Google appears to be scaling up the ads it shows to Gmail users

Their financial model is similar to a TV or newspaper.

Imagine you create a newspaper, you start out showing no ads, lots of people buy it, it is all good.

Then you raise money from investors to grow, and they start asking for more revenue. So you add one advertisement.

Then the investors want out, so you have to IPO...more ads. Then you have to keep the share price up because execs want options, and your HR consultant tells you that the "top" execs need to see a rising share price (as if you need a "top" exec to add more ads to a webpage)...more ads.

The ability to add more advertisements is limited by the space in the newspaper, but there is almost no marginal cost associated with adding more ads. So it looks like very clean growth, very strong economics.

This is basically how Google and Facebook work. Their revenue growth looks puzzling because they seem to achieve very consistent, very predictable revenue growth with no extra resources. The reason why is that they can add more ads to a page very easily, and can control their level of revenue growth so they can keep employees/investors happy (in that order). It is true that they have also achieved some pricing growth but that advantage has been capped (and is largely a function of their monopolistic position, i.e. Doubleclick allows Google to play both sides). Most of their growth has been increasing ads per page.

There is no way for them to function as public companies in this environment (again, I would say the situation with employees is actually taken more seriously than investors) without making their product worse. They won't stop before the product collapses.

Also raises the question: why does an executive need a consulting company to tell them to put less seeds on the bun? We can accept that "optimize" does not mean more...so...?

There's a thousand little things that just feel better with fastmail. Loading the Gmail webapp is so slow that I sometimes switch to HTML only. Fastmail: fast. Or if I get a message, I read it via a mobile app notification, and decide to delete it. For Gmail I need to open open the app to find a delete button. Fastmail lets you do that from the notification. I assume Gmail is trying to prioritize archive over delete, but I actually want to delete things.

I forgot Gmail has ads since I block them, but I never would have believed in 2006 that Gmail would one day look like these screenshots. Horrible.

This isn't why this happens.

If you are an exec at MCD, your main focus is on making numbers. That is it. Your bonus is based on this, your options are based on beating expectations...nothing else matters.

What this means in practice is that companies look for ways to cut costs and fill gaps when a number comes in light (because you can cut costs immediately but growing revenue requires long-term investment). And, over time, you see significant deterioration in product from lots of decisions made to make a number in a quarter.

An even more interesting aspect of this problem is that these companies only ever cut back on things like product. FMCGs were doing this for years, and most companies in the sector were still horribly overstaffed.

You are right, this doesn't happen in industries where there is more competition. But this is not true for almost every consumer-facing product where there are limits to competition. Indeed, FMCGs have been reducing product quality for years but it has only been changing consumer tastes that has led to more innovation through new products/categories. In other wards, no-one tries to start a new mayonnaise company because Hellmann's began adding more oil...you try to get distribution into the large grocery stores, and they will laugh you out the door (but you turn up with a vegan mayonnaise, and they are interested).

Another example of this is Tesco in the UK. They are famous for producing executives which make a series of short-term decisions over a very long period that add up to a bad situation (and there is no new competition, Tesco over-index to locations that have no other supermarket chains...you would lose tens of billions trying to just get a foothold).

Remember when gmail first came out like almost 20 years ago? You had to get an invite! People loved it. It was a big deal - it made people actually love google. It wasn't just a search engine, it was this awesome company making awesome things and sharing them with you and it just made so much sense. Gmail was a billion times better than the alternatives (hotmail? yahoo mail?) and the competition just looked lazy and bad. The early 2000s was a wild time when the internet and computers got fast enough that it was unleashing all these pent up ideas that suddenly could actually work. But nowadays it's like nobody knows what to do next, so we just spin our wheels optimizing ads and making the world terrible with recommender systems.