Ben Thompson: The Google Squeeze https://stratechery.com/2019/the-google-squeeze/: 'In 3Q 2014 Google had 16.5 billion in revenue and 2.8 billion in profit. I proceeded to write an article entitled Peak Google. Fast forward to last quarter, and Google had 36 billion in revenue and 6.7 billion in profit, increases of 118% and 139% respectively. It is difficult to imagine being more wrong! For the record, my thesis was... that... Google would continue to grow but that its relevance had peaked, in large part because brand marketing would become much more important on the web.... What truly misses the mark... is the suggestion that Google’s relevance has in any way decreased.... The biggest mistake... was in underestimating just how far Google could go in terms of showing users more ads, even once you accounted for more users using Google more often... more ads into mobile search results.... Google started to transform mobile results... instead of forcing users to click a link for an answer... Google would give it to them; they didn’t even need to “feel lucky”. Most importantly, though, when it came to vertical search categories, Google would offer an entirely new kind of results page.... What we saw was a continued shift of essentially the free links further down the page, by other modules that were inserted.... Note just how many screens you now have to scroll to reach organic results—at least 3 on an iPhone 11 Pro.... With the hotel module, Google captures demand more efficiently, which not only makes Google search more attractive to end users, but also transforms OTAs into suppliers, paying to provide the service that Google doesn’t want to. It is a textbook example of what Tren Griffin calls Wholesale Transfer Pricing: "Wholesale transfer pricing—the bargaining power of company A that supplies a unique product XYZ to Company B which may enable company A to take the profits of company B by increasing the wholesale price of XYZ." In this case the unique product is demand—users.... The most compelling pitch I have heard Yelp give... “The big companies are full of spam and misinformation, while we take the time to get reviews right.” It is hard not to wonder just how much more popular Yelp’s product might be if this message were spread as stridently as its anti-Google arguments. And, of course, there is Amazon: more product searches start on Amazon than Google, not because Amazon spent its energy complaining about Google favoring its own shopping results, but because Amazon went out and delivered a better experience for users. I remain very concerned about monopoly, particularly, when it comes to consumer tech, digital advertising; this Wall Street Journal story is an excellent overview of how Google makes it extremely difficult to compete (for competitive ad-tech companies) and extremely difficult to go elsewhere (for its customers)...
#noted #2019-12-17
