September 4, 2024 • 34 mins
A few weeks ago, a federal judge declared that Google has a monopoly over the search industry and text-based advertising. In this episode, Ed Zitron walks you through how the many monopolies of big tech hurt you on a daily basis.
LINKS: http://www.tinyurl.com/betterofflinelinks
Newsletter: wheresyoured.at
Reddit: http://www.reddit.com/r/betteroffline
Discord: chat.wheresyoured.at
Ed's Socials:
http://www.twitter.com/edzitron
https://bsky.app/profile/zitron.bsky.social
https://www.threads.net/@edzitron
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
All Zone Media. Hello and welcome to Better Offline and
of course I'm your host, head Zeitron. Before we go
any further, as a reminder, check out the show notes
(00:23):
for links to back up everything I'm saying. I'm not
creative enough to make this stuff up. It's real, I promise. Anyway,
the start of August felt kind of surreal for the
first time since jack GBT launched in November twenty twenty two.
There were signs that the markets were finally starting to
wake up to the bullshit of generative AI and kind
of seeing that it wasn't making anyone money really, you know,
(00:45):
the very obvious thing that some of us have been
saying for quite some time. Anyway, though, it was remarkable,
but not as remarkable as what happened in August fifth,
when a federal judge delivered his ruling in an antitrust
case filed against Google by the US Department of Justice.
In three hundred pages of dense legal text, Judge Amitt
Meta confirmed an excruciating detail that lengthened the breadth of
(01:08):
what all of us Gander's sort of new. The Google
has a monopoly in search and online general text advertising.
And that's a specific term of art. For many reasons,
this ruling was a humiliating one for Google, not least
because it showed the sordid, nasty little details of how
it's maintained its market dominance and actively impeded any chance
(01:28):
of fair competition in the search market. Documents obtained through
discovery revealed the incredible amounts of money that Google's been
paying companies. They paid Samsung eight billion dollars over four
years and Apple twenty billion dollars in twenty twenty two
alone to remain the fault search engine on their devices,
as well as Mozilla that makes the Firefox browser. They
pay about half a billion dollars a year. To be clear,
(01:52):
this is one of the grizzlier puts. Mozilla is an
organization I actually admire and they do a lot of
cool stuff technologically, but it also kind of revealed how
dependent they are on Google's money to stay afloat. Anyway,
Judge Meta found that Google had violated the Sherman Act,
a century old Dante trust legislation that, among other things,
led to the breakup of Standard Oil in nineteen ten,
(02:13):
as well as the breakup of AT and T in
nineteen eighty two. This is a significant moment in Silicon
Valley history, and it's an existential threat to Google. While
Google's initial success came thanks to it being actually better
than the alternatives.
Speaker 2 (02:27):
Anyone remember alta Vista? How do this? You see this?
Speaker 1 (02:30):
Google's continued existence is largely thanks to various interconnected monopolies
it's established, creating a choke hold on Well Search and
I'd argue the web at large. Over half of Google's
yearly revenue comes from Google Search, over one hundred and
seventy five billion of the three hundred or so billion
that Google makes every year. And it's hard to imagine
that Google could sustain said revenue or its dominance without
(02:52):
paying billions of dollars to starve the competition, and indeed,
this ruling kind of proves that they can't. As I mentioned,
the Sherman Act is roughly one hundred and thirty years old,
and since its creation, it's unwoven some of the America's
most intractable monopoly players, single handedly ruining the days of
oil company CEOs and rail barons alike. It's robust, powerful,
and it's a really good piece of legislation which in
(03:14):
the decades since its creation, has been augmented with new
laws to cover the blind spots missed by the original authors. Problematically,
the Reagan administration kind of detoothed it by refusing to
actually enforce it. You heard a little of that from
Matt Stoler's interview from last episode. But crucially, the Sherman
Act has teeth. It contains provisions that allow judges to
(03:35):
levy big fines, impose criminal penalties on CEOs or anyone
else involved, and those penalties can be about a decade long.
They can also order companies to perform specific actions like
divesting a business unit to remedy the situation. It's good shit,
and it's exactly what we need. Well, I don't think
that Sundar Pashai is going to prison, which would be very,
(03:55):
very funny, mostly because hardly anyone ever actually gets prosecuted
for violating the shit German Act. I do think this
ruling has the potential to kill Google, at least the
current Google that we see today, this present form of
this company that bankrolls its other entities using a crooked
monopoly over the search market. And in this two part series,
I'm going to take a look at how Google created
(04:16):
its monopoly and how that monopoly allowed it to.
