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Capitalism the Apple Way vs. Capitalism the Google Way (2017)

151 points by lawrenceyan 8y ago

lawrenceyan 8y ago
It's always interesting to take a look back on articles like these and see how the opinions / predictions of the author pan out. There has always seemed to be what is in my opinion a largely narrow minded short term oriented negativity directed towards the Google method of moonshots / bets. In hindsight now in 2019, it's clear with signs of growing stagnation on Apple's side and continued successful innovation and growth of Alphabet companies within vastly diverse industries (Verily, Waymo, Malta, etc.) which of the two methodologies was the better choice. I wonder what the future will hold? Culture seems like the strongest indicator for whether changes can be made. Without the sort of long term vision Jobs had to guide the company from the top down, successful pivoting depends on if internal company culture can support a bottom up revitalization I think.
- Eric_WVGG 8y ago
  I agree. It's clear in hindsight that Apple has provided more innovation and Alphabet is still an ad machine.
  - lawrenceyan 8y ago
    I disagree with the innovation portion of your comment, but definitely, advertising is an extremely strong foundation of consistent steady growth / revenue. Whatever the economic forces at the time, Google will always continue to provide. With Apple on the other hand it's foundation currently depends on hit-driven successes requiring repeated 2 year cycle refresh purchases from it's customers to sustain it. The issues with this are evidently shown. As to your comment on innovation, Apple has largely squandered it's source of foundational income cornering itself into a niche, such that though it may be extremely innovative in it's area (Apple has some amazing processor design for example), is fundamentally constrained by the limited pieces it has to work with. Basically, instead of undergoing a necessary evolution like we've seen from the progression of Google -> Alphabet, Apple has failed to scale itself in a way where it can keep up. This by no means is meant as a sleight to any Apple employees though, as I know from first hand experience that some of the best and brightest people are working there. It's just a matter of how scaling works. Horizontal scaling allows for unlimited growth, whereas vertical scaling quickly reaches an asymptotic ceiling.
    - scarface74 8y ago
      Seeing that nothing Google has done outside of selling ads has been profitable and we can assume that all of Apple’s products generate a profit, how can Google’s ventures be considered a “success”?
      - jboy55 8y ago
        A success in that it has transformed the public image of the worlds largest and effectively "only" internet ad platform into one of a benevolent tech company working on problems that will help the world. Google for most of the last decade has had it 'easy' though. The natural expansion of its ad revenue has reduced the need for it to turn some 'evilness' dials to keep revenue and profit growing. With Apple its very straight forward, they sell things, and if you want their services you pay for them.
        scarface74 8y ago
        A success in that it has transformed the public image of the worlds largest and effectively "only" internet ad platform into one of a benevolent tech company working on problems that will help the world. How much has that goodwill improved profitability? What were people going to do, revolt and use Bing?
        jboy55 8y ago
        Well, for one, it keeps Antitrust somewhat at bay. But, its beyond search, if you want to monetize your site with ads, its pretty much impossible to avoid using Google.
    - Eric_WVGG 8y ago
      I appreciate your considered reply to my admittedly flippant reply to what I considered an unconsidered statement, so I'll try to return the favor. Alphabet's approach to innovation is to throw spaghetti at the wall and see what sticks. I’m not disparaging that approach, it’s probably what I would do if I had all the money in the world. But I’m not convinced that any of these “moonshots” are amounting to much yet. Apple has been described by many as the world’s largest startup. They’re very careful with their focus and resources, even to the point of killing off successful products (not just iPods, but things like their routers and printers). They _could_ just spend money and grow, but they know that would lead Apple to not being Apple anymore. So what is Apple? A strangely conservative company with a clear vision of the future that they approach slowly and methodically. Apple brought us the “touch future” and the truly “personal computer” (the one you take everywhere in your pocket). We still haven’t fully realized this potential and Apple is still building on it. Look me up in ten years and let me know if they’ve hit that vertical ceiling.
- webwielder2 8y ago
  Google has indeed been much more successful at shipping vaporware.
  - dnautics 8y ago
    I wouldn't call google's products vaporware. There are definitely five that I have used. Search, Gmail, Maps, Youtube, and Android. I barely use google search anymore (DDG is my major driver) - I'm not too content with Gmail anymore, and my youtube use has gone down since their ad strategy has changed. Probably Maps and Android are the two products they do that I would consider 'quality'. I'm not happy with Tensorflow, Golang, or Kubernetes.
    - dnautics 8y ago
      oh chrome is pretty popular it seems (I use firefox)
    - avinium 8y ago
      Tensorflow, I can understand - I imagine the rampant popularity of pytorch shows we're not alone. What's your issue with Golang though?
      - dnautics 8y ago
        There was an article about how golang takes a very classist attitude... There are programmers who use go, that are the peons, and the programmers who write go, who are anointed.. like hashmaps breaking the typesystem. It feels like a lot of the things that happen like if err != nil are code smell. I wrote a cli in go and wouldn't mind it again but I program in elixir now and the emphasis on developer joy is refreshing (but it makes wise choices, e.g limiting the scope of macros to lexical)
    - samatman 8y ago
      In the last twenty years, Google/Alphabet has killed more products than Apple has launched. In a very real sense, Alphabet has an r selected corporate strategy, while Apple is K selected[0] [0]: https://en.wikipedia.org/wiki/R/K_selection_theory https://en.wikipedia.org/wiki/R/K_selection_theory
- nthuser 8y ago
  You have got to be joking. Looking at the revenue numbers, it's clear that Apple is more diversified than Google. The declining iPhone sales are a short term problem. People are just keeping the devices for longer, not abandoning the ecosystem. Their services and wearables are seeing an impressive growth. I think the watch will grow even faster once Apple makes it a completely independent device. The difference between these two companies is that one publicizes the stuff it's working on and rushes it to market, while the other keeps it all secret until it's ready. Also, Apple is working on AR glasses(rumored to be announced next year), self-driving car and are making a big push into digital health. Apple is far from doomed, they still have a lot of room for growth.
