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I agree with much of this, I would like to highlight one thing in particular: > The bigger a tech company gets the worse it becomes at providing consumer and c

I agree with much of this, I would like to highlight one thing in particular: > The bigger a tech company gets the worse it becomes at providing consumer and customer surplus, because it needs to eat that margin (of a sort) to keep growing. Growth demands that tech companies eventually consume that which first engendered them good will. When that comes to Google, I think they are talking about "eating the margin (of a sort)" of the good experience for end users, people searching. But the reality is they are actually eating the very real margin of the advertisers, their "actual customers". In the last ten years, through the excessive ingestion of data about the advertisers businesses, Google has sought to expand their bottom line by extracting as much revenue from advertisers as possible. The advertisers margin has become Google's target revenue. If (nearly) all advertising is via Google, their only way to grow that revenue is by extracting more of the advertisers margin. When you advertise on Google (and FB for that matter) you now have to transmit to Google's algorithm all data about all transactions on your site. This is sold as training the algorithm to enable the targeting of customers. But what you are in fact doing is telling Google everything about your revenue, they know exactly how much you are receiving from all sales. The algorithm is designed to maximise the extraction of the advertisers margin, to squeeze it as much as possible. This is going to come back and bite them. I believe advertisers are going to fall out of love with Google, if they haven't done so already.

jimnotgym 4y ago
I think you are absolutely right. Even on our small ecommerce presence we are seeing it is harder to get a return from Google shopping. A decade ago it was a no brainer, and now it is a money pit. We are seeking instead to expand our influencer involvement.
l33tman 4y ago
As a side-note, increasing margins is not the only way to gain revenue, you can increase the market as well. This is what they have been trying all along with all their parallel products. It was very successful with Android, less so with their self-driving car (that could have increased the market by letting drivers consume internet content and ads during the drive instead of driving).
saghm 4y ago
I've always found it pretty weird how common the idea is that companies _need_ to keep growing indefinitely, regardless of the size they've reach. If a company is sustainably making a profit (i.e. makes more money than it needs to spend to keep running) and will continue to for the foreseeable future, why do they need to grow their revenue even higher? It seems like the expectation is they need to do this so that the stock price can go up, but if people only buy the stock to sell it when it's worth more due to being larger, what's the actual connection between the stock price and the amount of money the company makes other than everyone just agreeing to pretend there's one? Ostensibly the reason stock is worth anything at all is that it could eventually yield dividends, but there's no reason that a company already making a profit can't just start paying dividends regularly without needing to ever grow any larger.
- evo 4y ago
  I suspect in reality the increasing compensation of the executive suite in stock, while intended to alleviate the principal agent problem, means that it's substantially more remunerative for leadership to try to goose their stock price by whatever means possible within their tenure than to steer the ship in a growth-agnostic fashion. Doubly so with modern big tech companies where RSU growth can fuel a big chunk of your salary costs for your tech department when your company is on the rise, but scare everyone off when the reverse is true.
- magic_hamster 4y ago
  Some people will say that companies need to grow to increase the bottom line, but my experience is that growth is actually a byproduct that indicates the health of your business rather than the actual goal. Growth is a result of competition, when new markets emerge, when competitors come up with better products, there is an opportunity to increase your market share and take in more revenue. Assuming you don't leave money on the table, it's understandable that you will compete and if you're doing well you will grow.