Speaker 2 (04:18):
Become fabulously rich.
Speaker 1 (04:20):
I'll also talk about what might happen next, which for
the most part, will involve a mixture of history, lessons
and a healthy dash of bullshit speculation. Ah, I'm kidding,
it will actually be good, but trust me, even the
best case scenario for Google here is fairly grim. You
may also wonder why I've been going on about monopolies
(04:40):
for weeks, and I really want you to understand. Monopolies
are a big part of why everything feels like it
stopped working. So many problems in the modern tech industry
are a result of a lack of competition, of monopolies
and oligopolies that change the incentive of a company from
selling you a service, you a customer who likes the service,
and for it to extracting as much value from you
(05:02):
as possible because you have nowhere else to go or
leaving is difficult. Competition is deeply important. After all, if
you're not worried about the competition, why would you worry
about your customers leaving? The incentives of the monopolist are
inherently degenerative. Monopolists are not concerned about building better products. No,
they're concerned about squeezing their captive audience as much as possible.
(05:26):
The documents I covered back in April in The Man
Who destroyed Google Search are a great example showing how
Prabagar Ragavan god I love saying his name. The former
head of ads at Google demanded an increase in queries,
meaning more searches rather than better results, as a means
of increasing the amount of time one would spend on Google,
which in turn would allow Google to show you more ads.
(05:47):
However you feel about capitalism, a better economy is one
where actual, real competition between businesses exists, one based on
their ability to meet customers' needs. This stuff feels very obvious,
but it needs repeating. A company that fears the competition
is one that will compete to win a customer's business
and heart. And conversely, a company that has no real
(06:09):
fear of losing customers because they've dominated the market with
say a monopoly, or set up a healthy cartel of friendly,
other bigger quote competitors where newcomers are effectively chased out. Yeah,
they can make their products worse without fear that customers
might do something annoying like choose another option. You see
a lot of it outside of tech two. Ticketmaster and
(06:31):
its associated properties have dominated live events to the point
that they control both on sale tickets and the resale market,
leading to things like their horrifying Platinum Seats deal, where
Ticketmaster reserves tickets so that it can sell them for
a higher price to fans that couldn't buy them the
normal way, which Ticketmaster also runs. And that's why the
Department of Justice is suing them, and they suit them
(06:53):
in May for their monopoly. I wish the executives at
Ticketmaster nothing but the worst. Four companies control eighty percent
of US air travel after decades of acquisitions, allowing them
to effectively charge whatever they want, and because there are
so few of them, they'll pretty much keep their prices
around the same amount. It's a fake competition and a
fake competitive environment, and it's bad for customers and it's disgusting.
(07:18):
Now you may think, ah, I got really shitty internet speed,
and whenever I call customer service, they don't seem to
pick up. And that's because most Americans have no real
choice in internet providers thanks to monopolies run by companies
like Comcast, Charter Central, Lincoln, Cox, who can charge what
they want, perform a fairly mediocre standard, and effectively abandoned
less profitable rural areas, discarding some to ultraslow DSL Internet
(07:40):
that many of you probably have not used in decades,
and one of my favorite ones are the real fuck nuts.
The scumbags are at Frontier Frontier Communications, which is partly
owned by a private equity firm called Cerebrous Capital Management,
which owns part of Albertson's, a grocery store that's currently
in the midst of a battle with the FDC over
a larger chain called Kroger's trying to buy them, with
(08:03):
the FTC correctly arguing that it would eliminate competition and
allow one firm to control grocery prices. Hey, that reminds
me of something. You remember when inflation was increasing prices everywhere. Yeah,
if you'd like a journalist who was writing, actually, it's
it's nothing to do with the companies. You're fucking wrong.
You were wrong at the time, and you should not
(08:23):
write anymore. It's disgusting. What actually happened was the increasingly
dwindling amount of competition in many consumer goods companies allowed
them to all raise their prices at once, gouging customers
in a way that should have had someone sent to
jail rather than make nineteen million dollars for CEOs that
were bleeding Americans dry. It's also much much easier for
(08:43):
a tech company to establish a monopoly because they often
do so nestled in their own platforms, making the monopolies
just a little bit harder to pull apart. Without a
three hundred page legal document. One can easily say, if
you own all the grocery stores in an area, that
means you can control the price of groceries. That one's
a bit more obvious, but it's a little harder to
(09:03):
point at the problem with the tech industry because said
monopolies are. They're pretty new and different, yet mostly come
down to owning on some level both the customer and
those selling to the customer. There are no alternatives.
Speaker 2 (09:17):
This is a fairly.