  - phaus 8y ago
    If they announce AR glasses that look like anything besides a regular sized, normal looking, but super stylish pair of sunglasses running amazing software that always works, with a killer feature that no one even knew they needed, it will be safe to end the tired debate of whether Steve Jobs was the biggest reason that they regularly made great things. I do agree though that Apple is more diversified than a company that keeps selling super-expensive beta tests that get killed after the first or second try doesn't work.
  - partingshots 8y ago
    Alphabet is doing all of these things and more though no? With much more success too from what I can garner. Waymo is the defacto number one leader in self-driving, whereas Apple’s self driving unit is having huge issues internally. Similarly, didn’t Verily just receive a $1 billion dollar investment a few days ago with Silver Lake as the primary backer for it’s various life science hardware/digital technologies it’s working on like LiftWare [1], Project Baseline [2], etc? [1] Liftware - https://youtu.be/cFHwoOkSj7w https://youtu.be/cFHwoOkSj7w [2] Baseline Study - https://projectbaseline.com https://projectbaseline.com
    - nthuser 8y ago
      > Alphabet is doing all of these things and more though no? With more much success too from what I can garner. Apple has more diversified revenue than Alphabet. Why would you say Alphabet is more successful?. All this tells me is that Apple thinks long and hard before publicizing what it's working on, they won't show us prototypes. > Waymo is the defacto number one leader in self-driving, whereas Apple’s self driving unit is having huge issues internally with getting anything done. ALL of Apple's reported problems had to do with the MAKING of a car, not autonomous systems. People just don't get this distinction. We will know how far their system is at the end of this month when the DMV releases their disengagement report. By the way, recent developments indicate that Apple is back to building an electric self-driving car instead of a self-driving platform.
yellowbuilding 8y ago
I want neither
deleted 8y ago
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sonnyblarney 8y ago
This is not an existential issue vis-a-vis Apple, Google, or even about capitalism. It's really a CFO's problem, financial engineering. Companies that sit on massive cash all have this problem. The difference is not one of culture, it's the fact that Google is still controlled by powerful founders who can act in different way, i.e. 'maintain hard power' through share voting 10x's ... or even via 'soft power' just by being founders. Apple has more of a regular CEO. There are a variety of interesting things about this, but it's mostly on the financial side, and won't make a spec of difference in the rest of the company. Neither Apple nor G will be operationally hindered, M&A and other activities will be just the same. As founders move away from Alphabet, I bet they take a few fewer moonshots though ...
- shusson 8y ago
  > This is not an existential issue vis-a-vis Apple, Google, or even about capitalism. > It's really a CFO's problem, financial engineering. I'm not sure how you distinguish this from capitalism.
  - sonnyblarney 8y ago
    To pay or not pay dividends is economically a net neutral exercise. This is a matter of investor relations, and an issue mostly for the CFO of the company and has little material relationship to the nature of the company. It's not really a fundamental issue of control, it's just one of the many issues that pops up in the day to day of organizations that are cash flush relative to their income.
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pokemongoaway 8y ago
Capitalism is characterized by lack - lack of government control, intervention, and partnership. Both Apple's and Google's have been heavily characterized by anti-capitalistic phenomena, which is not the same as how the article spins it.
partingshots 8y ago
From taking a look at the author’s title on the site, the person who wrote this, Mihir Desai, is an economics professor at Harvard University. I wonder if he has any updated thoughts on this subject matter. Does anyone know of any more recent links to articles or writings he’s made?
- edaemon 8y ago
  He did write "Why Apple Is the Future of Capitalism" in August 2018, which seems pretty relevant: https://www.nytimes.com/2018/08/06/opinion/apple-trillion-market-cap.html https://www.nytimes.com/2018/08/06/opinion/apple-trillion-ma... Here's his list of publications: http://www.mihirdesai.org/publications-and-media/ http://www.mihirdesai.org/publications-and-media/
  - cageface 8y ago
    That Times article seems a lot less convincing in the light of Apple's recent stock crash.
    - coldtea 8y ago
      The future of capitalism includes tons of stock crashes anyway... And I don't think his argument was "Apple is infallible", but "Apple's model will prevail (or is good) for the future of capitalism". Not that Apple or any company following the model is guaranteed to always have increased stock value forever.
profalseidol 8y ago
It should be the laborers that decide what to with the profit. Not those who sit on their assess looking at Fibonacci traces.
- enitihas 8y ago
  Yeah, from each according to his ... Oh wait, isn't that's what communism is and haven't we already seen enough of how that pans out?
- simonh 8y ago
  The reason that fails is that in practice the labourers generally decide to spend the money now, rather than invest it in growth, so businesses run that way tend to fail. There are very, very few counter-examples in narrow low-growth specialised markets, but the general rule has been shown to occur countless times across economies as small as communes to as big as a superpower. The reason capitalism works is that capital generally flows to people with a track record of making efficient, effective, growth (and therefore jobs) generating investments. Which is what you want. There is some wastage of course, but far less than in planned economies (at least all of them so far) and capitalism tends to be very efficient at recycling that wasted capital back into productive enterprises.
  - pickpuck 8y ago
    Do you have any sources on workplace democracy failures? I would love to read some case studies.
    - simonh 8y ago
      One example is a recent study of the Yugoslav economy and what happened after control of production was shifted to worker councils. Employment and growth plummeted. "Amongst other things, these work councils were now free to decide on the distribution of income between wages and investment. In one sense, this policy change was a success: income per worker increased and wages became a bigger share of the economic pie. However, labour-managed firms seem to have reaped such rewards by hurting other members of the labour force, restricting the employment of new workers so as to limit the worker-based labour market competition that could scupper the wage demands of the 'insiders'." https://capx.co/do-workers-need-capitalists-new-lessons-from-yugoslavias-socialist-experiment/ https://capx.co/do-workers-need-capitalists-new-lessons-from...
