22 ms·

It’s time for Alphabet to spin off YouTube?

279 points by alexcos 4y ago

pclmulqdq 4y ago
It's time for antitrust to hit Meta, Alphabet, and Amazon. At the very least. Amazon: AWS is one of the most valuable businesses ever created. You don't need the retail arm any more, now that it is enshitting itself. Also spin off the media company, comprising Audible and prime video, to make a Disney competitor. Amazon would absolutely be more valuable broken up. Meta: Meta has always run 3 separate products either way. Spinning off the loser (Facebook), and the non-social networking product (WhatsApp) would let Instagram grow wings against TikTok. Google: Search, YouTube, ads, and technical infrastructure (cloud) can all easily be separated, and Search and YouTube could likely command an even bigger premium by treating other ad networks as first-class citizens. Google ads could get a lot more business too when they are not tied to other products (those products might compete with yours, driving you away from Google ads).
- nubinetwork 4y ago
  > Also spin off the media company, comprising Audible and prime video And twitch.
  - walthamstow 4y ago
    MGM too? Or are they owned by Amazon in a different way?
- paganel 4y ago
  Not combatting the merits of those break-ups, of which I agree, just wanted to point out that WhatsApp is a social media product at this point, because all the relevant social group interactions have moved there from Facebook the website/the app.
  - the_af 4y ago
    What do you mean? Just as anecdote, I don't have whatsapp groups for my fb groups. My whatsapp and fb worlds are entirely disconnected. People in groups from fb often promote Discord (which I don't like: real time chatting with strangers feels odd to me). Facebook is aggressively promoting its own chat for groups, spamming it violently and so I'm forced to unsubscribe/ignore lots of chat groups now. Do people really need yet another chat platform?
    - paganel 4y ago
      > ust as anecdote, I don't have whatsapp groups for my fb groups Exactly that, that the personal updates for close friends and family that we used to post on FB are now posted on several dedicated WhatsApp groups. Yes, that means that that former highschool colleague who you'd met once in the last 20 years won't get to see them, but it's still social. > Facebook is aggressively promoting its own chat for groups, Could be, but the WhatsApp interface when it comes to group chats is way nicer and more intuitive (especially when it comes to sharing photos).
- rcme 4y ago
  I used to support breaking up Meta, Google, and Amazon. Their market positions are pretty dominant, but not unassailable. Facebook barely avoided Snap eating their lunch with stories and now looks to be in a losing position against TikTok. Google vs. LLMs will be interesting to see play out. Amazon… is still in a very strong position.
- capitalsigma 4y ago
  It's unclear to me how making these divisions dramatically increase their infrastructure costs (by either pulling them in-house or paying a premium to the original parent company) will "help them compete"
  - pclmulqdq 4y ago
    Are you sure that they will dramatically increase infrastructure costs? Large companies get amazing deals from clouds, and this is no exception to that rule. Their infrastructure costs might actually decrease because the clouds will have to compete for their business.
    - jasode 4y ago
      >Are you sure that they will dramatically increase infrastructure costs? [...] Their infrastructure costs might actually decrease because the clouds will have to compete for their business. Maybe theoretically possible but I have doubts. As Youtube's founding was February 2005, they now have 18 years (i.e. exabytes) of videos stored on Google's datacenters. Exporting all that to a competitor like AWS (even with mass Snowmobile transfer service) probably wouldn't make financial sense. I worked on a corporate spin-out from a petroleum company and there was months of back & forth negotiation for "IT infrastructure services pricing" from the ex-parent company. The new spin out company was definitely not getting a deal from the ex-parent company and switching to other datacenter competitors wasn't realistic because the ex-parent already had all the data and the existing IT staff expertise to run-&-maintain the spin-off's proprietary systems. (E.g. think Lotus Notes custom programming workflows). Google could realistically raise their infrastructure prices to an independent Youtube spinoff but that higher cost is still less than switching to Azure or AWS.
  - Scarblac 4y ago
    It will help their competitors compete, which would presumably be the point of antitrust action.
- kryptiskt 4y ago
  Privacy will be impossible as long as platform owners are in the ad business so the most important thing for me is to separate Android and Chrome from Google's ad business. For the same reason Apple and Microsoft should be forced to choose between being in the phone/computer or ad business. I don't care too much about Facebook, no doubt they are capable of failing on their own.
  - JustLurking2022 4y ago
    You should read up about DMA coming out of the EU. Privacy is possible even in a conglomerate.
  - Dalewyn 4y ago
    I wouldn't even mind ads in Windows, objectively speaking, if Microsoft were to just give it out for free (as in no activation required). What sucks about Microsoft and ads right now is they sell you a product and then also drown you in ads. Either I pay cold hard cash or they give me ads, but not both; they shouldn't get to double dip.
- kyrra 4y ago
  Google side: from maybe a business idea, you could have it work. But from a technical perspective, it would be near impossible without years of engineering effort. Google has a ton of core internal infra that is shared between all the business units at Google. The only reason this is feasible is that the cost of running it is shared between the units. (Googler opinions are my own).
  - zeckalpha 4y ago
    Call it a discontinued tier of GCP that only has a handful of customers, and things could more or less stay the same.
  - hnbad 4y ago
    The fun thing about antitrust is that this is entirely Google's problem.
    - londons_explore 4y ago
      Op is suggesting this breakup might increase shareholder value. Ie. It would be worth doing even without a government regulator forcing it. If true, then their internal engineering limitations directly impact how viable the idea is.
  - jeffbee 4y ago
    Yeah I'd love to know how this "spinoff" would work. YouTube is an arms-length independent company but Google happens to have deployed dedicated, co-designed accelerators around the world to support their use case?
    - pclmulqdq 4y ago
      AWS sells video accelerator machines. GCP could sell access to Argos.
  - drdec 4y ago
    Sounds like the internal infrastructure should also be spun off into it's own company with the other baby Googles as customers! (sarcasm, in case Poe's Law has you down)
- runako 4y ago
  These hypothetical splits show the perils of having outsiders (including regulators) make decisions like these. Just some quick notes: > You don't need the retail arm any more [...] spin off the media company, comprising Audible and prime video, to make a Disney competitor The whole point of the conglomerate model they use (following Costco) is that the membership fee grants consumers access to a bevy of services. The services may not work a la carte. Further, spinning Amazon media to become one of the weakest Disney competitors doesn't obviously enhance competition or consumer welfare in media. > Spinning off the loser (Facebook), and the non-social networking product (WhatsApp) would let Instagram grow wings against TikTok. The "loser" (Facebook) generates most of the revenue and profit at Meta. The Google analysis arrives at a viable conclusion (the ads business could be run as a utility), for the wrong reasons. (For ex: Search/YT would not get a bigger premium by treating as first-class other, weaker, ad networks. The near-monopoly is what drives pricing power and is frequently a reason cited for forcing a hypothetical breakup.) Anyway, this stuff is not obvious or easy, even assuming people can agree on goals (which is difficult).
  - vidarh 4y ago
    > The services may not work a la carte They don't need to. Prime could still offer Prime Video / Music as a membership perk. But if the media services are independent, maybe it'd turn out offering one or more of the others, or letting customer pick and choose, would end up making more financial sense (FireTV can already be used to subscribe to competing services in addition) I'm not saying it's necessarily a good idea - I don't have an opinion on that - but the bundling of services does not depend on them being part of the same company.
    - runako 4y ago
      This misses the point. A breakup would put Prime Video / Music (are those two even allowed to be in the same company? Why? Who decides?) on the same footing as Hulu or Spotify. This would create independent third-tier players in both markets. The consumer would likely end up paying more (because Prime Video / Music can't be run at zero or negative margins as part of a bundle; ditto for other media options like Spotify). Further, I'm not sure what goal would be served by doing all of this and increasing costs to the consumer.
- swarnie 4y ago
  ? Meta: Meta has always run 3 separate products either way. Spinning off the loser (Facebook), and the non-social networking product (WhatsApp) would let Instagram grow wings against TikTok. Three products which share data. I don't care what the law says, or what they tell a select/congress committee, nothing will convince me otherwise.
- rvz 4y ago
  and Microsoft.
- deleted 4y ago
  [deleted]
- jxf 4y ago
  Facebook is practically a utility company at this point. The number of businesses whose only online presence is Facebook/Instagram is significant.
- kevinmchugh 4y ago
  If I was an antitrust regulator worried about Disney's dominance, I would just make them sell star wars and/or avatar so they don't own three sci-fi mega franchises. I'd also consider Pixar and Hulu. Why do things to Amazon in service of sapping Disney's power?
- geoduck14 4y ago
  None of these are reasons for an antitrust case
- lm28469 4y ago
  > Also spin off the media company, comprising Audible and prime video, Prime video is what they use to get a foot in the door, then they know you'll want to extract as much value as you can from your prime membership, and that's done by buying shit from amazon
- sofixa 4y ago
