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The problem with the article is that every company wants to manage risk; turning risk into money is what a company, any company, does. Now bigger companies hav
by cm277 4y ago
The problem with the article is that every company wants to manage risk; turning risk into money is what a company, any company, does.
Now bigger companies have processes, hierarchies, etc. to manage risk in a distributed way, because well they are bigger. But guess what these companies also have? profits! revenue! multiple products/services that produce that revenue that can be then assigned down at the appropriate level of hierarchy that took/mitigated/managed the original risk.
Google doesn't. It's a single-product company with a single Profit Line and thousands of Loss lines and it's pretending to be something else. That's why they are so busy managing risk all the time; most of them don't have revenues to manage, aim for, use to be rewarded for.
Google is a monopoly, a rentier on the internet. They need to be broken up and repurposed to multiple, actually value-creating companies. If not for the health of the internet, at least for the mental health of its employees it seems.
(I would argue that Google's "free" products, like Android, are the worst thing that has happened to the internet; they cannot be broken up soon enough).
- drewda 4y agoFor example, it could be fascinating to see YouTube as a stand-alone company. Currently its revenues are masked under the "Google" part of Alphabet. It sounds like it's extremely profitable. It could be interesting to see YouTube perform as an independent entity on public markets alongside other media entities, rather than bundled into a "tech" company.
- Konnstann 4y agoFrom what I've heard, and from the decisions Google keeps making regarding revenue sharing, ads, etc. YouTube loses them a lot of money due to video storage costs. I believe they even restrict the quality of uploads for some users now to combat that, but don't quote me.
- saagarjha 4y agoYouTube is profitable.
- nnurmanov 4y agoIMO, anything older than 3 years should be on paid plan. Save the planet, delete your old YouTube videos
- drewda 4y ago> In 2022, YouTube's advertising revenue accounted for approximately 11.35 percent of Google's total revenue. That year, the video platform's annual ad revenues amounted to 29.24 billion U.S. dollars, up from the 28.84 billion U.S. dollars in the previous year. https://www.statista.com/statistics/289659/youtube-share-of-google-total-ad-revenues https://www.statista.com/statistics/289659/youtube-share-of-...
- rippercushions 4y agoFor context, the sum total of Google's capex last year (offices, data centers, networking, everything) was around $30B. Meaning they could spend (almost!) every cent of that on YouTube video storage and still come out ahead.
- guelo 4y agoI agree with your larger point but you exaggerate too much calling it a single-product company. Here's a revenue pie chart https://i0.wp.com/fourweekmba.com/wp-content/uploads/2022/10/google-revenue-breakdown.png?resize=1024%2C772&ssl=1 https://i0.wp.com/fourweekmba.com/wp-content/uploads/2022/10... Search is 58% of revenue but I'd still call it at least a 4 product company with the "other" products contributing a decent 11%.
- BugsJustFindMe 4y agoAds is 80% of all revenue on your chart (search ads + network ads + youtube ads). If you want, you can stretch their products to ads, cloud, and play store. But ads are still 80% of the whole pie. More if one accepts that some percentage of youtube subscribers are only paying to get rid of ads.
- guelo 4y agoI would consider Youtube and Search and AdSense as completely separate giant businesses.
- alostpuppy 4y agoThey all were at one point.
- mLuby 4y agoImagine if they can't sell ads. How are they making money? I don't think subscriptions, pay per use, or referral fees would work.
- rippercushions 4y agoThey're different because the funnels are different. If Bing were to eviscerate Google Search overnight, YouTube and AdSense (other companies showing Google ads on their pages) will still continue to draw in the clicks and the eyeballs.
- sonofhans 4y ago> Google is a monopoly, a rentier on the internet. They need to be broken up and repurposed to multiple, actually value-creating companies. If not for the health of the internet, at least for the mental health of its employees it seems. > (I would argue that Google's "free" products, like Android, are the worst thing that has happened to the internet; they cannot be broken up soon enough). Yes! I agree with this entirely. Google is the behemoth of mediocrity, the McDonald’s of tech companies. All their products are good enough to deter competition and to keep feeding search, and not an ounce better. Humans and human attention are just grist for their mill.
- mochomocha 4y ago> turning risk into money is what a company, any company, does. I must say that's one of the most unorthodox description of what a company does I've seen. How is a bread factory or a plumber "turning risk into money"? It sounds like you're describing an insurance company or a bank, not, you know a company like Google who produces free software & services to billions of people in exchange for monetizing their attention. Focusing on risk mitigation in a company is explicitly optimizing for protecting existing income stream at the expense of innovation, customers, and new income streams. It's not what "any company does": it's what uninspired companies who have lost their ways focus on. It sounds like what a consultant used to "financialize" everything would say to solve Google's problems and slowly turn it into an intangible conglomerate like GE who is just the shadow of its previous self. But maybe this time has arrived for Google?
- maxfurman 4y agoA bread factory takes on risk by holding the ingredients for bread (which might expire, and cost money to store), paying bakers to make the bread (who might get sick or do a bad job), and on and on. It takes on and manages these risks, and if it is successful it makes enough bread to turn a profit and if not it goes out of business.
- nwiswell 4y agoThat's kind of absurd as a construction. It may be literally true that a bread factory accepts various kinds of risk in the ordinary course of business, but it's plainly not the primary reason that a bread factory turns a profit. Does a bread factory that hedges its future wheat purchases with wheat futures have a lower expectation profit than one which does not? You can think about arbitrarily risk-neutral enterprises that are profitable. For example, what risk is a residential REIT taking, especially one whose properties are all insured? By contrast, you can look at a business like a casino (or a catastrophe reinsurer), where it is legitimately the case that operating income is predominantly the result of risk-taking. But when you put the two side by side, there is not a huge difference in ROIC (Return on Invested Capital), which you might've expected if profits were fundamentally a risk premium.
- greenornot 4y ago> It's a single-product company > They need to be broken up and repurposed to multiple, actually value-creating companies. These obviously can't both be true. You need to take your pick of what you critizice.
- antihipocrat 4y agoPerhaps there's no drive for revenue due to these services being subsidized by the main income stream. The real cost of delivering these services is written off by the company as a necessary expense. The value obtained from these services via goodwill or some other metric is currently deemed to be greater than their cost.