jhack 8y ago
> The paths taken by Apple and Google manifest alternative answers to one of the main questions facing capitalism today: What should public companies do with all of the money that they’re making? Even as corporations have brought in enormous profits, there has been a shortage of lucrative opportunities for investment and growth, creating surpluses of cash. This imbalance has resulted in the pileup of $2 trillion on corporate balance sheets. Pay your employees.
- techslave 8y ago
  or more realistically, your investors (dividends).
  - cs_advice 8y ago
    Better to pay the workers. It's an absolute shame that Amazon it's making so much money and treating their workers like shit. > Unions who represent Amazon workers have characterized its work conditions as “draconian” and physically demanding to the point of causing injury. Francisco Hervias, a worker who protested on Black Friday in Madrid last month, said at the time that he nearly lost his hand on the job. https://gizmodo.com/amazon-workers-in-spain-and-germany-announce-strikes-ah-1830970868 https://gizmodo.com/amazon-workers-in-spain-and-germany-anno...
    - lotsofpulp 8y ago
      Instead of targeting specific entities, the better way would be to introduce structural changes in a American society via federal laws mandating paid leave minimums and removal of non-monetary compensation like health insurance benefit. A reduction in supply of labor will lead to higher wages, at the same time providing people with less stress and more time to participate in their community.
- xs567 8y ago
  Pay your taxes, you mean? https://www.theguardian.com/technology/2019/jan/03/google-tax-haven-bermuda-netherlands https://www.theguardian.com/technology/2019/jan/03/google-ta...
netcan 8y ago
Fairly interesting read. It's about their accumulated piles of cash, what investors think about it and founder-investor dynamics. The main comparison point and conclusion is interestingly straightforward: Google gets to keep their pile o' cash because founders still control voting rights. The economic analysis is traditional (principal-agent issues) but I think it undersells the differences from theory. Eg, investors are still happily buying "founder controlled" shares like Google and Tesla even though the principal-agent problem is huge on paper. Reminds me of musk said: spaceX can't have public investors because going to mars doesn't give you the best risk adjusted returns. Investors will want to launch satellites for cash, not risk everything to go to mars where there are no customers. The hitch is that these investors will still buy the shares even if the mission is "mars." They'll campaign for a more lucrative mission and eventually win. Perhaps these "founder control" arrangements are a way of creating kinds of "investment doctrines." Either way, their existence (beyond founders that simply own lots of shares) suggests that public shares create governance problems that aren't explainable via principal-agent or some other traditional economic explanation.
- rsj_hn 8y ago
  Either way, their existence (beyond founders that simply own lots of shares) suggests that public shares create governance problems that aren't explainable via principal-agent or some other traditional economic explanation. I'm not sure I'd phrase it this way. Suppose option A earns you 5% and option B earns you 6%. But you, as a founder, really prefer option A to option B. Then you better not take your company public, because your personal preference doesn't match the market preference. In your example, going to Mars earns less money than selling the satellites, and Musk really wants to go to Mars. I don't see this as a governance problem -- Musk's pleasure in going to Mars plus the returns from doing that exceed the public's pleasure from the returns only. So since this is a bit of a vanity project, it can't be publicly controlled and remain a Musk vanity project. That's not a governance problem, it's how governance is supposed to work. But then you say that investors are happily buying these shares? Well, it's an expected income stream, so the shares are being priced. Happiness has nothing to do with it. A 5% return is still worth something, even if the share price would go up should the strategy change. In no model would the price of the suboptimal income stream be zero. The real question here is what happens to the visionary iconoclast who knows that going to Mars will result in a higher return. For them, it's not a vanity project but some kind of private belief that is more accurate than the market belief. In that case, non-voting shares will outperform in the long run. We can say that Steve Jobs was such a visionary and maybe Musk is, too. But how much do you want to bet on that? And is that really an argument for one type of structure over another? That your average company is run by some visionary genius that is smarter than the market? Is that a governance problem? No, not at all.
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mcv 8y ago
The article discusses which group of stakeholders should have the most control over the company: upper management, or investors. But companies have not just two, but at least 4 groups of stakeholders. Investors and management, but also employees, who also depend on the long-term health of the company, and customers, who want the company to be a reliable partner that's healthy enough to continue to support their products. I'd like to see a control structure that balances all these stakeholders, rather than choosing one that has all the power. All power in one place is certainly easier, but also more open to abuse, whether it's hedge funds looting the company, or Enron-style upper management looting the company. A company is not doing a good job unless all 4 groups of stakeholders are happy. (I suppose you could consider society a 5th stakeholder that doesn't want the company to pollute or create other harmful side effects.)
- repsilat 8y ago
  Someone once told me that "exit is more powerful than voice". I think they meant that the market is a better democracy than voting. Capitalism traditionally gives power to customers through their ability to choose not to buy the company's products. Works better for Apple than for Google, though we pass laws to mitigate some externalities (privacy). Workers get a say in a similar way. If a company isn't worth working for, they won't work there. This is truer for companies like Google and Apple than most (even though they are enormous) because the labour market is so tight. Again, though, we pass laws like allowing labour unions (which are a price-fixing mechanism) to address imbalances of power. Funnily enough, this is kind of on-topic for the article. Ownership in a company usually gives you "voice" and "exit", and these fancy share classes effectively take away voice and just leave the average shareholder with exit -- "If you don't like how we run the company, invest in someone else." I think the reasonableness of it is a question of effectiveness rather than morality or logic, to be honest, but I do like the idea that Zuckerberg's board proposed to him when considering an additional share class+split that would have entrenched his power: "Your shares will become regular stock when you stop personally being CEO." They wanted him to run the company how he wanted to run it, but didn't want him to hand-pick a successor. Still, a bit perverse that negotiation. Technically Zuck had the votes, so I guess (?) the legal mechanism of that action was "We won't sue you for not representing our interests if we do it this way." (Voting stock or no, shareholders always have some legal voice.)
