked on such large conglomerates it’s closer to friends & family discount than from large external company discount. There’s also transfer pricing and other accounting ways to improve numbers. This is so widespread that one such co…

That's simple Managerial Accounting 101.

Every major company operates the same way.

When Disney+ "buys" the right to stream the latest Marvel movie from Marvel Studios, the company as a whole has to back out the revenue so not to count it twice. But still show Disney+'s profit.

Re: It’s time for Alphabet to spin off YouTube?

#178

Post by scarface_74 »

Retric wrote: post #175
scarface_74 wrote: post #164

Earlier quoted context omitted.

In that case are you saying it should be illegal for any company to leverage its resources to get into a new business? Should Netflix not been allowed to leverage profits it was making in shipping DVDs to enter streaming?

No, it’s not a question of money but of resources. If Google offers up their compute at market rates and YouTube is treated as any other customer on that compute then it’s not a problem. Microsoft for example could have spent unlimited money on IE and the justice department wouldn’t have cared as long as it was treated as a business investment. However, leveraging the ability to change windows was seen as problematic…

Actually, you're kind of making my point. Absolutely nothing came of the DOJ case with regards to IE bundling.

But that still isn't logical. Are you really going to say that a company shouldn't be allowed to use resources to create a new product? Should it have been illegal for Netflix to use profits from shipping DVDs to later bundle video streaming?

Should it also be illegal for companies to "subsidize" open source contributors? Should it be illegal for YC and other VCs to "subsidize" money losing startups based on previous successes?

How long should a company be allowed to spend money on money losing products to gain a foothold? Microsoft probably lost money on the first 2 generations of the Xbox. Should that be illegal? Should Microsoft not be allowed to throw billions at ChatGPT?

Re: It’s time for Alphabet to spin off YouTube?

#179

Post by crazygringo »

Y_Y wrote: post #152
crazygringo wrote: post #99

Earlier quoted context omitted.

I don't know what you mean. If I watch a 9-minute clip, I get 2 ads at the top but can skip them after the first 5 seconds of the first ad. And then there's often a 15-second unskippable commercial in the middle. So about 4% ads. Sometimes there's a single first unskippable 15-second ad instead, so about 5% ads. (And the ratio seems roughly the same with shorter videos, as they don't have the ad in the middle and som…

That 27% rate would be illegally high in most countries. Not to mention the many places which have high-quality public broadcasters with few or no ads. That said network TV isn't necessarily a great comparison. For me I'm most likely to compare with YouTube of the past, very similar content, but no ads. Or YouTube with adblock or third-party android apps.

Well the parent commenter was talking about network TV (and basic cable isn't any different) and YouTube is an American company.

So that's great if 27% ad time is illegal in some other countries, but I guess they either make it up with mandatory fees (like in the UK) or have lower budget programming.

Re: It’s time for Alphabet to spin off YouTube?

#180

Post by crazygringo »

CydeWeys wrote: post #127
crazygringo wrote: post #82

I can't agree. Ultimately, the article argues for spinoff because of 1) focus, 2) more subscription experimentation, and 3) regulators. But there's zero evidence YouTube is a distraction, it's already done lots of experimenation with subscriptions, and YouTube seems like the last of regulators' concerns with Alphabet. I do think it's true there isn't a whole lot of strategic synergy between YouTube and Google or the…

The two companies would likely have more total value separate than together. The stock market doesn't price conglomerates correctly.

Citation needed. When companies are split, sometimes they gain value and sometimes they lose it. There's no hard and fast rule, and I'm not aware of evidence of systematic downwards mispricing of conglomerates.
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