Speaker 1 (09:18):
Basic part of all commerce. One cannot have a lawyer
represent both sides, and one ideally should not have the
same agent represent both the buyer and the seller of
a house, which does happen in some states, which is insane.
And yet it's these conflicts of interest that the tech
industry has made billions of dollars off of and I'd
argue that they can't operate without metas monopoly over the
(09:39):
advertising on both Instagram and Facebook, as well as its
own black box algorithms allow it to make the products
that you use every day so much worse just to
show you more ads, and they can increase advertising prices
whenever they want something they've done multiple times without anybody
really covering it. As a result, Meta is also the
only source of truth for houses successful your advertising is,
(10:01):
to the point that it tricked the entire media industry
into pivoting to video using phony numbers. Hundreds of people
lost their jobs. Nothing happened to Meta. Meta, as with
any digital advertising monopolist, can basically say whatever it wants
to you, inflating stats where they need to as a
means of getting more money out of you, which is
why there is a seven billion dollar class action suit
against the company for literally doing that. How has it
(10:25):
taken this long to do anything? It drives me fucking anyway, again,
it's about incentives. If Meta has no competition, Meta does
not have to act honestly or give detailed metrics about
ad performance, because where else are you gonna go, You're
gonna go to the other advertiser on Facebook. As Matt
Stoler said in the last episode, as Mata isn't really
losing business as their products decay, that seriously suggests they've
(10:47):
got a monopoly over well the advertising on their own products. Now,
I know some of you say I'm too easy on Apple,
but don't worry. I'm writing the ship Apple has, at
least outside of Europe, with the European Commissioners ruled the
company must allow third party app stores the monopoly over
the iOS and associated app stores as well as the
advertising connected to it, meaning that it can set the
(11:09):
prices such as it's seventy thirty revenue split, what can
be installed and house said apps and monetized, which is
again why the Department of Justice has recently sued it
for antitrust violations. There is only one way to buy
apps on your iPhone, and that's why the app store
is so utterly swamped with micro transaction, pumped filth and
random flashlight apps with invasive advertising and spyware and shit,
(11:32):
there's not really quality control.
Speaker 2 (11:34):
And that is.
Speaker 1 (11:35):
Usually, by the way, what their argument is, especially Apple
and I use Apple devices and recording this on an
Apple device. I use an iPhone and a MacBook. But
come the fuck on the whole point of the app Store,
this whole time with Apple holding onto it with their nasty,
gauntleted fists, was that they hold the quality up. But
(11:55):
what you see with the app Store today is a disgrace.
Everything is micro transaction field. And I know the argument is, well,
that's what customers want. Fuck you, it's what you allow.
Apple allowed the micro transaction industry to grow on iOS
and in doing so, effectively killed gaming on your phone.
The reason that most games require some kind they're free
(12:18):
to play, but they require some kind of micro transaction
to really use them is because these games are insanely profitable.
They're also deeply evil and exploitative. Yeah, Apple allows them
because Apple makes so much money off of them, thirty
percent of each transaction. If there was a just world here,
if we lived in a just society, if the App
Store was a just society, Apple would have said, no,
(12:39):
this is an evil kind of money making thing. There
is no reason why this should exist. And I know
I sound a bit radical on this, and I'm sure
someone would disagree and say, oh, I like playing Warlords Battlemasters.
I don't care. Those games are evil. There's a reason
why mobile gaming is so thin, and it's because of
(13:00):
companies like Apple, and Matt Stoler said this on the
last episode, and I really like this. When you have
such a strong monopoly, you're effectively a political power, and
things grow within the system, evil things when you use
that monopoly and that power in a way that incentivizes them.
Apple could and should have and the play Store to
an extent. Sure, but Apple really created this market, should
(13:22):
have crushed microtransaction filled free to play games. They should
have rate limited them, I don't know, or they should
have just not allowed them to live. Companies like Ebony,
for example, have got so rich over these games that
require people to put hundreds of dollars to even compete. Hey,
it's another competition thing, all right. I'll stop rating about
this though. We'll get back to the advertising side of
(13:45):
the app store. And Apple, just to be clear, is
the only advertising firm on the app Store, and that
is a big problem. Apple has aggressively moved against tracking
of iOS users, a good thing, by the way, yet
they hold a complete monopoly on any advertisements on the
app Store on their phones and any associated advertisement at
all on the iPhone, and yeah, you just have to
(14:06):
trust them, by the way, on the results there as
that's the only company you can advertise with. There's not
really any other choice.
Speaker 2 (14:13):
Sorry. Also, that's why Apple is also.