giorgioz 8y ago
I don't see them as two ways but rather the same way at different times. Founders of Apple lost majority many decades ago. If Steve Jobs was alive and had a majority in Apple's stocks would have behaved like Google's founders Larry Page and Sergey Brin.
robertAngst 8y ago
How to spend profits was interesting, was surprised they didn't talk about Apple's Anti-Consumer and Anti-Developer model that forces one time users into their ecosystem. Wanted to see how google was doing similar.
glenrivard 8y ago
Well one has never declined YoY for a single quarter since day 1. Plus continues to have strong growth with 20%+ for the last 10 straight quarters. It is also half the age of Apple. So sounds like one is beating the other in terms of capitalism.
mcrad 8y ago
Well in one sense "managers capitalism" isn't capitalism at all. It's the principal-agent problem in the extreme. The basic point of capitalism is to distribute power and decision making as much as possible. That's called a market. Those who argue that Google has the better strategy don't really understand the ethics of business and its role in society. Sure, if you're trying to "win the game" be more like Google. If you're trying to make capitalism proud, be Apple. Probably a socialist anyway!
chooseaname 8y ago
> Even as corporations have brought in enormous profits, there has been a shortage of lucrative opportunities for investment and growth, creating surpluses of cash. This imbalance has resulted in the pileup of $2 trillion on corporate balance sheets. As companies continue to generate more profits than they need to fund their own growth, the question becomes: Who will decide what to do with all those profits—managers or investors? And will they decide to pay their employees?
- rorykoehler 8y ago
  > there has been a shortage of lucrative opportunities for investment and growth History has proven this to be false. There is only a shortage of creativity. There was a Micorsoft talk Ballmer gave where he rightly pointed out that it is rare for even successful companies to have more than one cash cow idea. Using their existing cash to create two or more is the main challenge facing companies like Microsoft, Google and Apple.
bsbechtel 8y ago
The analyses in the comments and in the article all assume shareholders are one large, homogeneous group with identical or very similar goals regarding investment strategies. This is far from the truth, and realizing there are differing investors with different risk and time adjusted financial goals changes this debate drastically, and (imho) makes it largely irrelevant.
- muraiki 8y ago
  From the article: > Proponents of the managerial model embodied by Google worry about a different principal-agent problem. Rather than being concerned about managers ignoring investors, they are concerned that investors won’t serve the people who would benefit from the long-term success of the company. Those professional investors are both the principals for the CEOs but also the agents of many other shareholders. The hedge funds that pressured Apple are the dreaded “short-term” investors who are interested only in quick wins and don’t serve their longer-term beneficiaries, such as pension funds, that allocate capital to them in the first place. As investors, hedge funds are impatient, and, the argument goes, ruining the economy by shortening time horizons.
charliebrownau 8y ago
Gday Platforms that censor speech List :- * Facebook * Twitter * Google * Youtube * TUMBLR * Pateron * Stripe * Paypal * Twitch * Spotify * Apple * pin interest * LinkedIn * Mailchimp * Wordpress * mastodon * azure * Mastercard * Godaddy * MEDIUM * Shopify * Cloudflare * pusher * WIKI * Reddit * teespring * Slack * coinbase * GOFUNDME * VISA
charliebrownau 8y ago
Gday Platforms that DONT censor speech * Minds + mewe (FB alt) * Gabai (Twitter alt) * Bitchute (Youtube alt) * Tutanota + Protonmail(email alt) * Wire (skype alt) * Librepay (Donation alt)(Warning they use STRIPE+Paypal) * subscribestar (Donation alt)(Warning they use STRIPE+Paypal) * Startengine (Kickstarter alt) * peertube (DIY self host youtube stream style server) * stream.me (steaming alt) * Voat (Reddit alt) * Movim (Tumblr alt) * Pixelfed (Instagram alt)(one admin is an leftist) * @GetTogether (meetup.com alt) Also look into:- * searX.me or Duckduckgo (search alt) * OpenStreetmap - instead of Google maps * imgtc or tineye - free image upload site * Linux - Win/MacOSX replacement * f-droid.org - Google Play Store ALT * Mumble - Discord ALT * Gitlab (Github alt) * spreadshirt - shirt merch alt Regards Charliebrownau
SqwRock 8y ago
An interesting article. One thing I like is that there's no "trickle-down" economics BS here, for decades it has been preached that tax cuts will increase the profits which will be reinvested for the benefit of larger social groups. When in fact we've seen an increase in corruption and social inequality. Here we have two models that are being compared not by who makes more, but who is more competent to actually reinvest and sustain long-term goals. As utopistic as it may sound, I would add the workers into the circle, an educated workforce is the only solid unit that can remain active in a recession caused by bad managers or greedy investors.
anm89 8y ago
Business. Business is the word they were looking for. Apple and Google don't engage in capitalism, they engage in business. Capitalism is a socio economical political system that they are actors in and have no say over(besides attempts to lobby which are real but not the focus here). This may sound like semantics but I think this subtle and intentional shift in language is dangerous. You constantly slip the strawman into everyday language until the average person has heard it enough times to have a deeply negative view of capitalism because they equate capitalism to companies they don't like(we are already past this point) These days, being deeply anti capitalist is a main stream viewpoint but if you ask people what they mean by it, many of them aren't usually looking for economic system reform, they are looking for Companies that they feel are doing business unethically to be constrained or policed. They end up fighting the wrong thing based on a faulty definition which is highly unlikely to produce the results they want.