  > Amazon would absolutely be more valuable broken up That is total nonsense, completely irrelevant, and true. Conglomerates being worth less than the sum of all parts is one of the stupidest parts of Wall Street. There is no actual rationale for this besides maybe it being easier to evaluate a company doing only a single thing? Specifically with regards to the examples given - Amazon, Meta, Google - it's the cross-subsidising and reuse of stuff that makes them profitable. Prime video without AWS' cache isn't a great competitor to Disney; YouTube on it's own will have a ruinous infrastructure bill that is subsidised by Google now; WhatsApp doesn't make money so can only survive on someone else's dime, etc. etc. Same goes for traditional conglomerates - of course GE were stronger before they split up into three. What will GE Aerospace do next time there's an air travel downturn like a pandemic? Crash and burn unless it has enough reserves, because it won't have the benefit of being propped up by different businesses that aren't impacted (like say GE HealthCare). Bombardier today are in a much worse spot, focusing only on a minuscule and volatile niche (private jets), but at least in their case it wasn't their choice, Boeing bankrupted them with protectionist tricks. The real reasons to split them up would be to improve competition and the choice of consumers, not because "idiot investors think 'value' will go up".
  - conductr 4y ago
    Would customers pay for Amazon services individually if they were unbundled? I’m guessing there would be significant drop off. Prime Video would implode. Subscription revenue wouldn’t be sufficient to fund content and it’s a short life from there.
  - SilverBirch 4y ago
    It's pretty wild that your example of a good conglomerate is GE considering GE's a perfect of example of why conglomerates don't work. Gee I sure wish I could invest in that great GE Aerospace division, too bad if I do the jokers over at GE Capital are going to snort half of it and place the rest on black. GE was the notorious exception to conglomerates being terrible right up until it also turned into a massive shit show.
  - jefftk 4y ago
    > Conglomerates being worth less than the sum of all parts is one of the stupidest parts of Wall Street. There is no actual rationale for this besides maybe it being easier to evaluate a company doing only a single thing? One example: some parts of a business need a positive consumer reputation and others don't. When you connect these under the same company you may end up with two business units that are each less valuable than if they were free to take the approach that best suited their business. For example, an ad company that didn't care much what consumers thought about it would use fingerprinting to personalize ads and it's prevalent in the industry, but Google committed to not doing this. Why? My guess is that a big part was reputation: having an ads division that's tracking users with no opt out is inconsistent with the company-wide policies Google needs to be competitive in consumer markets. In this case I think the effects are positive, in that the display ads division is closer to what consumers would want than if it were independent, but I think it's pretty likely that spinning DoubleClick back out would increase overall profits. (I used to work at Google, and here I'm speculating about decisions made several levels above me that I wasn't a part of.)
- AlchemistCamp 4y ago
  Amazon doesn't have close to a monopoly with AWS, Prime Video or even its ecommerce. What possible anti-trust rationale would there be to forcibly break up the company?
- giancarlostoro 4y ago
  > Meta: Meta has always run 3 separate products either way. Spinning off the loser (Facebook), and the non-social networking product (WhatsApp) You don't think of it as a social networking product, but it is used as such. I consider Discord social media, and WhatsApp is honestly a text only Discord competitor in the grand scheme of things, all the group chats are reminiscent of Discord servers, but for people who dont care about all that Discord has to offer, even if they never heard of Discord. I would absolutely include chat platforms under social media.
  - JohnFen 4y ago
    I've never thought of WhatsApp as a social networking product. For me, it's just an SMS replacement necessary to talk to my friends outside of the US. Not saying my perspective is correct, but I think of a "social networking" product as one where I'm talking to groups of people. That's not how I use WhatsApp. That's always 1-on-1 conversations with people I know in the real world.
    - giancarlostoro 4y ago
      For some people it is all the social media they get. People share memes, and pictures, and live updates.
- cptskippy 4y ago
  Why wasn't Microsoft included in this list? They have more overlap with Amazon and Google then Meta does.
- psychlops 4y ago
  Globalization is at odds with national level anti-trust. The past has shown that international companies supported by their governments would eat away at the smaller US companies.
  - pclmulqdq 4y ago
    I think this is the big reason that the US hasn't taken action against these companies. They view them as strategic, and want to keep a very friendly relationship.
    - msabalau 4y ago
      In this case, treating the "US" as if "they" have a consistent, considered view that drives all their actions seems a little odd and vaguely conspiratorial. After all, it has been well reported that US politicians on both sides of the aisle are looking to put investigative scrutiny on big tech in the year ahead. And US regulators were broadly underutilizing antitrust tools across the board in the past, not just for big tech. That also seems to be changing. Sure, the US pursues strategies related industrial policy and national security. The CHIPS act or the Inflation Reduction Act are examples. But you don't need a "big reason" why to explain why US companies like these tech firms have been underregulated. It isn't isn't some mystery, it is just (unfortunately) normal. If US firms are grossly underregulated and under-punished for simple stuff like wage theft, you don't need to invoke strategy to explain why big tech has gotten away with anticompetitive stuff in the past.
- adrr 4y ago
  Hitting companies with antitrust when consumers have is a terrible idea. Antitrust laws were made to prevent monopolies giving consumers choice and preventing them from getting screwed. Amazon is e-commerce, i have multiple choices to shop on web. Amazon has even benefited the consumer by forcing retailers speed up shipping. For cloud hosting, there are alternatives to AWS. There’s healthy competition in both fields. Meta the consumer is the advertiser. They are the ones spending the money. For advertising, there are different channel and mediums. You could buy billboard ads, tv/radio ads, direct mail etc. Competition is very healthy. Google the same thing. The consumer are advertisers. Thats the market. Lets compare major anti-trust actions. Standard oil was the pretty much the sole source of oil in the US. Consumers had no choice. ATT another major antitrust case where there was just one telecom company in the US. Kodak where they were controlled all the film market.
- actuator 4y ago
  IMO Apple should be the biggest target for antitrust right now looking at what they do on their platforms.
- lancesells 4y ago
  > Spinning off the loser (Facebook) I'm not a Facebook user but it's not a loser. - 2.9B Monthly Users in 2022 - 5.3B People with Internet Access - 55% of the world uses Facebook. It seems both Instagram and Whatsapp have about ~2B monthly users. And sure, these numbers are juiced but none are losers.
- chiefalchemist 4y ago
  Last I read, which was a couple of years ago, after Google search, YouTube is the next most searched "search engine". It serves ads. Is it really, from Google's POV that different than it's core business? That aside, as we know now, Google wasted it's time with Plus. Instead it should have fleshed out YT's social aspects. While that's easy to say in retrospect, it's still not a bad idea if Google wanted to "social media" product.
- WaitWaitWha 4y ago
  The online retail portion of amazon.com would not survive such a split [0]. [0]: Most recent Amazon.com, Inc. 10-K https://d18rn0p25nwr6d.cloudfront.net/CIK-0001018724/d2fde7ee-05f7-419d-9ce8-186de4c96e25.pdf https://d18rn0p25nwr6d.cloudfront.net/CIK-0001018724/d2fde7e...
- iaseiadit 4y ago
  “Search, YouTube, ads, and technical infrastructure (cloud) can all easily be separated” At a product-level view from 10,000 feet, it might seem this way. In reality, these are deeply interconnected systems that are 15-20 years in the making. “Easily separated” are the last words I’d use.
zpeti 4y ago
This would be the worst time to spin it off. Tiktok is a threat but seems slightly subdued, things might take off for YouTube again. On ads ATT has depressed revenue a lot but apples recent updates will mean better tracking soon and revenue will recover. Everything is pointing up for YouTube (and meta), this is the worst time for a change in ownedhip structure. You should do that at the top not the bottom.
- thewarrior 4y ago
  What are these recent ATT updates ? Does Meta also benefit ?
  - zpeti 4y ago
    They’re releasing much more data to advertisers, meaning targeting on FB and Meta will considerably improve in the next few months. Which will improve performance for everyone.
jl6 4y ago
I always assumed YouTube’s technical foundations were significantly subsidized by the mothership, but I have no data to base that on other than looking at the $29bn/year revenue figure and wondering whether that amount of money would be enough to provision the amount of compute, storage and bandwidth that YouTube needs, plus all other expenses (including revenue sharing with uploaders). Yes, $29bn is a lot of money, but there is a lot of YouTube.
- Aromasin 4y ago
  From what I'm aware, a lot of these larger companies basically treat other parts of the business the same they would customers; very important customers, but customers all the same. If YouTube wants more cloud budget, it comes out of their budget and goes into revenues of the Cloud business unit. Not quite that simplistic of course, but in essence it's meant to drive competitiveness. No special privilege's just because you're part of the same team. If an external company is paying more, for more compute, the business goes to them.
  - bpodgursky 4y ago
    Yeah I think this is generally true, although YouTube is a weird case because there's literally no equivalent customer with even a fraction of the compute volume.
