4 ms·

To me, it seems crazy that a company would actively try to self-sabotage their bread-and-butter product in search of a bit of extra revenue when they're already

by whakim 5y ago

To me, it seems crazy that a company would actively try to self-sabotage their bread-and-butter product in search of a bit of extra revenue when they're already making record profits. Not to mention that, as the author of the article points out, Google published a well-known quantitative paper on why that's a bad tradeoff.

fdgsdfogijq 5y ago
It happens all the time though. Look at amazon, they flood their marketplace with cheap knockoff products that hurt the credibility of their ecommerce offerings, but the money generated is too much to shut off. So in the short run, amazon makes more money for a worse reputation, and in the long run ??? its unclear
- whakim 5y ago
  I don't think that's analogous: you'd have to argue that Amazon spent a ton of time and effort on keeping cheap knockoff products off their marketplace and then did a sudden u-turn and decided not to do that anymore. Even then, I don't think the analogy holds, because the quality of Amazon's marketplace listings isn't anywhere near as synonymous with Amazon as the quality of Google's search results is with Google.
  - bryanrasmussen 5y ago
    >Even then, I don't think the analogy holds, because the quality of Amazon's marketplace listings isn't anywhere near as synonymous with Amazon as the quality of Google's search results is with Google. What? Why not, and anyway Amazon I'm giving money. I'd think that quality there would be more deeply linked than anywhere I'm just giving some time.
- prewett 5y ago
  My dad frequently says that sooner or later the finance guys get in charge of the company and then they cut the fat and keep cutting into the product. Sooner or later they go too far. Seems fairly inevitable, seems to happen a lot. I assume that what happens is that the product matures, so the obvious thing to do is make things more financially efficient. Problem is, the company sells a product and the finance CEO's core competency is reducing costs, and reducing costs isn't something that customers actually buy.
danielrpa 5y ago
The CEO and upper management might simply not care about the long-term viability of the company. Cashing out in the short-term sounds more like what these executives generally do.
- KarlKemp 5y ago
  > Cashing out in the short-term sounds more like what these executives generally do. It only sounds like what they do because you only ever read stuff written by people who believe that without any evidence. Sundar Pichai has been with Google since 2004.
  - danielrpa 5y ago
    Sundar Pichai is probably the weakest of the FAANG executives - if not one of the weakest Fortune 100 executives. Google's search result quality, reduction in overall prestige and lack of new major products are just a few indicators of that. But speaking in general, there is limited correlation between executive compensation and company performance. You can DuckDuckGo it if you want to find the evidence for this statement.
  - AlbertCory 5y ago
    For whatever it's worth: I had a talk with a WSJ reporter, who said he's met all the FAANG chief executives, and Sundar was the least impressive of them all. Having everyone you've worked with love you and find you brilliant is not at all the same thing as being brilliant.
apatters 5y ago
It's rational and commonplace behavior for a monopoly to prioritize profit maximization over product quality, there must be thousands of case studies over the years. If a firm has no viable competitors, why do they care whether their product is good or not? Google Search has 86% market share in the US.
- KarlKemp 5y ago
  The cases you mention involve maximizing profits by saving on costs. The theory above is that lower quality leads to an increase in revenue, and it is tenuous at best.
godelski 5y ago
That happens when companies have monopolies. They can sacrifice quality for profits. Happens frequently. Obviously you can't sacrifice quality to zero, but you can a bit. It would make sense that they would keep pushing it down little by little (returning higher and higher profits) to find the turning point. I don't think they're yet in danger though because there isn't a real uptick in the competition.
- fnord77 5y ago
  > you can't sacrifice quality to zero, GM tried in the 80s
ghosty141 5y ago
Key word: "would". We don't know and I highly doubt this is the case.

by whakim 5y ago

fdgsdfogijq 5y ago

It happens all the time though. Look at amazon, they flood their marketplace with cheap knockoff products that hurt the credibility of their ecommerce offerings, but the money generated is too much to shut off. So in the short run, amazon makes more money for a worse reputation, and in the long run ??? its unclear

whakim 5y ago
I don't think that's analogous: you'd have to argue that Amazon spent a ton of time and effort on keeping cheap knockoff products off their marketplace and then did a sudden u-turn and decided not to do that anymore. Even then, I don't think the analogy holds, because the quality of Amazon's marketplace listings isn't anywhere near as synonymous with Amazon as the quality of Google's search results is with Google.
- bryanrasmussen 5y ago
  >Even then, I don't think the analogy holds, because the quality of Amazon's marketplace listings isn't anywhere near as synonymous with Amazon as the quality of Google's search results is with Google. What? Why not, and anyway Amazon I'm giving money. I'd think that quality there would be more deeply linked than anywhere I'm just giving some time.
prewett 5y ago
My dad frequently says that sooner or later the finance guys get in charge of the company and then they cut the fat and keep cutting into the product. Sooner or later they go too far. Seems fairly inevitable, seems to happen a lot. I assume that what happens is that the product matures, so the obvious thing to do is make things more financially efficient. Problem is, the company sells a product and the finance CEO's core competency is reducing costs, and reducing costs isn't something that customers actually buy.

danielrpa 5y ago

The CEO and upper management might simply not care about the long-term viability of the company. Cashing out in the short-term sounds more like what these executives generally do.

KarlKemp 5y ago
> Cashing out in the short-term sounds more like what these executives generally do. It only sounds like what they do because you only ever read stuff written by people who believe that without any evidence. Sundar Pichai has been with Google since 2004.
- danielrpa 5y ago
  Sundar Pichai is probably the weakest of the FAANG executives - if not one of the weakest Fortune 100 executives. Google's search result quality, reduction in overall prestige and lack of new major products are just a few indicators of that. But speaking in general, there is limited correlation between executive compensation and company performance. You can DuckDuckGo it if you want to find the evidence for this statement.
- AlbertCory 5y ago
  For whatever it's worth: I had a talk with a WSJ reporter, who said he's met all the FAANG chief executives, and Sundar was the least impressive of them all. Having everyone you've worked with love you and find you brilliant is not at all the same thing as being brilliant.

apatters 5y ago

It's rational and commonplace behavior for a monopoly to prioritize profit maximization over product quality, there must be thousands of case studies over the years. If a firm has no viable competitors, why do they care whether their product is good or not? Google Search has 86% market share in the US.

KarlKemp 5y ago
The cases you mention involve maximizing profits by saving on costs. The theory above is that lower quality leads to an increase in revenue, and it is tenuous at best.

godelski 5y ago

That happens when companies have monopolies. They can sacrifice quality for profits. Happens frequently. Obviously you can't sacrifice quality to zero, but you can a bit. It would make sense that they would keep pushing it down little by little (returning higher and higher profits) to find the turning point. I don't think they're yet in danger though because there isn't a real uptick in the competition.

fnord77 5y ago
> you can't sacrifice quality to zero, GM tried in the 80s

ghosty141 5y ago

Key word: "would". We don't know and I highly doubt this is the case.