- Radim 4y ago
  The standard response is evolutionary: If you leave profit (growth, resources) on the table, someone else will pick them up and beat you with it. The supposed analogy is biological. You may choose to check out of the always-do-more-with-less rat race, or even out of existence completely. But that choice will help populate the world with "not your successors". Similar with companies: your "sustainably making profit" premise is incompatible with "willingly foregoes growth / change" – at least in the long term, due to competition.
kandu 4y ago
In principle, the advertisers could buy Google shares and influence the company's policy towards an equilibrium that is more favourable to advertisers. If a natural monopoly is a public company, the entities that depend on this company could buy shares and bend the company's actions towards their interests. Is this happening? If not, why not?
- VBprogrammer 4y ago
  Google is a trillion dollar company. You'd need to have billions of dollars in Google stock before you opinion even mattered around the board room. The majority of the companies advertising on Google couldn't even dream of that and for those that could it's not exactly clear that this would be a wise investment.
  - pclmulqdq 4y ago
    Google also has dual-class shares. If you aren't Larry or Sergei, your opinion won't matter much even if you own several hundred billion of the stock.
- marcosdumay 4y ago
  So... a dollar, a vote? That doesn't make for a great democratic rule.
ilyt 4y ago
And it's same on the other side of the pipe, content creators on YT are getting worse and worse deal every year, that's why everyone nowadays runs sponsorships and patreon on it
fallingknife 4y ago
Advertisers have no choice but to go where the eyeballs are. So I don't see how they could possibly drop Google unless Google loses those eyeballs. If they could, then Google wouldn't be so exploitative.
- lazyasciiart 4y ago
  Depends how you define eyeballs. If google traffic actually created a loss for them, that traffic would not be worth having.
samwillis 4y ago
Something I would like to add to my original point, and why I think this is "anti trust". During the last 10 years there has been a proactive move to remove controls and visibility from advertisers, moving towards a black box algorithm. At the same time Google have a (near) monopoly on search advertising. The supposed "auction" between advertisers is closed book and controlled by secret algorithms. Google are the ultimate beneficiary of the auction, but don't show how it operates, what the other bids were, and how they reached a value for the placement. On top of that as the advertiser you have been forced to give Google your full revenue numbers in order to play this game. In my opinion Google needs breaking up, they should not be able to operate as both the marketplace/exchange and the vendor when they have a monopolistic position. The advertising marketplace/exchange should also be regulated in the same way as financial exchanges.
- smoldesu 4y ago
  > they should not be able to operate as both the marketplace/exchange and the vendor This should just be codified into law, regardless of monopolistic intent. Any vendor that uses their position of power to limit the freedom of their customers should be hit with the full extent of the law - starting with FAANG, and then working our way down from there.
klabb3 4y ago
Y’all worried about Google. But ads + search/recommendations is a lost battle, that’s just the status quo – the devil we already know. I’m worried more about Apple. Why? Because Apple has been a counterweight to ad-tech. They’ve been able to champion privacy and UX for actual end users, they have literally been forced to care. But now they’re expanding into ad-tech as well, that’s terrifying; there is literally only Google left, and they’re full-on ad-tech already. So that means mobile (by far the biggest and most universal computing platform worldwide) will have NO customer champions. (Caveat Apple treats customers bad already yadda yadda, but this point still holds). This will be a truly “advertiser first” world. I’m no antitrust expert, but I can understand a company maximizing its core business (or “do one thing really well”), and I can even respect pure ad-tech. What truly sucks though, is these “expand into every crack of the market” faceless mega-behemoths that these companies all become. (In McKinsey speak, I believe this horror is known as vertical integration.) This always sucks for the consumer.