  - curiousllama 4y ago
    That stuff still comes with special privileges. E.g., yes they'll "pay" for compute, but they'll do so at cost. And they're also allowed to deploy a monitoring widgets to other orgs' data centers to find when they're at low utilization, and then argue "at cost" is actually near 0, because the compute resources were just sitting around anyway. And then have the search team agree because YouTube promises to build the new data API search has been asking for forever. If you ultimately report earnings on the same P&L, USD is just monopoly money you trade around to get things done.
- kevincox 4y ago
  When I worked at Google I definitely noticed that YouTube was great at (ab)using untracked or very cheap resources. They definitely get huge benifits of otherwise idle data centers in sleeping regions. As the regular service traffic died off YouTube would put those idle cores to work transcoding video. It is definitely the case that YouTube gets lots of really cheap compute by being part of Google. But that isn't a bad thing, they are making use of an otherwise wasted resource, effectively lowering the cost for products that need daytime capacity to serve humans.
ur-whale 4y ago
https://archive.is/SG4zP https://archive.is/SG4zP
osigurdson 4y ago
For me, YouTube is the most effective ad sponsored service by far. Users are forced to watch at least 5 seconds of ads before watching any content. This 5 second window is very focused as there is no time to context switch to anything else. Contrast this with Google search - sure there are some ads at the top but these are easy to mentally filter out.
- loloquwowndueo 4y ago
  Cue uBlock origin - I don’t recall the last time I watched an injected ad on YouTube. Of course most content these days is peddling some product, or has a quick word from sponsors - but at least I don’t have to put up with unrelated ads in the middle of a stream.
  - causi 4y ago
    You, my friend, need to install SponsorBlock.
  - osigurdson 4y ago
    I don't bother with that stuff. I just wish the ads were more relevant.
  - deleted 4y ago
    [deleted]
  - pier25 4y ago
    And so the creators don't get paid when you watch their content. I pay for YouTube Premium. Creators get paid and I don't watch ads. We have a family plan so this applies to the whole family. We spend way more time watching YouTube than Netflix but pay for both.
    - j-bos 4y ago
      Echoing this, a YT premium subscription feels like a proper transaction.
    - edgyquant 4y ago
linuxftw 4y ago
I'm pretty satisfied with YouTube as a viewer other than Firefox on Linux can always decode the ads, but not always the actual content (many other sites have this issue as well). There's so much great content on YT for just about anything. Gardening, mechanics, computers, games, sports, you name it. It's all there. Most other platforms are quite vapid. I suppose that's fine for the drooling masses, but I'm a quality of quantity person.
dghughes 4y ago
YouTube has become horrible experience practically unwatchable unless you pay for the monthly Premium service. And this is coming from me a person who grew up watching TV stuffed with ads. I can't imagine with young people who never watched TV think of bare non-premium YouTube. Non-premium YouTube is just an ad machine that happens to show some video content between ads. It used to be the opposite of that.
- crazygringo 4y ago
  I don't know what you mean. If I watch a 9-minute clip, I get 2 ads at the top but can skip them after the first 5 seconds of the first ad. And then there's often a 15-second unskippable commercial in the middle. So about 4% ads. Sometimes there's a single first unskippable 15-second ad instead, so about 5% ads. (And the ratio seems roughly the same with shorter videos, as they don't have the ad in the middle and sometimes skip the intro ad altogether when watched in succession.) While network TV is 8 minutes of ads in a 30 min slot, or 27% ads. So about 5x as much ad time. If YouTube started implementing unskippable ad segments that were multiple minutes long then there would be a comparison. But in my experience, YouTube is miles better than network TV ever has been in our lifetimes.
  - Y_Y 4y ago
    That 27% rate would be illegally high in most countries. Not to mention the many places which have high-quality public broadcasters with few or no ads. That said network TV isn't necessarily a great comparison. For me I'm most likely to compare with YouTube of the past, very similar content, but no ads. Or YouTube with adblock or third-party android apps.
    - crazygringo 4y ago
      Well the parent commenter was talking about network TV (and basic cable isn't any different) and YouTube is an American company. So that's great if 27% ad time is illegal in some other countries, but I guess they either make it up with mandatory fees (like in the UK) or have lower budget programming.
stillsleepy 4y ago
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VLM 4y ago
I was unimpressed by the arguments in the article. Focus implies that Alphabet cannot avoid being over controlling (why? Any evidence other than idle speculation?) whereas devotion to increasing quarterly shareholder value would somehow be hands off (LOL has the author ever worked for a megacorporation?), or eventually being bought out by a (probably overcontrolling) competitor (Disney? Netflix?) would by some miracle be less overcontrolling than Alphabet currently is. With a side dish of the assumption that Youtube would be better off with less control and oversight. Why is that? The second argument is also weak. The claim is there are two ways to being ad sales in-house at Youtube (they... aren't already?) one is paying financial market middlemen billions to do a corporate split such that there will only (temporarily?) be in house sales dept, the other option is a cheap, probably money saving, departmental re-org. "We can save money by making a giant pile of cash and lighting it on fire". Naah, not taking the bait, doesn't sound profitable. The third argument is the author is some kind of insider and our toothless and ineffective unelected regulators hate google more than they hate facebook (solely because he claims it to be the case), so splitting from google would reduce government regulation. I mean, we're just making stuff up at this point, aren't we? The forth, unnumbered, argument is a restatement of the first argument, that Alphabet is inherently and uncontrollably hypercontrolling so "freeing" Alphabet from hypercontrolling responsibilities WRT youtube would allow better micromanagement of various AI projects. Now wait a minute, the first argument was Alphabet's theoretical control issues are "bad" therefore YT should leave, why is the forth argument that toxic management is somehow good when its applied to new AI divisions? I have a better idea, if the author repeatedly restates that Alphabet management is incompetent and detrimental to everything it touches, why let it ruin AI along with ruining Youtube, why not push to implement better leadership at Alphabet so all the orgs underneath Alphabet would benefit? I'm just saying if the repeated theme of the article is Alphabet is a "rats deserting the sinking ship" argument, well... why not fix the ship so its not sinking instead of coming up with elaborate and expensive evacuation processes? If Alphabet management is toxic therefore YT should leave to avoid it, then a couple paragraphs later claiming Alphabet management is toxic therefore they need to manage AI even harder, doesn't make sense.
crazygringo 4y ago
I can't agree. Ultimately, the article argues for spinoff because of 1) focus, 2) more subscription experimentation, and 3) regulators. But there's zero evidence YouTube is a distraction, it's already done lots of experimenation with subscriptions, and YouTube seems like the last of regulators' concerns with Alphabet. I do think it's true there isn't a whole lot of strategic synergy between YouTube and Google or the rest of Alphabet. It's not like YouTube and Maps reinforce each other the way Docs and Slides do. But the biggest argument for keeping them together is that there are large economies of scale, mainly regarding datacenters and edge nodes and all of the like, and that for this reason alone YouTube is an essentially perfect part of Alphabet's portfolio.
- alldayeveryday 4y ago
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- conductr 4y ago
  The synergy is that google has active advertisers with payment information on file. They can cross sell ads on any vertical to that customer list. A new company would struggle just to get advertisers to sign up and struggle to get the content and struggle to get the views. This is why google bought YouTube to begin with, it’s a vertical for advertising which is their business.
  - H8crilA 4y ago
    That's on the revenue front and is indeed important. On the product front: some search and generally data processing technologies are similar or even identical in Search an YouTube (YT Search, but definitely not only that).
    - conductr 4y ago
      Yes, I’m sure that’s so but not quite sure of how that implies anticompetitiveness. If a YT competitor built a search feature that they thought was so good they spun up a search engine product, does that make them anticompetitive? Every competitor has to implement their own solutions to these problems. Or, don’t? Search isn’t a barrier to entry. You could launch a video service without a search feature. If you can leverage something from your existing assets, that’s not anticompetitive. It’s like a lawn mowing service starting a Christmas light hanging service because they already possess the truck and most of the tools and labor resources. It’s the definition of being competitive. They may be able to offer lower prices to consumers because they get to use their assets during middle of winter when grass isn’t growing. Or, and this is key to the bundled conglomerate argument, offer a service that wouldn’t otherwise be feasible (because the cost would be higher than what customers would pay.) In this case, bundling of the service is a net positive to consumers.
ydnaclementine 4y ago
It's time for Android to spin off google too. Their new "Did you know google made a PHONE?" commercial feels like terrible marketing. They should market it something like: "Android, powered by Google", and take advantage of the view that google is at least seen as a modern bell labs (by normals at least), so people can get the feeling that smart people are working on android. Otherwise I don't think anyone really knows android and google are the same (present company excluded).