Speaker 1 (14:16):
Being sued by the DOJ for alleged German Act violations
over allegations It's control of services like I Message, which
is unavailable on Android, door Windows, and as internal documents show,
is seen as a useful tool for ensuring customer loyalty
has allowed it to restrict competition in the messaging, smartphone
and wearable markets. And what's frustrating here is Apple is
(14:36):
probably not as evil as Google, and I've definitely gone
to back for Apple. But when you really sit and
think about it, does it need to be like this?
Could Apple not open this stuff up? There's not really
a quality control thing. Eddie Q, if you're listening, come
on the show shoot the shit with me, because I'd
like to hear the justification. Steve Jobs was a horrible
(14:58):
man at Deadbeat Dad, real piece of shit, but he
at least realized that there was a level of quality
you had to provide and the app store doesn't have it.
There is an App Store episode coming, By the way,
I'm gonna really take it to task because I think
that Apple's responsibility to society here is yet another thing
they've defaulted on, just like Google's defaulted on search. And
(15:19):
you know, this whole thing is it comes down to restrictions.
And I don't think you should live restrict for lives.
Though restricted lives, I don't know, but if you want
to free yourself and especially the money in your wallet,
you should buy one of the following products.
Speaker 2 (15:34):
Or don't.
Speaker 1 (15:35):
That's what a life unrestricted feels like. But take your
wallets out and maybe start spending on this product that's
coming up that I'm sure you're gonna hear the ad
and you're gonna be like, damn, damn, that's so.
Speaker 2 (15:45):
Good for Ed. Ed probably loves this.
Speaker 1 (15:47):
It's probably hearing this ad and saying, damn, they really
nailed the things that I believe in. So go on,
show them your credit card, wave it in their face
a bit yum young, and we're back. But I want
(16:08):
to make it clear, and I will make it clear.
The competition is good. You want competition. Every one of
these companies has sold you a lie that allowing them
to control the experience makes it better because it'll be
curated by the company that made it. Yet the companies
that make these things a huge constantly laying people off,
though this isn't the case with Apple, and when given
(16:30):
the chance, will take as many liberties as they can
to squeezees many dollars out of every user. And when
they don't have to compete, they get lazy, they get domesticated.
They don't have to innovate or impress you. They just
have to keep you there, and keeping you there can
be as simple as it's really difficult to move, or
where else are you going to go? I keep using
my iPhone because I genuinely like iOS, but I also
(16:53):
know that if I message was an app rather than
a thing only found in Apple products, I'd absolutely consider
using another platform. I'm sure someone's going to message me
about goddamn beeper or something like that. It's not a
good ux. I don't like it, sorry, Casey. Anyway, when
you have a marketplace entirely dominated by one company selling
advertising on services it runs, you really have no idea
(17:15):
what you're buying. And this is when we get back
to Google and specifically their AI powered Performance Max platform,
a four year old black box advertising solution that covers
all of Google's properties, letting you run one campaign across
every Google property. Man, how convenient, right? You just tell
Google what you want, how much you want to spend,
(17:35):
and roughly who you'd like to see it with what
you're advertising a Google will magically tell you at the
end how many people saw your ads and how much
you owe Google for the pleasure. And no, you do
not know where the ads ran, which is a problem
That means that hundreds of large brands find themselves every
year spending money on spammy and scammy websites that likely
never get them any real customers. And as an aside,
(17:56):
by the way I'm hearing tell that there's a big
problem in CPM advertising cost per mile, so impressions where
I don't know the impressions might not be real people,
they might be bots. Oh and you know what, I
have to wonder if the end of this trial doesn't
involve that data being shared with the rest of the
(18:17):
companies in the industry and US finding out it's a
much bigger problem. I have an advertising episode coming up
as well. This, by the way, all of this horrible
monopolistic chicanery. This is what keeps the lights on for
these companies. Google and Meta own both the products and
the advertising services available on those products, and thus set
the terms of every part of the transaction. Because there's
(18:38):
no other way to advertise on Google, Search, Facebook, or Instagram,
there are entities competing for placement, but that competition is
done on the terms and the platforms set by the
platforms themselves, which in turn control how and when the
ads are shown and how much you'll be charged for them. Crucially,
these companies also control all the data involved. They are
(18:58):
both the companies selling you the ad space and the
company auditing said ad space and the business. If you
do not like Google as an advertising vendor on Google,
or Meta as a partner to advertise with on Facebook,
you are shit out of luck, both if you want
to try an alternative and if you need them to
improve the product in question. This is the exact reason
that Google is so nervous about its upcoming antitrust trial
(19:21):
over its accused monopoly over digital advertising, because the government
wants it to divest its ad management divination, which would
in turn create an entirely different marketplace, one where it
actually I don't know had to compete. I also don't
believe that most of these companies can operate without their monopolies.