151 points by lawrenceyan 8y ago

It's always interesting to take a look back on articles like these and see how the opinions / predictions of the author pan out. There has always seemed to be what is in my opinion a largely narrow minded short term oriented negativity directed towards the Google method of moonshots / bets. In hindsight now in 2019, it's clear with signs of growing stagnation on Apple's side and continued successful innovation and growth of Alphabet companies within vastly diverse industries (Verily, Waymo, Malta, etc.) which of the two methodologies was the better choice. I wonder what the future will hold? Culture seems like the strongest indicator for whether changes can be made. Without the sort of long term vision Jobs had to guide the company from the top down, successful pivoting depends on if internal company culture can support a bottom up revitalization I think.

Eric_WVGG 8y ago
I agree. It's clear in hindsight that Apple has provided more innovation and Alphabet is still an ad machine.
- lawrenceyan 8y ago
  I disagree with the innovation portion of your comment, but definitely, advertising is an extremely strong foundation of consistent steady growth / revenue. Whatever the economic forces at the time, Google will always continue to provide. With Apple on the other hand it's foundation currently depends on hit-driven successes requiring repeated 2 year cycle refresh purchases from it's customers to sustain it. The issues with this are evidently shown. As to your comment on innovation, Apple has largely squandered it's source of foundational income cornering itself into a niche, such that though it may be extremely innovative in it's area (Apple has some amazing processor design for example), is fundamentally constrained by the limited pieces it has to work with. Basically, instead of undergoing a necessary evolution like we've seen from the progression of Google -> Alphabet, Apple has failed to scale itself in a way where it can keep up. This by no means is meant as a sleight to any Apple employees though, as I know from first hand experience that some of the best and brightest people are working there. It's just a matter of how scaling works. Horizontal scaling allows for unlimited growth, whereas vertical scaling quickly reaches an asymptotic ceiling.
  - scarface74 8y ago
    Seeing that nothing Google has done outside of selling ads has been profitable and we can assume that all of Apple’s products generate a profit, how can Google’s ventures be considered a “success”?
    - jboy55 8y ago
      A success in that it has transformed the public image of the worlds largest and effectively "only" internet ad platform into one of a benevolent tech company working on problems that will help the world. Google for most of the last decade has had it 'easy' though. The natural expansion of its ad revenue has reduced the need for it to turn some 'evilness' dials to keep revenue and profit growing. With Apple its very straight forward, they sell things, and if you want their services you pay for them.
      - scarface74 8y ago
        A success in that it has transformed the public image of the worlds largest and effectively "only" internet ad platform into one of a benevolent tech company working on problems that will help the world. How much has that goodwill improved profitability? What were people going to do, revolt and use Bing?
        jboy55 8y ago
        Well, for one, it keeps Antitrust somewhat at bay. But, its beyond search, if you want to monetize your site with ads, its pretty much impossible to avoid using Google.
  - Eric_WVGG 8y ago
    I appreciate your considered reply to my admittedly flippant reply to what I considered an unconsidered statement, so I'll try to return the favor. Alphabet's approach to innovation is to throw spaghetti at the wall and see what sticks. I’m not disparaging that approach, it’s probably what I would do if I had all the money in the world. But I’m not convinced that any of these “moonshots” are amounting to much yet. Apple has been described by many as the world’s largest startup. They’re very careful with their focus and resources, even to the point of killing off successful products (not just iPods, but things like their routers and printers). They _could_ just spend money and grow, but they know that would lead Apple to not being Apple anymore. So what is Apple? A strangely conservative company with a clear vision of the future that they approach slowly and methodically. Apple brought us the “touch future” and the truly “personal computer” (the one you take everywhere in your pocket). We still haven’t fully realized this potential and Apple is still building on it. Look me up in ten years and let me know if they’ve hit that vertical ceiling.
webwielder2 8y ago
Google has indeed been much more successful at shipping vaporware.
- dnautics 8y ago
  I wouldn't call google's products vaporware. There are definitely five that I have used. Search, Gmail, Maps, Youtube, and Android. I barely use google search anymore (DDG is my major driver) - I'm not too content with Gmail anymore, and my youtube use has gone down since their ad strategy has changed. Probably Maps and Android are the two products they do that I would consider 'quality'. I'm not happy with Tensorflow, Golang, or Kubernetes.
  - dnautics 8y ago
    oh chrome is pretty popular it seems (I use firefox)
  - avinium 8y ago
    Tensorflow, I can understand - I imagine the rampant popularity of pytorch shows we're not alone. What's your issue with Golang though?
    - dnautics 8y ago
      There was an article about how golang takes a very classist attitude... There are programmers who use go, that are the peons, and the programmers who write go, who are anointed.. like hashmaps breaking the typesystem. It feels like a lot of the things that happen like if err != nil are code smell. I wrote a cli in go and wouldn't mind it again but I program in elixir now and the emphasis on developer joy is refreshing (but it makes wise choices, e.g limiting the scope of macros to lexical)
  - samatman 8y ago
    In the last twenty years, Google/Alphabet has killed more products than Apple has launched. In a very real sense, Alphabet has an r selected corporate strategy, while Apple is K selected[0] [0]: https://en.wikipedia.org/wiki/R/K_selection_theory https://en.wikipedia.org/wiki/R/K_selection_theory
nthuser 8y ago
You have got to be joking. Looking at the revenue numbers, it's clear that Apple is more diversified than Google. The declining iPhone sales are a short term problem. People are just keeping the devices for longer, not abandoning the ecosystem. Their services and wearables are seeing an impressive growth. I think the watch will grow even faster once Apple makes it a completely independent device. The difference between these two companies is that one publicizes the stuff it's working on and rushes it to market, while the other keeps it all secret until it's ready. Also, Apple is working on AR glasses(rumored to be announced next year), self-driving car and are making a big push into digital health. Apple is far from doomed, they still have a lot of room for growth.
- phaus 8y ago
  If they announce AR glasses that look like anything besides a regular sized, normal looking, but super stylish pair of sunglasses running amazing software that always works, with a killer feature that no one even knew they needed, it will be safe to end the tired debate of whether Steve Jobs was the biggest reason that they regularly made great things. I do agree though that Apple is more diversified than a company that keeps selling super-expensive beta tests that get killed after the first or second try doesn't work.
- partingshots 8y ago
  Alphabet is doing all of these things and more though no? With much more success too from what I can garner. Waymo is the defacto number one leader in self-driving, whereas Apple’s self driving unit is having huge issues internally. Similarly, didn’t Verily just receive a $1 billion dollar investment a few days ago with Silver Lake as the primary backer for it’s various life science hardware/digital technologies it’s working on like LiftWare [1], Project Baseline [2], etc? [1] Liftware - https://youtu.be/cFHwoOkSj7w https://youtu.be/cFHwoOkSj7w [2] Baseline Study - https://projectbaseline.com https://projectbaseline.com
  - nthuser 8y ago
    > Alphabet is doing all of these things and more though no? With more much success too from what I can garner. Apple has more diversified revenue than Alphabet. Why would you say Alphabet is more successful?. All this tells me is that Apple thinks long and hard before publicizing what it's working on, they won't show us prototypes. > Waymo is the defacto number one leader in self-driving, whereas Apple’s self driving unit is having huge issues internally with getting anything done. ALL of Apple's reported problems had to do with the MAKING of a car, not autonomous systems. People just don't get this distinction. We will know how far their system is at the end of this month when the DMV releases their disengagement report. By the way, recent developments indicate that Apple is back to building an electric self-driving car instead of a self-driving platform.