- throwaway472919 4y ago
  Was a bit surprised it got past the lawyers re:antitrust, it's very heavy on "You already use EVERYTHING Google"
  - scarface_74 4y ago
    Yes and next anti-trust should break up Microsoft for bundling office and break up the cable companies for bundling cable channels. We should also get rid of BigFastFood because McDonalds bundles hamburgers, fries and a drink...
londons_explore 4y ago
There are only a few times when a spun off company can be worth more than an integrated one... 1) When the spinoff might have negative value. Eg. has big liabilities. But you don't need to make it fully independent to gain this benefit - it can be a wholly owned subsidiary. 2) When the spinoff can't get clients or suppliers due to the business of the parent company - eg. the renewable energy division of BP might not have much success getting charitable funding from green charities. 3) Where someone else wants to buy the spinoff for more than market value for strategic reasons. Eg. to have its patents, or to shut down a competing business. I don't think any of these apply in the case of Youtube.
nindalf 4y ago
I respect the Economist’s business columnist (Schumpeter) and tech columnist (Babbage) but this seems to be a case of Schumpeter writing about tech. Leaving aside HN loving the idea of Big Tech being weakened by becoming Relatively Small Tech, I don’t see how this is in Alphabet’s or YouTube’s interest. The article assumes that such a divorce would be simple and it would allow YouTube to focus on taking on TikTok. It sounds like the exact opposite to me. YouTube clearly shares a lot of infrastructure with the rest of Google, especially datacenters and ads. Instead of focusing on high leverage activity like improving product, they would spend their time figuring out how to split datacenters, ads products, internal tooling etc. Almost all of their software stack is maintained internally. They would need to fork it and staff all of these teams. All of this is time wasted, work duplication and cost increases. Most of the rest is questionable claims. Like the claim that a post-divorce YouTube would be able to focus on subscription revenue. You mean like YouTube Premium, a subscription they’ve had for years? They’re not replacing ads with subscription, they need both, so they need to recreate whatever ads infra they were sharing. The only argument that made any sense was that it would buy goodwill with regulators. This is because regulators also like the idea of Relatively Small Tech. I feel like this article was started with that Wall St mentality of “I wish I could invest in YouTube without investing in the rest of it” and it somehow tries to justify the rest the divorce. Really, if I had to think about what YouTube wants to do I’d say they have to beat TikTok at the recommendation game. To do that they need as much data as possible (even if that sounds distasteful to HN), meaning the entire profile that Google has built on each person. In what world does YouTube build better recommendations after voluntarily giving up access to this data? I’m keen to read an argument that argues this is in the best interests of Alphabet and YouTube. Ideally something that goes into specifics rather than vague notions of “focus”.
- hodgesrm 4y ago
  > Leaving aside HN loving the idea of Big Tech being weakened by becoming Relatively Small Tech, I don’t see how this is in Alphabet’s or YouTube’s interest. What might instead generate more value is to spin out Google Workspaces (aka docs, slides, sheets, drive, etc.) It feels as if their business products are losing out to Microsoft, which IMO offer a greatly inferior collaboration experience for distributed teams. To pick one concrete example Google Drive is poorly suited for storing business documents due to its hostility to hierarchy and poor tools for viewing and search. By contrast Sheets is amazing. We run our business on it. These product deserve a separate, innovative focus that does not treat document management as a search problem.
webdoodle 4y ago
Just in time for the Weaponization hearings. Conveniently...
marban 4y ago
Start with spinning off Shorts into a separate tab and I'm happy.
mattpallissard 4y ago
> I always assumed YouTube’s technical foundations were significantly subsidized by the mothership, but I have no data to base that on I'd venture to guess that YouTube provided more value than just their customer base. I often wonder how much of their tech stack made it into the larger Google org. Example; for the longest time when you'd log into gsuite via a SAML IdP you'd notice a youtube url in the login flow.
- hn_go_brrrrr 4y ago
  > I often wonder how much of their tech stack made it into the larger Google org. Very little, though that may be changing. Most of YouTube was written in Python, which is essentially unknown for a production system at Google. > Example; for the longest time when you'd log into gsuite via a SAML IdP you'd notice a youtube url in the login flow. This was just to set the YouTube "logged in" cookie.
nickdothutton 4y ago
What percentage can the investment bank handling the spin-out expect to skim while simultaneously talking up the share price of both Google and the spin-out? (Rubs hands vigorously).
WesolyKubeczek 4y ago
I'm afraid Youtube will just die. As far as I know, it's still not profitable on its own.
ARandomerDude 4y ago
> It [YouTube] is an advertising juggernaut to boot. > Messrs Page and Brin control more than half of Alphabet’s voting rights, and would not like to be the first titans of tech to start selling off the family silver. Many commenters here have correctly pointed out that the business case presented in the article makes approximately zero sense. That's because the article is actually an antitrust argument disguised as a business analysis.
theknocker 4y ago
[dead]
causi 4y ago
Why has a question mark been added to the article title?
whalesalad 4y ago
judging by the way 9 times out of 10 the callback url for a google oauth login is to a youtube domain, i'm going to sarcastically assume that this is architecturally impossible
- jonas-w 4y ago
  Where does this number come from? Is this just a made up number, or is this a real statistic?
  - whalesalad 4y ago
    in my personal experience this happens to me most of the time, but not all the time.
PreInternet01 4y ago
Well, YouTube-the-hosting-business definitely doesn't fit in very well with Goo-Alpha-whatever (being, really, an advertising-cum-PI-broker), but that's hardly the fault of the owning company. Fact is: there is very little business sense in an outfit like YouTube. You have massive server costs, massive bandwidth costs, a fickle audience, a precarious copyright situation, and very little margin for recovery. Yet, YouTube is and remains popular. Very very popular. So, you would think there is some room for a play there. And there have been sufficient suggestions from various parties on what that play should be. Increase advertising. Go full-Spotify. Et cetera, ad absurdum. What YouTube has implemented is a mediocre mix of worst-case options: sure, customers can get a subscription, but it does not actually offer any advantages. And yes, partners can create opportunities, but only if they're a top-10 media company, and therefore won't create anything if their life literally depended on it. Smaller partners are smothered: Alpha-Goo-tube could listen to them, but they don't and won't. So, YouTube right now is an entire market-in-itself waiting to be disrupted. Spotify did it for audio; who will be the disruptor for video, and when, remains to be seen. Given the current market conditions, we'll have to wait a year or two, but that YouTube is toast is pretty much a given.
madrox 4y ago
YouTube's problem isn't competitors. They already have most of the eyeballs on the planet. It's that anything new they do is going to cannibalize the rest of their revenue streams. Want to push people to more clips and create a revenue stream there? They need to prove to their creators it won't take revenue away from their existing videos. That makes them very careful to roll out new things. TikTok, by comparison, had no creators to lose, so they can go after new generations of creators or simply be another syndication channel.
luckydata 4y ago
This would be an absurd move. Youtube is a property that relies on Google's ad infrastructure AND commercial relationship with advertisers to make sense. You split it and it becomes instantly less appealing cause you're dealing with another network so you can't coordinate campaigns as well as you can in the current system. It's complete nonsense and shows the person writing has no idea how that particular business works.
swframe2 4y ago
With AI tech getting dramatically better quickly, we need to wait wrt restructuring the dominant players. Basically, all the major players in the tech space are going to make major transformations to their internal services over the next 5 years. YouTube as you know it today is not going to be here 5 years from now.
buggythebug 4y ago
Stopping calling them Alphabet. These tech companies are worse than rappers when it comes to name changes. It's Google.
AtNightWeCode 4y ago
Fix the font.
AtNightWeCode 4y ago
Youtube costs close to 2x compared to HBO where I live, just to get rid of the ads. Who came up with that business plan? The big problem with Youtube right now is the death of history. More and more often I seek "Youtube"-content on other sites.
gerash 4y ago
As if Google or other tech companies don't already have non-stop re-orgs, now Economist's armchair executives are proposing even more re-orgs so all the poor army of engineers spend their next year on migrations.
- rullelito 4y ago
  It's time for Microsoft to spin off the start menu.
ggm 4y ago
If it can generate a LOT of money and thus realise shareholder value, but if it simply moves cost around the table but leaves people no better off, why do it? And consider the longer term signal: is alphabet so shot, it's divesting asset for cash, and if so.. why now?
comboy 4y ago
Doesn't youtube need a lot of bandwidth which if you separated into two different companies would get much more expensive (both for yt and the rest)?
archsurface 4y ago
The Economist - I don't know what their actual thinking is behind this, but as usual they should probably rename themselves to The Marxist. On this occasion though, most comments seem to be in agreement against The Economist.
Flatcircle 4y ago
On a long enough timeline YouTube will be alphabet’s most valuable asset imho