jimnotgym 4y ago

I think you are absolutely right. Even on our small ecommerce presence we are seeing it is harder to get a return from Google shopping. A decade ago it was a no brainer, and now it is a money pit. We are seeking instead to expand our influencer involvement.

l33tman 4y ago

As a side-note, increasing margins is not the only way to gain revenue, you can increase the market as well. This is what they have been trying all along with all their parallel products. It was very successful with Android, less so with their self-driving car (that could have increased the market by letting drivers consume internet content and ads during the drive instead of driving).

saghm 4y ago

I've always found it pretty weird how common the idea is that companies _need_ to keep growing indefinitely, regardless of the size they've reach. If a company is sustainably making a profit (i.e. makes more money than it needs to spend to keep running) and will continue to for the foreseeable future, why do they need to grow their revenue even higher? It seems like the expectation is they need to do this so that the stock price can go up, but if people only buy the stock to sell it when it's worth more due to being larger, what's the actual connection between the stock price and the amount of money the company makes other than everyone just agreeing to pretend there's one? Ostensibly the reason stock is worth anything at all is that it could eventually yield dividends, but there's no reason that a company already making a profit can't just start paying dividends regularly without needing to ever grow any larger.

evo 4y ago
I suspect in reality the increasing compensation of the executive suite in stock, while intended to alleviate the principal agent problem, means that it's substantially more remunerative for leadership to try to goose their stock price by whatever means possible within their tenure than to steer the ship in a growth-agnostic fashion. Doubly so with modern big tech companies where RSU growth can fuel a big chunk of your salary costs for your tech department when your company is on the rise, but scare everyone off when the reverse is true.
magic_hamster 4y ago
Some people will say that companies need to grow to increase the bottom line, but my experience is that growth is actually a byproduct that indicates the health of your business rather than the actual goal. Growth is a result of competition, when new markets emerge, when competitors come up with better products, there is an opportunity to increase your market share and take in more revenue. Assuming you don't leave money on the table, it's understandable that you will compete and if you're doing well you will grow.
Radim 4y ago
The standard response is evolutionary: If you leave profit (growth, resources) on the table, someone else will pick them up and beat you with it. The supposed analogy is biological. You may choose to check out of the always-do-more-with-less rat race, or even out of existence completely. But that choice will help populate the world with "not your successors". Similar with companies: your "sustainably making profit" premise is incompatible with "willingly foregoes growth / change" – at least in the long term, due to competition.

kandu 4y ago

In principle, the advertisers could buy Google shares and influence the company's policy towards an equilibrium that is more favourable to advertisers. If a natural monopoly is a public company, the entities that depend on this company could buy shares and bend the company's actions towards their interests. Is this happening? If not, why not?

VBprogrammer 4y ago
Google is a trillion dollar company. You'd need to have billions of dollars in Google stock before you opinion even mattered around the board room. The majority of the companies advertising on Google couldn't even dream of that and for those that could it's not exactly clear that this would be a wise investment.
- pclmulqdq 4y ago
  Google also has dual-class shares. If you aren't Larry or Sergei, your opinion won't matter much even if you own several hundred billion of the stock.
marcosdumay 4y ago
So... a dollar, a vote? That doesn't make for a great democratic rule.

ilyt 4y ago

And it's same on the other side of the pipe, content creators on YT are getting worse and worse deal every year, that's why everyone nowadays runs sponsorships and patreon on it

fallingknife 4y ago

Advertisers have no choice but to go where the eyeballs are. So I don't see how they could possibly drop Google unless Google loses those eyeballs. If they could, then Google wouldn't be so exploitative.

lazyasciiart 4y ago
Depends how you define eyeballs. If google traffic actually created a loss for them, that traffic would not be worth having.

samwillis 4y ago

Something I would like to add to my original point, and why I think this is "anti trust". During the last 10 years there has been a proactive move to remove controls and visibility from advertisers, moving towards a black box algorithm. At the same time Google have a (near) monopoly on search advertising. The supposed "auction" between advertisers is closed book and controlled by secret algorithms. Google are the ultimate beneficiary of the auction, but don't show how it operates, what the other bids were, and how they reached a value for the placement. On top of that as the advertiser you have been forced to give Google your full revenue numbers in order to play this game. In my opinion Google needs breaking up, they should not be able to operate as both the marketplace/exchange and the vendor when they have a monopolistic position. The advertising marketplace/exchange should also be regulated in the same way as financial exchanges.

smoldesu 4y ago
> they should not be able to operate as both the marketplace/exchange and the vendor This should just be codified into law, regardless of monopolistic intent. Any vendor that uses their position of power to limit the freedom of their customers should be hit with the full extent of the law - starting with FAANG, and then working our way down from there.

klabb3 4y ago

Y’all worried about Google. But ads + search/recommendations is a lost battle, that’s just the status quo – the devil we already know. I’m worried more about Apple. Why? Because Apple has been a counterweight to ad-tech. They’ve been able to champion privacy and UX for actual end users, they have literally been forced to care. But now they’re expanding into ad-tech as well, that’s terrifying; there is literally only Google left, and they’re full-on ad-tech already. So that means mobile (by far the biggest and most universal computing platform worldwide) will have NO customer champions. (Caveat Apple treats customers bad already yadda yadda, but this point still holds). This will be a truly “advertiser first” world. I’m no antitrust expert, but I can understand a company maximizing its core business (or “do one thing really well”), and I can even respect pure ad-tech. What truly sucks though, is these “expand into every crack of the market” faceless mega-behemoths that these companies all become. (In McKinsey speak, I believe this horror is known as vertical integration.) This always sucks for the consumer.