yellowbuilding 8y ago

I want neither

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sonnyblarney 8y ago

This is not an existential issue vis-a-vis Apple, Google, or even about capitalism. It's really a CFO's problem, financial engineering. Companies that sit on massive cash all have this problem. The difference is not one of culture, it's the fact that Google is still controlled by powerful founders who can act in different way, i.e. 'maintain hard power' through share voting 10x's ... or even via 'soft power' just by being founders. Apple has more of a regular CEO. There are a variety of interesting things about this, but it's mostly on the financial side, and won't make a spec of difference in the rest of the company. Neither Apple nor G will be operationally hindered, M&A and other activities will be just the same. As founders move away from Alphabet, I bet they take a few fewer moonshots though ...

shusson 8y ago
> This is not an existential issue vis-a-vis Apple, Google, or even about capitalism. > It's really a CFO's problem, financial engineering. I'm not sure how you distinguish this from capitalism.
- sonnyblarney 8y ago
  To pay or not pay dividends is economically a net neutral exercise. This is a matter of investor relations, and an issue mostly for the CFO of the company and has little material relationship to the nature of the company. It's not really a fundamental issue of control, it's just one of the many issues that pops up in the day to day of organizations that are cash flush relative to their income.

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pokemongoaway 8y ago

Capitalism is characterized by lack - lack of government control, intervention, and partnership. Both Apple's and Google's have been heavily characterized by anti-capitalistic phenomena, which is not the same as how the article spins it.

partingshots 8y ago

From taking a look at the author’s title on the site, the person who wrote this, Mihir Desai, is an economics professor at Harvard University. I wonder if he has any updated thoughts on this subject matter. Does anyone know of any more recent links to articles or writings he’s made?

edaemon 8y ago
He did write "Why Apple Is the Future of Capitalism" in August 2018, which seems pretty relevant: https://www.nytimes.com/2018/08/06/opinion/apple-trillion-market-cap.html https://www.nytimes.com/2018/08/06/opinion/apple-trillion-ma... Here's his list of publications: http://www.mihirdesai.org/publications-and-media/ http://www.mihirdesai.org/publications-and-media/
- cageface 8y ago
  That Times article seems a lot less convincing in the light of Apple's recent stock crash.
  - coldtea 8y ago
    The future of capitalism includes tons of stock crashes anyway... And I don't think his argument was "Apple is infallible", but "Apple's model will prevail (or is good) for the future of capitalism". Not that Apple or any company following the model is guaranteed to always have increased stock value forever.

profalseidol 8y ago

It should be the laborers that decide what to with the profit. Not those who sit on their assess looking at Fibonacci traces.

enitihas 8y ago
Yeah, from each according to his ... Oh wait, isn't that's what communism is and haven't we already seen enough of how that pans out?
simonh 8y ago
The reason that fails is that in practice the labourers generally decide to spend the money now, rather than invest it in growth, so businesses run that way tend to fail. There are very, very few counter-examples in narrow low-growth specialised markets, but the general rule has been shown to occur countless times across economies as small as communes to as big as a superpower. The reason capitalism works is that capital generally flows to people with a track record of making efficient, effective, growth (and therefore jobs) generating investments. Which is what you want. There is some wastage of course, but far less than in planned economies (at least all of them so far) and capitalism tends to be very efficient at recycling that wasted capital back into productive enterprises.
- pickpuck 8y ago
  Do you have any sources on workplace democracy failures? I would love to read some case studies.
  - simonh 8y ago
    One example is a recent study of the Yugoslav economy and what happened after control of production was shifted to worker councils. Employment and growth plummeted. "Amongst other things, these work councils were now free to decide on the distribution of income between wages and investment. In one sense, this policy change was a success: income per worker increased and wages became a bigger share of the economic pie. However, labour-managed firms seem to have reaped such rewards by hurting other members of the labour force, restricting the employment of new workers so as to limit the worker-based labour market competition that could scupper the wage demands of the 'insiders'." https://capx.co/do-workers-need-capitalists-new-lessons-from-yugoslavias-socialist-experiment/ https://capx.co/do-workers-need-capitalists-new-lessons-from...