279 points by alexcos 4y ago

It's time for antitrust to hit Meta, Alphabet, and Amazon. At the very least. Amazon: AWS is one of the most valuable businesses ever created. You don't need the retail arm any more, now that it is enshitting itself. Also spin off the media company, comprising Audible and prime video, to make a Disney competitor. Amazon would absolutely be more valuable broken up. Meta: Meta has always run 3 separate products either way. Spinning off the loser (Facebook), and the non-social networking product (WhatsApp) would let Instagram grow wings against TikTok. Google: Search, YouTube, ads, and technical infrastructure (cloud) can all easily be separated, and Search and YouTube could likely command an even bigger premium by treating other ad networks as first-class citizens. Google ads could get a lot more business too when they are not tied to other products (those products might compete with yours, driving you away from Google ads).

nubinetwork 4y ago
> Also spin off the media company, comprising Audible and prime video And twitch.
- walthamstow 4y ago
  MGM too? Or are they owned by Amazon in a different way?
paganel 4y ago
Not combatting the merits of those break-ups, of which I agree, just wanted to point out that WhatsApp is a social media product at this point, because all the relevant social group interactions have moved there from Facebook the website/the app.
- the_af 4y ago
  What do you mean? Just as anecdote, I don't have whatsapp groups for my fb groups. My whatsapp and fb worlds are entirely disconnected. People in groups from fb often promote Discord (which I don't like: real time chatting with strangers feels odd to me). Facebook is aggressively promoting its own chat for groups, spamming it violently and so I'm forced to unsubscribe/ignore lots of chat groups now. Do people really need yet another chat platform?
  - paganel 4y ago
    > ust as anecdote, I don't have whatsapp groups for my fb groups Exactly that, that the personal updates for close friends and family that we used to post on FB are now posted on several dedicated WhatsApp groups. Yes, that means that that former highschool colleague who you'd met once in the last 20 years won't get to see them, but it's still social. > Facebook is aggressively promoting its own chat for groups, Could be, but the WhatsApp interface when it comes to group chats is way nicer and more intuitive (especially when it comes to sharing photos).
rcme 4y ago
I used to support breaking up Meta, Google, and Amazon. Their market positions are pretty dominant, but not unassailable. Facebook barely avoided Snap eating their lunch with stories and now looks to be in a losing position against TikTok. Google vs. LLMs will be interesting to see play out. Amazon… is still in a very strong position.
capitalsigma 4y ago
It's unclear to me how making these divisions dramatically increase their infrastructure costs (by either pulling them in-house or paying a premium to the original parent company) will "help them compete"
- pclmulqdq 4y ago
  Are you sure that they will dramatically increase infrastructure costs? Large companies get amazing deals from clouds, and this is no exception to that rule. Their infrastructure costs might actually decrease because the clouds will have to compete for their business.
  - jasode 4y ago
    >Are you sure that they will dramatically increase infrastructure costs? [...] Their infrastructure costs might actually decrease because the clouds will have to compete for their business. Maybe theoretically possible but I have doubts. As Youtube's founding was February 2005, they now have 18 years (i.e. exabytes) of videos stored on Google's datacenters. Exporting all that to a competitor like AWS (even with mass Snowmobile transfer service) probably wouldn't make financial sense. I worked on a corporate spin-out from a petroleum company and there was months of back & forth negotiation for "IT infrastructure services pricing" from the ex-parent company. The new spin out company was definitely not getting a deal from the ex-parent company and switching to other datacenter competitors wasn't realistic because the ex-parent already had all the data and the existing IT staff expertise to run-&-maintain the spin-off's proprietary systems. (E.g. think Lotus Notes custom programming workflows). Google could realistically raise their infrastructure prices to an independent Youtube spinoff but that higher cost is still less than switching to Azure or AWS.
- Scarblac 4y ago
  It will help their competitors compete, which would presumably be the point of antitrust action.
kryptiskt 4y ago
Privacy will be impossible as long as platform owners are in the ad business so the most important thing for me is to separate Android and Chrome from Google's ad business. For the same reason Apple and Microsoft should be forced to choose between being in the phone/computer or ad business. I don't care too much about Facebook, no doubt they are capable of failing on their own.
- JustLurking2022 4y ago
  You should read up about DMA coming out of the EU. Privacy is possible even in a conglomerate.
- Dalewyn 4y ago
  I wouldn't even mind ads in Windows, objectively speaking, if Microsoft were to just give it out for free (as in no activation required). What sucks about Microsoft and ads right now is they sell you a product and then also drown you in ads. Either I pay cold hard cash or they give me ads, but not both; they shouldn't get to double dip.
kyrra 4y ago
Google side: from maybe a business idea, you could have it work. But from a technical perspective, it would be near impossible without years of engineering effort. Google has a ton of core internal infra that is shared between all the business units at Google. The only reason this is feasible is that the cost of running it is shared between the units. (Googler opinions are my own).
- zeckalpha 4y ago
  Call it a discontinued tier of GCP that only has a handful of customers, and things could more or less stay the same.
- hnbad 4y ago
  The fun thing about antitrust is that this is entirely Google's problem.
  - londons_explore 4y ago
    Op is suggesting this breakup might increase shareholder value. Ie. It would be worth doing even without a government regulator forcing it. If true, then their internal engineering limitations directly impact how viable the idea is.
- jeffbee 4y ago
  Yeah I'd love to know how this "spinoff" would work. YouTube is an arms-length independent company but Google happens to have deployed dedicated, co-designed accelerators around the world to support their use case?
  - pclmulqdq 4y ago
    AWS sells video accelerator machines. GCP could sell access to Argos.
- drdec 4y ago
  Sounds like the internal infrastructure should also be spun off into it's own company with the other baby Googles as customers! (sarcasm, in case Poe's Law has you down)
runako 4y ago
These hypothetical splits show the perils of having outsiders (including regulators) make decisions like these. Just some quick notes: > You don't need the retail arm any more [...] spin off the media company, comprising Audible and prime video, to make a Disney competitor The whole point of the conglomerate model they use (following Costco) is that the membership fee grants consumers access to a bevy of services. The services may not work a la carte. Further, spinning Amazon media to become one of the weakest Disney competitors doesn't obviously enhance competition or consumer welfare in media. > Spinning off the loser (Facebook), and the non-social networking product (WhatsApp) would let Instagram grow wings against TikTok. The "loser" (Facebook) generates most of the revenue and profit at Meta. The Google analysis arrives at a viable conclusion (the ads business could be run as a utility), for the wrong reasons. (For ex: Search/YT would not get a bigger premium by treating as first-class other, weaker, ad networks. The near-monopoly is what drives pricing power and is frequently a reason cited for forcing a hypothetical breakup.) Anyway, this stuff is not obvious or easy, even assuming people can agree on goals (which is difficult).
- vidarh 4y ago
  > The services may not work a la carte They don't need to. Prime could still offer Prime Video / Music as a membership perk. But if the media services are independent, maybe it'd turn out offering one or more of the others, or letting customer pick and choose, would end up making more financial sense (FireTV can already be used to subscribe to competing services in addition) I'm not saying it's necessarily a good idea - I don't have an opinion on that - but the bundling of services does not depend on them being part of the same company.
  - runako 4y ago
    This misses the point. A breakup would put Prime Video / Music (are those two even allowed to be in the same company? Why? Who decides?) on the same footing as Hulu or Spotify. This would create independent third-tier players in both markets. The consumer would likely end up paying more (because Prime Video / Music can't be run at zero or negative margins as part of a bundle; ditto for other media options like Spotify). Further, I'm not sure what goal would be served by doing all of this and increasing costs to the consumer.
swarnie 4y ago
? Meta: Meta has always run 3 separate products either way. Spinning off the loser (Facebook), and the non-social networking product (WhatsApp) would let Instagram grow wings against TikTok. Three products which share data. I don't care what the law says, or what they tell a select/congress committee, nothing will convince me otherwise.