jhack 8y ago

> The paths taken by Apple and Google manifest alternative answers to one of the main questions facing capitalism today: What should public companies do with all of the money that they’re making? Even as corporations have brought in enormous profits, there has been a shortage of lucrative opportunities for investment and growth, creating surpluses of cash. This imbalance has resulted in the pileup of $2 trillion on corporate balance sheets. Pay your employees.

techslave 8y ago
or more realistically, your investors (dividends).
- cs_advice 8y ago
  Better to pay the workers. It's an absolute shame that Amazon it's making so much money and treating their workers like shit. > Unions who represent Amazon workers have characterized its work conditions as “draconian” and physically demanding to the point of causing injury. Francisco Hervias, a worker who protested on Black Friday in Madrid last month, said at the time that he nearly lost his hand on the job. https://gizmodo.com/amazon-workers-in-spain-and-germany-announce-strikes-ah-1830970868 https://gizmodo.com/amazon-workers-in-spain-and-germany-anno...
  - lotsofpulp 8y ago
    Instead of targeting specific entities, the better way would be to introduce structural changes in a American society via federal laws mandating paid leave minimums and removal of non-monetary compensation like health insurance benefit. A reduction in supply of labor will lead to higher wages, at the same time providing people with less stress and more time to participate in their community.
xs567 8y ago
Pay your taxes, you mean? https://www.theguardian.com/technology/2019/jan/03/google-tax-haven-bermuda-netherlands https://www.theguardian.com/technology/2019/jan/03/google-ta...

netcan 8y ago

Fairly interesting read. It's about their accumulated piles of cash, what investors think about it and founder-investor dynamics. The main comparison point and conclusion is interestingly straightforward: Google gets to keep their pile o' cash because founders still control voting rights. The economic analysis is traditional (principal-agent issues) but I think it undersells the differences from theory. Eg, investors are still happily buying "founder controlled" shares like Google and Tesla even though the principal-agent problem is huge on paper. Reminds me of musk said: spaceX can't have public investors because going to mars doesn't give you the best risk adjusted returns. Investors will want to launch satellites for cash, not risk everything to go to mars where there are no customers. The hitch is that these investors will still buy the shares even if the mission is "mars." They'll campaign for a more lucrative mission and eventually win. Perhaps these "founder control" arrangements are a way of creating kinds of "investment doctrines." Either way, their existence (beyond founders that simply own lots of shares) suggests that public shares create governance problems that aren't explainable via principal-agent or some other traditional economic explanation.

rsj_hn 8y ago
Either way, their existence (beyond founders that simply own lots of shares) suggests that public shares create governance problems that aren't explainable via principal-agent or some other traditional economic explanation. I'm not sure I'd phrase it this way. Suppose option A earns you 5% and option B earns you 6%. But you, as a founder, really prefer option A to option B. Then you better not take your company public, because your personal preference doesn't match the market preference. In your example, going to Mars earns less money than selling the satellites, and Musk really wants to go to Mars. I don't see this as a governance problem -- Musk's pleasure in going to Mars plus the returns from doing that exceed the public's pleasure from the returns only. So since this is a bit of a vanity project, it can't be publicly controlled and remain a Musk vanity project. That's not a governance problem, it's how governance is supposed to work. But then you say that investors are happily buying these shares? Well, it's an expected income stream, so the shares are being priced. Happiness has nothing to do with it. A 5% return is still worth something, even if the share price would go up should the strategy change. In no model would the price of the suboptimal income stream be zero. The real question here is what happens to the visionary iconoclast who knows that going to Mars will result in a higher return. For them, it's not a vanity project but some kind of private belief that is more accurate than the market belief. In that case, non-voting shares will outperform in the long run. We can say that Steve Jobs was such a visionary and maybe Musk is, too. But how much do you want to bet on that? And is that really an argument for one type of structure over another? That your average company is run by some visionary genius that is smarter than the market? Is that a governance problem? No, not at all.

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mcv 8y ago

The article discusses which group of stakeholders should have the most control over the company: upper management, or investors. But companies have not just two, but at least 4 groups of stakeholders. Investors and management, but also employees, who also depend on the long-term health of the company, and customers, who want the company to be a reliable partner that's healthy enough to continue to support their products. I'd like to see a control structure that balances all these stakeholders, rather than choosing one that has all the power. All power in one place is certainly easier, but also more open to abuse, whether it's hedge funds looting the company, or Enron-style upper management looting the company. A company is not doing a good job unless all 4 groups of stakeholders are happy. (I suppose you could consider society a 5th stakeholder that doesn't want the company to pollute or create other harmful side effects.)