rvz 4y ago
and Microsoft.
deleted 4y ago
[deleted]
jxf 4y ago
Facebook is practically a utility company at this point. The number of businesses whose only online presence is Facebook/Instagram is significant.
kevinmchugh 4y ago
If I was an antitrust regulator worried about Disney's dominance, I would just make them sell star wars and/or avatar so they don't own three sci-fi mega franchises. I'd also consider Pixar and Hulu. Why do things to Amazon in service of sapping Disney's power?
geoduck14 4y ago
None of these are reasons for an antitrust case
lm28469 4y ago
> Also spin off the media company, comprising Audible and prime video, Prime video is what they use to get a foot in the door, then they know you'll want to extract as much value as you can from your prime membership, and that's done by buying shit from amazon
sofixa 4y ago
> Amazon would absolutely be more valuable broken up That is total nonsense, completely irrelevant, and true. Conglomerates being worth less than the sum of all parts is one of the stupidest parts of Wall Street. There is no actual rationale for this besides maybe it being easier to evaluate a company doing only a single thing? Specifically with regards to the examples given - Amazon, Meta, Google - it's the cross-subsidising and reuse of stuff that makes them profitable. Prime video without AWS' cache isn't a great competitor to Disney; YouTube on it's own will have a ruinous infrastructure bill that is subsidised by Google now; WhatsApp doesn't make money so can only survive on someone else's dime, etc. etc. Same goes for traditional conglomerates - of course GE were stronger before they split up into three. What will GE Aerospace do next time there's an air travel downturn like a pandemic? Crash and burn unless it has enough reserves, because it won't have the benefit of being propped up by different businesses that aren't impacted (like say GE HealthCare). Bombardier today are in a much worse spot, focusing only on a minuscule and volatile niche (private jets), but at least in their case it wasn't their choice, Boeing bankrupted them with protectionist tricks. The real reasons to split them up would be to improve competition and the choice of consumers, not because "idiot investors think 'value' will go up".
- conductr 4y ago
  Would customers pay for Amazon services individually if they were unbundled? I’m guessing there would be significant drop off. Prime Video would implode. Subscription revenue wouldn’t be sufficient to fund content and it’s a short life from there.
- SilverBirch 4y ago
  It's pretty wild that your example of a good conglomerate is GE considering GE's a perfect of example of why conglomerates don't work. Gee I sure wish I could invest in that great GE Aerospace division, too bad if I do the jokers over at GE Capital are going to snort half of it and place the rest on black. GE was the notorious exception to conglomerates being terrible right up until it also turned into a massive shit show.
- jefftk 4y ago
  > Conglomerates being worth less than the sum of all parts is one of the stupidest parts of Wall Street. There is no actual rationale for this besides maybe it being easier to evaluate a company doing only a single thing? One example: some parts of a business need a positive consumer reputation and others don't. When you connect these under the same company you may end up with two business units that are each less valuable than if they were free to take the approach that best suited their business. For example, an ad company that didn't care much what consumers thought about it would use fingerprinting to personalize ads and it's prevalent in the industry, but Google committed to not doing this. Why? My guess is that a big part was reputation: having an ads division that's tracking users with no opt out is inconsistent with the company-wide policies Google needs to be competitive in consumer markets. In this case I think the effects are positive, in that the display ads division is closer to what consumers would want than if it were independent, but I think it's pretty likely that spinning DoubleClick back out would increase overall profits. (I used to work at Google, and here I'm speculating about decisions made several levels above me that I wasn't a part of.)
AlchemistCamp 4y ago
Amazon doesn't have close to a monopoly with AWS, Prime Video or even its ecommerce. What possible anti-trust rationale would there be to forcibly break up the company?
giancarlostoro 4y ago
> Meta: Meta has always run 3 separate products either way. Spinning off the loser (Facebook), and the non-social networking product (WhatsApp) You don't think of it as a social networking product, but it is used as such. I consider Discord social media, and WhatsApp is honestly a text only Discord competitor in the grand scheme of things, all the group chats are reminiscent of Discord servers, but for people who dont care about all that Discord has to offer, even if they never heard of Discord. I would absolutely include chat platforms under social media.
- JohnFen 4y ago
  I've never thought of WhatsApp as a social networking product. For me, it's just an SMS replacement necessary to talk to my friends outside of the US. Not saying my perspective is correct, but I think of a "social networking" product as one where I'm talking to groups of people. That's not how I use WhatsApp. That's always 1-on-1 conversations with people I know in the real world.
  - giancarlostoro 4y ago
    For some people it is all the social media they get. People share memes, and pictures, and live updates.
cptskippy 4y ago
Why wasn't Microsoft included in this list? They have more overlap with Amazon and Google then Meta does.
psychlops 4y ago
Globalization is at odds with national level anti-trust. The past has shown that international companies supported by their governments would eat away at the smaller US companies.
- pclmulqdq 4y ago
  I think this is the big reason that the US hasn't taken action against these companies. They view them as strategic, and want to keep a very friendly relationship.
  - msabalau 4y ago
    In this case, treating the "US" as if "they" have a consistent, considered view that drives all their actions seems a little odd and vaguely conspiratorial. After all, it has been well reported that US politicians on both sides of the aisle are looking to put investigative scrutiny on big tech in the year ahead. And US regulators were broadly underutilizing antitrust tools across the board in the past, not just for big tech. That also seems to be changing. Sure, the US pursues strategies related industrial policy and national security. The CHIPS act or the Inflation Reduction Act are examples. But you don't need a "big reason" why to explain why US companies like these tech firms have been underregulated. It isn't isn't some mystery, it is just (unfortunately) normal. If US firms are grossly underregulated and under-punished for simple stuff like wage theft, you don't need to invoke strategy to explain why big tech has gotten away with anticompetitive stuff in the past.
adrr 4y ago
Hitting companies with antitrust when consumers have is a terrible idea. Antitrust laws were made to prevent monopolies giving consumers choice and preventing them from getting screwed. Amazon is e-commerce, i have multiple choices to shop on web. Amazon has even benefited the consumer by forcing retailers speed up shipping. For cloud hosting, there are alternatives to AWS. There’s healthy competition in both fields. Meta the consumer is the advertiser. They are the ones spending the money. For advertising, there are different channel and mediums. You could buy billboard ads, tv/radio ads, direct mail etc. Competition is very healthy. Google the same thing. The consumer are advertisers. Thats the market. Lets compare major anti-trust actions. Standard oil was the pretty much the sole source of oil in the US. Consumers had no choice. ATT another major antitrust case where there was just one telecom company in the US. Kodak where they were controlled all the film market.
actuator 4y ago
IMO Apple should be the biggest target for antitrust right now looking at what they do on their platforms.
lancesells 4y ago
> Spinning off the loser (Facebook) I'm not a Facebook user but it's not a loser. - 2.9B Monthly Users in 2022 - 5.3B People with Internet Access - 55% of the world uses Facebook. It seems both Instagram and Whatsapp have about ~2B monthly users. And sure, these numbers are juiced but none are losers.
chiefalchemist 4y ago
Last I read, which was a couple of years ago, after Google search, YouTube is the next most searched "search engine". It serves ads. Is it really, from Google's POV that different than it's core business? That aside, as we know now, Google wasted it's time with Plus. Instead it should have fleshed out YT's social aspects. While that's easy to say in retrospect, it's still not a bad idea if Google wanted to "social media" product.
WaitWaitWha 4y ago
The online retail portion of amazon.com would not survive such a split [0]. [0]: Most recent Amazon.com, Inc. 10-K https://d18rn0p25nwr6d.cloudfront.net/CIK-0001018724/d2fde7ee-05f7-419d-9ce8-186de4c96e25.pdf https://d18rn0p25nwr6d.cloudfront.net/CIK-0001018724/d2fde7e...
iaseiadit 4y ago
“Search, YouTube, ads, and technical infrastructure (cloud) can all easily be separated” At a product-level view from 10,000 feet, it might seem this way. In reality, these are deeply interconnected systems that are 15-20 years in the making. “Easily separated” are the last words I’d use.

zpeti 4y ago

This would be the worst time to spin it off. Tiktok is a threat but seems slightly subdued, things might take off for YouTube again. On ads ATT has depressed revenue a lot but apples recent updates will mean better tracking soon and revenue will recover. Everything is pointing up for YouTube (and meta), this is the worst time for a change in ownedhip structure. You should do that at the top not the bottom.

thewarrior 4y ago
What are these recent ATT updates ? Does Meta also benefit ?
- zpeti 4y ago
  They’re releasing much more data to advertisers, meaning targeting on FB and Meta will considerably improve in the next few months. Which will improve performance for everyone.

jl6 4y ago

I always assumed YouTube’s technical foundations were significantly subsidized by the mothership, but I have no data to base that on other than looking at the $29bn/year revenue figure and wondering whether that amount of money would be enough to provision the amount of compute, storage and bandwidth that YouTube needs, plus all other expenses (including revenue sharing with uploaders). Yes, $29bn is a lot of money, but there is a lot of YouTube.

Aromasin 4y ago
From what I'm aware, a lot of these larger companies basically treat other parts of the business the same they would customers; very important customers, but customers all the same. If YouTube wants more cloud budget, it comes out of their budget and goes into revenues of the Cloud business unit. Not quite that simplistic of course, but in essence it's meant to drive competitiveness. No special privilege's just because you're part of the same team. If an external company is paying more, for more compute, the business goes to them.
- bpodgursky 4y ago
  Yeah I think this is generally true, although YouTube is a weird case because there's literally no equivalent customer with even a fraction of the compute volume.
- curiousllama 4y ago
  That stuff still comes with special privileges. E.g., yes they'll "pay" for compute, but they'll do so at cost. And they're also allowed to deploy a monitoring widgets to other orgs' data centers to find when they're at low utilization, and then argue "at cost" is actually near 0, because the compute resources were just sitting around anyway. And then have the search team agree because YouTube promises to build the new data API search has been asking for forever. If you ultimately report earnings on the same P&L, USD is just monopoly money you trade around to get things done.
kevincox 4y ago
When I worked at Google I definitely noticed that YouTube was great at (ab)using untracked or very cheap resources. They definitely get huge benifits of otherwise idle data centers in sleeping regions. As the regular service traffic died off YouTube would put those idle cores to work transcoding video. It is definitely the case that YouTube gets lots of really cheap compute by being part of Google. But that isn't a bad thing, they are making use of an otherwise wasted resource, effectively lowering the cost for products that need daytime capacity to serve humans.

ur-whale 4y ago

https://archive.is/SG4zP https://archive.is/SG4zP

osigurdson 4y ago

For me, YouTube is the most effective ad sponsored service by far. Users are forced to watch at least 5 seconds of ads before watching any content. This 5 second window is very focused as there is no time to context switch to anything else. Contrast this with Google search - sure there are some ads at the top but these are easy to mentally filter out.

loloquwowndueo 4y ago
Cue uBlock origin - I don’t recall the last time I watched an injected ad on YouTube. Of course most content these days is peddling some product, or has a quick word from sponsors - but at least I don’t have to put up with unrelated ads in the middle of a stream.
- causi 4y ago
  You, my friend, need to install SponsorBlock.
- osigurdson 4y ago
  I don't bother with that stuff. I just wish the ads were more relevant.
- deleted 4y ago
  [deleted]
- pier25 4y ago
  And so the creators don't get paid when you watch their content. I pay for YouTube Premium. Creators get paid and I don't watch ads. We have a family plan so this applies to the whole family. We spend way more time watching YouTube than Netflix but pay for both.
  - j-bos 4y ago
    Echoing this, a YT premium subscription feels like a proper transaction.
  - edgyquant 4y ago

linuxftw 4y ago

I'm pretty satisfied with YouTube as a viewer other than Firefox on Linux can always decode the ads, but not always the actual content (many other sites have this issue as well). There's so much great content on YT for just about anything. Gardening, mechanics, computers, games, sports, you name it. It's all there. Most other platforms are quite vapid. I suppose that's fine for the drooling masses, but I'm a quality of quantity person.

dghughes 4y ago

YouTube has become horrible experience practically unwatchable unless you pay for the monthly Premium service. And this is coming from me a person who grew up watching TV stuffed with ads. I can't imagine with young people who never watched TV think of bare non-premium YouTube. Non-premium YouTube is just an ad machine that happens to show some video content between ads. It used to be the opposite of that.

crazygringo 4y ago
I don't know what you mean. If I watch a 9-minute clip, I get 2 ads at the top but can skip them after the first 5 seconds of the first ad. And then there's often a 15-second unskippable commercial in the middle. So about 4% ads. Sometimes there's a single first unskippable 15-second ad instead, so about 5% ads. (And the ratio seems roughly the same with shorter videos, as they don't have the ad in the middle and sometimes skip the intro ad altogether when watched in succession.) While network TV is 8 minutes of ads in a 30 min slot, or 27% ads. So about 5x as much ad time. If YouTube started implementing unskippable ad segments that were multiple minutes long then there would be a comparison. But in my experience, YouTube is miles better than network TV ever has been in our lifetimes.
- Y_Y 4y ago
  That 27% rate would be illegally high in most countries. Not to mention the many places which have high-quality public broadcasters with few or no ads. That said network TV isn't necessarily a great comparison. For me I'm most likely to compare with YouTube of the past, very similar content, but no ads. Or YouTube with adblock or third-party android apps.
  - crazygringo 4y ago
    Well the parent commenter was talking about network TV (and basic cable isn't any different) and YouTube is an American company. So that's great if 27% ad time is illegal in some other countries, but I guess they either make it up with mandatory fees (like in the UK) or have lower budget programming.

stillsleepy 4y ago

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VLM 4y ago

I was unimpressed by the arguments in the article. Focus implies that Alphabet cannot avoid being over controlling (why? Any evidence other than idle speculation?) whereas devotion to increasing quarterly shareholder value would somehow be hands off (LOL has the author ever worked for a megacorporation?), or eventually being bought out by a (probably overcontrolling) competitor (Disney? Netflix?) would by some miracle be less overcontrolling than Alphabet currently is. With a side dish of the assumption that Youtube would be better off with less control and oversight. Why is that? The second argument is also weak. The claim is there are two ways to being ad sales in-house at Youtube (they... aren't already?) one is paying financial market middlemen billions to do a corporate split such that there will only (temporarily?) be in house sales dept, the other option is a cheap, probably money saving, departmental re-org. "We can save money by making a giant pile of cash and lighting it on fire". Naah, not taking the bait, doesn't sound profitable. The third argument is the author is some kind of insider and our toothless and ineffective unelected regulators hate google more than they hate facebook (solely because he claims it to be the case), so splitting from google would reduce government regulation. I mean, we're just making stuff up at this point, aren't we? The forth, unnumbered, argument is a restatement of the first argument, that Alphabet is inherently and uncontrollably hypercontrolling so "freeing" Alphabet from hypercontrolling responsibilities WRT youtube would allow better micromanagement of various AI projects. Now wait a minute, the first argument was Alphabet's theoretical control issues are "bad" therefore YT should leave, why is the forth argument that toxic management is somehow good when its applied to new AI divisions? I have a better idea, if the author repeatedly restates that Alphabet management is incompetent and detrimental to everything it touches, why let it ruin AI along with ruining Youtube, why not push to implement better leadership at Alphabet so all the orgs underneath Alphabet would benefit? I'm just saying if the repeated theme of the article is Alphabet is a "rats deserting the sinking ship" argument, well... why not fix the ship so its not sinking instead of coming up with elaborate and expensive evacuation processes? If Alphabet management is toxic therefore YT should leave to avoid it, then a couple paragraphs later claiming Alphabet management is toxic therefore they need to manage AI even harder, doesn't make sense.

crazygringo 4y ago

I can't agree. Ultimately, the article argues for spinoff because of 1) focus, 2) more subscription experimentation, and 3) regulators. But there's zero evidence YouTube is a distraction, it's already done lots of experimenation with subscriptions, and YouTube seems like the last of regulators' concerns with Alphabet. I do think it's true there isn't a whole lot of strategic synergy between YouTube and Google or the rest of Alphabet. It's not like YouTube and Maps reinforce each other the way Docs and Slides do. But the biggest argument for keeping them together is that there are large economies of scale, mainly regarding datacenters and edge nodes and all of the like, and that for this reason alone YouTube is an essentially perfect part of Alphabet's portfolio.

alldayeveryday 4y ago
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conductr 4y ago
The synergy is that google has active advertisers with payment information on file. They can cross sell ads on any vertical to that customer list. A new company would struggle just to get advertisers to sign up and struggle to get the content and struggle to get the views. This is why google bought YouTube to begin with, it’s a vertical for advertising which is their business.
- H8crilA 4y ago
  That's on the revenue front and is indeed important. On the product front: some search and generally data processing technologies are similar or even identical in Search an YouTube (YT Search, but definitely not only that).
  - conductr 4y ago
    Yes, I’m sure that’s so but not quite sure of how that implies anticompetitiveness. If a YT competitor built a search feature that they thought was so good they spun up a search engine product, does that make them anticompetitive? Every competitor has to implement their own solutions to these problems. Or, don’t? Search isn’t a barrier to entry. You could launch a video service without a search feature. If you can leverage something from your existing assets, that’s not anticompetitive. It’s like a lawn mowing service starting a Christmas light hanging service because they already possess the truck and most of the tools and labor resources. It’s the definition of being competitive. They may be able to offer lower prices to consumers because they get to use their assets during middle of winter when grass isn’t growing. Or, and this is key to the bundled conglomerate argument, offer a service that wouldn’t otherwise be feasible (because the cost would be higher than what customers would pay.) In this case, bundling of the service is a net positive to consumers.

ydnaclementine 4y ago

It's time for Android to spin off google too. Their new "Did you know google made a PHONE?" commercial feels like terrible marketing. They should market it something like: "Android, powered by Google", and take advantage of the view that google is at least seen as a modern bell labs (by normals at least), so people can get the feeling that smart people are working on android. Otherwise I don't think anyone really knows android and google are the same (present company excluded).