repsilat 8y ago
Someone once told me that "exit is more powerful than voice". I think they meant that the market is a better democracy than voting. Capitalism traditionally gives power to customers through their ability to choose not to buy the company's products. Works better for Apple than for Google, though we pass laws to mitigate some externalities (privacy). Workers get a say in a similar way. If a company isn't worth working for, they won't work there. This is truer for companies like Google and Apple than most (even though they are enormous) because the labour market is so tight. Again, though, we pass laws like allowing labour unions (which are a price-fixing mechanism) to address imbalances of power. Funnily enough, this is kind of on-topic for the article. Ownership in a company usually gives you "voice" and "exit", and these fancy share classes effectively take away voice and just leave the average shareholder with exit -- "If you don't like how we run the company, invest in someone else." I think the reasonableness of it is a question of effectiveness rather than morality or logic, to be honest, but I do like the idea that Zuckerberg's board proposed to him when considering an additional share class+split that would have entrenched his power: "Your shares will become regular stock when you stop personally being CEO." They wanted him to run the company how he wanted to run it, but didn't want him to hand-pick a successor. Still, a bit perverse that negotiation. Technically Zuck had the votes, so I guess (?) the legal mechanism of that action was "We won't sue you for not representing our interests if we do it this way." (Voting stock or no, shareholders always have some legal voice.)

giorgioz 8y ago

I don't see them as two ways but rather the same way at different times. Founders of Apple lost majority many decades ago. If Steve Jobs was alive and had a majority in Apple's stocks would have behaved like Google's founders Larry Page and Sergey Brin.

robertAngst 8y ago

How to spend profits was interesting, was surprised they didn't talk about Apple's Anti-Consumer and Anti-Developer model that forces one time users into their ecosystem. Wanted to see how google was doing similar.

glenrivard 8y ago

Well one has never declined YoY for a single quarter since day 1. Plus continues to have strong growth with 20%+ for the last 10 straight quarters. It is also half the age of Apple. So sounds like one is beating the other in terms of capitalism.

mcrad 8y ago

Well in one sense "managers capitalism" isn't capitalism at all. It's the principal-agent problem in the extreme. The basic point of capitalism is to distribute power and decision making as much as possible. That's called a market. Those who argue that Google has the better strategy don't really understand the ethics of business and its role in society. Sure, if you're trying to "win the game" be more like Google. If you're trying to make capitalism proud, be Apple. Probably a socialist anyway!

chooseaname 8y ago

> Even as corporations have brought in enormous profits, there has been a shortage of lucrative opportunities for investment and growth, creating surpluses of cash. This imbalance has resulted in the pileup of $2 trillion on corporate balance sheets. As companies continue to generate more profits than they need to fund their own growth, the question becomes: Who will decide what to do with all those profits—managers or investors? And will they decide to pay their employees?

rorykoehler 8y ago
> there has been a shortage of lucrative opportunities for investment and growth History has proven this to be false. There is only a shortage of creativity. There was a Micorsoft talk Ballmer gave where he rightly pointed out that it is rare for even successful companies to have more than one cash cow idea. Using their existing cash to create two or more is the main challenge facing companies like Microsoft, Google and Apple.

bsbechtel 8y ago

The analyses in the comments and in the article all assume shareholders are one large, homogeneous group with identical or very similar goals regarding investment strategies. This is far from the truth, and realizing there are differing investors with different risk and time adjusted financial goals changes this debate drastically, and (imho) makes it largely irrelevant.

muraiki 8y ago
From the article: > Proponents of the managerial model embodied by Google worry about a different principal-agent problem. Rather than being concerned about managers ignoring investors, they are concerned that investors won’t serve the people who would benefit from the long-term success of the company. Those professional investors are both the principals for the CEOs but also the agents of many other shareholders. The hedge funds that pressured Apple are the dreaded “short-term” investors who are interested only in quick wins and don’t serve their longer-term beneficiaries, such as pension funds, that allocate capital to them in the first place. As investors, hedge funds are impatient, and, the argument goes, ruining the economy by shortening time horizons.

charliebrownau 8y ago

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charliebrownau 8y ago

Gday Platforms that DONT censor speech * Minds + mewe (FB alt) * Gabai (Twitter alt) * Bitchute (Youtube alt) * Tutanota + Protonmail(email alt) * Wire (skype alt) * Librepay (Donation alt)(Warning they use STRIPE+Paypal) * subscribestar (Donation alt)(Warning they use STRIPE+Paypal) * Startengine (Kickstarter alt) * peertube (DIY self host youtube stream style server) * stream.me (steaming alt) * Voat (Reddit alt) * Movim (Tumblr alt) * Pixelfed (Instagram alt)(one admin is an leftist) * @GetTogether (meetup.com alt) Also look into:- * searX.me or Duckduckgo (search alt) * OpenStreetmap - instead of Google maps * imgtc or tineye - free image upload site * Linux - Win/MacOSX replacement * f-droid.org - Google Play Store ALT * Mumble - Discord ALT * Gitlab (Github alt) * spreadshirt - shirt merch alt Regards Charliebrownau

SqwRock 8y ago

An interesting article. One thing I like is that there's no "trickle-down" economics BS here, for decades it has been preached that tax cuts will increase the profits which will be reinvested for the benefit of larger social groups. When in fact we've seen an increase in corruption and social inequality. Here we have two models that are being compared not by who makes more, but who is more competent to actually reinvest and sustain long-term goals. As utopistic as it may sound, I would add the workers into the circle, an educated workforce is the only solid unit that can remain active in a recession caused by bad managers or greedy investors.

anm89 8y ago

Business. Business is the word they were looking for. Apple and Google don't engage in capitalism, they engage in business. Capitalism is a socio economical political system that they are actors in and have no say over(besides attempts to lobby which are real but not the focus here). This may sound like semantics but I think this subtle and intentional shift in language is dangerous. You constantly slip the strawman into everyday language until the average person has heard it enough times to have a deeply negative view of capitalism because they equate capitalism to companies they don't like(we are already past this point) These days, being deeply anti capitalist is a main stream viewpoint but if you ask people what they mean by it, many of them aren't usually looking for economic system reform, they are looking for Companies that they feel are doing business unethically to be constrained or policed. They end up fighting the wrong thing based on a faulty definition which is highly unlikely to produce the results they want.