throwaway472919 4y ago
Was a bit surprised it got past the lawyers re:antitrust, it's very heavy on "You already use EVERYTHING Google"
- scarface_74 4y ago
  Yes and next anti-trust should break up Microsoft for bundling office and break up the cable companies for bundling cable channels. We should also get rid of BigFastFood because McDonalds bundles hamburgers, fries and a drink...

londons_explore 4y ago

There are only a few times when a spun off company can be worth more than an integrated one... 1) When the spinoff might have negative value. Eg. has big liabilities. But you don't need to make it fully independent to gain this benefit - it can be a wholly owned subsidiary. 2) When the spinoff can't get clients or suppliers due to the business of the parent company - eg. the renewable energy division of BP might not have much success getting charitable funding from green charities. 3) Where someone else wants to buy the spinoff for more than market value for strategic reasons. Eg. to have its patents, or to shut down a competing business. I don't think any of these apply in the case of Youtube.

nindalf 4y ago

I respect the Economist’s business columnist (Schumpeter) and tech columnist (Babbage) but this seems to be a case of Schumpeter writing about tech. Leaving aside HN loving the idea of Big Tech being weakened by becoming Relatively Small Tech, I don’t see how this is in Alphabet’s or YouTube’s interest. The article assumes that such a divorce would be simple and it would allow YouTube to focus on taking on TikTok. It sounds like the exact opposite to me. YouTube clearly shares a lot of infrastructure with the rest of Google, especially datacenters and ads. Instead of focusing on high leverage activity like improving product, they would spend their time figuring out how to split datacenters, ads products, internal tooling etc. Almost all of their software stack is maintained internally. They would need to fork it and staff all of these teams. All of this is time wasted, work duplication and cost increases. Most of the rest is questionable claims. Like the claim that a post-divorce YouTube would be able to focus on subscription revenue. You mean like YouTube Premium, a subscription they’ve had for years? They’re not replacing ads with subscription, they need both, so they need to recreate whatever ads infra they were sharing. The only argument that made any sense was that it would buy goodwill with regulators. This is because regulators also like the idea of Relatively Small Tech. I feel like this article was started with that Wall St mentality of “I wish I could invest in YouTube without investing in the rest of it” and it somehow tries to justify the rest the divorce. Really, if I had to think about what YouTube wants to do I’d say they have to beat TikTok at the recommendation game. To do that they need as much data as possible (even if that sounds distasteful to HN), meaning the entire profile that Google has built on each person. In what world does YouTube build better recommendations after voluntarily giving up access to this data? I’m keen to read an argument that argues this is in the best interests of Alphabet and YouTube. Ideally something that goes into specifics rather than vague notions of “focus”.

hodgesrm 4y ago
> Leaving aside HN loving the idea of Big Tech being weakened by becoming Relatively Small Tech, I don’t see how this is in Alphabet’s or YouTube’s interest. What might instead generate more value is to spin out Google Workspaces (aka docs, slides, sheets, drive, etc.) It feels as if their business products are losing out to Microsoft, which IMO offer a greatly inferior collaboration experience for distributed teams. To pick one concrete example Google Drive is poorly suited for storing business documents due to its hostility to hierarchy and poor tools for viewing and search. By contrast Sheets is amazing. We run our business on it. These product deserve a separate, innovative focus that does not treat document management as a search problem.

webdoodle 4y ago

Just in time for the Weaponization hearings. Conveniently...

marban 4y ago

Start with spinning off Shorts into a separate tab and I'm happy.

mattpallissard 4y ago

> I always assumed YouTube’s technical foundations were significantly subsidized by the mothership, but I have no data to base that on I'd venture to guess that YouTube provided more value than just their customer base. I often wonder how much of their tech stack made it into the larger Google org. Example; for the longest time when you'd log into gsuite via a SAML IdP you'd notice a youtube url in the login flow.

hn_go_brrrrr 4y ago
> I often wonder how much of their tech stack made it into the larger Google org. Very little, though that may be changing. Most of YouTube was written in Python, which is essentially unknown for a production system at Google. > Example; for the longest time when you'd log into gsuite via a SAML IdP you'd notice a youtube url in the login flow. This was just to set the YouTube "logged in" cookie.

nickdothutton 4y ago

What percentage can the investment bank handling the spin-out expect to skim while simultaneously talking up the share price of both Google and the spin-out? (Rubs hands vigorously).

WesolyKubeczek 4y ago

I'm afraid Youtube will just die. As far as I know, it's still not profitable on its own.

ARandomerDude 4y ago

> It [YouTube] is an advertising juggernaut to boot. > Messrs Page and Brin control more than half of Alphabet’s voting rights, and would not like to be the first titans of tech to start selling off the family silver. Many commenters here have correctly pointed out that the business case presented in the article makes approximately zero sense. That's because the article is actually an antitrust argument disguised as a business analysis.

theknocker 4y ago

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causi 4y ago

Why has a question mark been added to the article title?

whalesalad 4y ago

judging by the way 9 times out of 10 the callback url for a google oauth login is to a youtube domain, i'm going to sarcastically assume that this is architecturally impossible

jonas-w 4y ago
Where does this number come from? Is this just a made up number, or is this a real statistic?
- whalesalad 4y ago
  in my personal experience this happens to me most of the time, but not all the time.

PreInternet01 4y ago

Well, YouTube-the-hosting-business definitely doesn't fit in very well with Goo-Alpha-whatever (being, really, an advertising-cum-PI-broker), but that's hardly the fault of the owning company. Fact is: there is very little business sense in an outfit like YouTube. You have massive server costs, massive bandwidth costs, a fickle audience, a precarious copyright situation, and very little margin for recovery. Yet, YouTube is and remains popular. Very very popular. So, you would think there is some room for a play there. And there have been sufficient suggestions from various parties on what that play should be. Increase advertising. Go full-Spotify. Et cetera, ad absurdum. What YouTube has implemented is a mediocre mix of worst-case options: sure, customers can get a subscription, but it does not actually offer any advantages. And yes, partners can create opportunities, but only if they're a top-10 media company, and therefore won't create anything if their life literally depended on it. Smaller partners are smothered: Alpha-Goo-tube could listen to them, but they don't and won't. So, YouTube right now is an entire market-in-itself waiting to be disrupted. Spotify did it for audio; who will be the disruptor for video, and when, remains to be seen. Given the current market conditions, we'll have to wait a year or two, but that YouTube is toast is pretty much a given.

madrox 4y ago

YouTube's problem isn't competitors. They already have most of the eyeballs on the planet. It's that anything new they do is going to cannibalize the rest of their revenue streams. Want to push people to more clips and create a revenue stream there? They need to prove to their creators it won't take revenue away from their existing videos. That makes them very careful to roll out new things. TikTok, by comparison, had no creators to lose, so they can go after new generations of creators or simply be another syndication channel.

luckydata 4y ago

This would be an absurd move. Youtube is a property that relies on Google's ad infrastructure AND commercial relationship with advertisers to make sense. You split it and it becomes instantly less appealing cause you're dealing with another network so you can't coordinate campaigns as well as you can in the current system. It's complete nonsense and shows the person writing has no idea how that particular business works.

swframe2 4y ago

With AI tech getting dramatically better quickly, we need to wait wrt restructuring the dominant players. Basically, all the major players in the tech space are going to make major transformations to their internal services over the next 5 years. YouTube as you know it today is not going to be here 5 years from now.

buggythebug 4y ago

Stopping calling them Alphabet. These tech companies are worse than rappers when it comes to name changes. It's Google.

AtNightWeCode 4y ago

Fix the font.

AtNightWeCode 4y ago

Youtube costs close to 2x compared to HBO where I live, just to get rid of the ads. Who came up with that business plan? The big problem with Youtube right now is the death of history. More and more often I seek "Youtube"-content on other sites.

gerash 4y ago

As if Google or other tech companies don't already have non-stop re-orgs, now Economist's armchair executives are proposing even more re-orgs so all the poor army of engineers spend their next year on migrations.

rullelito 4y ago
It's time for Microsoft to spin off the start menu.

ggm 4y ago

If it can generate a LOT of money and thus realise shareholder value, but if it simply moves cost around the table but leaves people no better off, why do it? And consider the longer term signal: is alphabet so shot, it's divesting asset for cash, and if so.. why now?

comboy 4y ago

Doesn't youtube need a lot of bandwidth which if you separated into two different companies would get much more expensive (both for yt and the rest)?

archsurface 4y ago

The Economist - I don't know what their actual thinking is behind this, but as usual they should probably rename themselves to The Marxist. On this occasion though, most comments seem to be in agreement against The Economist.

Flatcircle 4y ago

On a long enough timeline YouTube will be alphabet’s most valuable asset imho