As I've said before, Facebook and Instagram are increasingly decaying
(19:41):
products that make tens of billions of dollars a year
because there's no competitor that can undercut or compete with
metas advertising dollars, which make up ninety eight percent of
their revenue. Meta made thirteen point four to six billion
dollars in profit last quarter on thirty nine billion dollars
in revenue, which is a direct result of it being
able to manipul the platform to show more advertising and
(20:02):
increase the pricing of the advertising being shown. Metas users
are trapped because Meta owns two of the largest social
networks in the world three if you count Threads, though
it doesn't show adds yet, and Metas advertisers need to
be able to access the swards of people that the
platform has. Everyone loses except for Meta. Of course, Meta
does so very well, but we need to crush their monopoly.
(20:25):
And by the way, all of this goes for Google
two and they made a profit of twenty three point
six two billion dollars last quarter, but on revenues of
eighty four point seventy four billion dollars. Do you really
think that sixty one billion dollars in expenditures or losses
is sustainable in the event that Google no longer owns
a monopoly over its advertising space. All those costs aren't
(20:47):
all associated with Google Search half of their revenue is,
and how much of said revenue is tied in the
vagueness of the metrics it provides to its advertisers. Using
these numbers, we see that Meta had expenditures of twins
tent five point five four billion dollars over the last quarter. Again,
can it sustain this level of spending without a monopoly
on advertising on Facebook and Instagram? I don't think they can.
(21:10):
And sure they could cut back on the tens of
billions of dollars they're putting into reality labs. That might help,
but at some point they're going to run out of
people to sell to and they definitely couldn't survive if
they couldn't rig the dice how they have been. And
while we might like the main revenue driving products and
services from Apple like iPhones and MacBooks and Microsoft Xbox,
(21:30):
Surface Office three sixty five and Windows, it's hard to
say the same of Meta and Google, and I believe
both are very brittle. As a result, a lack of
competition has turned Metascore products into skinner boxes that live
only as a result of a combination of a black
box advertising product where nobody knows what's actually happening, and
a product that billions of people rely on and use
(21:50):
for free, kind of like Google Search and its associated
products like Gmail and Google Docs, which I got to
admit I still really like Gmail and Google are so good.
I have had readers and listeners ask I don't know
when they're going to fuck them up, and I'm scared.
But these companies are not competing so much as they're
holding the digital lives of their customers hostage and using
(22:11):
that as a means to set the terms of how
they're shown advertising that Google both controls the placement and
pricing up. They're not worried about somebody using the other product.
Facebook has really not got any competitors, let's be honest.
Gmail kind of does, but does it. It's just it's
a big mess. But you know, if you're looking for
(22:32):
an alternative product to something you already own, well, there's
a great place to go to and it's whatever the
next thing you hear is. And I'm sure they're very
trustworthy and they would never ever embarrass me. And you
should take your wallet and just fastball it at them
so hard you require Tommy John's surgery. Please buy the
thing or dimond, I don't know. I can't make you,
(23:07):
and we're back. As I was saying, Google doesn't have
to worry about losing you to another search engine, nor
does it worry about you leaving Gmail or Google Docs
or any of its other products, because leaving is hard
and advertisers simply do not have another choice. Google has
such a large market share of so many markets and
just one easy ad platform to use them, ah, I
(23:27):
would be painful. And also where else do you find
this many customers? It doesn't even have to as Microsoft, Amazon,
and Apple have had to diversify its business or add
other revenue streams besides the big two of search and
online advertising. Yes they make money on cloud, yes, yes, yes,
but that's not going to replace the search revenue. Don't
(23:47):
take the piss. I'd even go as far as to
say that Google can't diversify, at least culturally speaking. When
it was a young company, Google had a policy where
engineers could spend at least twenty percent of their time
on projects that in rested them. This in turn led
to the creation of beloved things like Google News, which
was a passion project of Krishna Barat, and Gmail from
Paul Boushett. And what's crazy about this is Google has
(24:13):
kind of moved away from this model. I'll get to
it in a second. It's extremely blood boiling in the
twenty tens. As Google entered this adolescence, it began to
resemble sadly the kind of stodgy corporate behemoths it once
for cutting perks and ending permissive workplace practices, and one,
it seems, was this twenty percent time. Whether twenty percent
time still exists is genuinely a hot debate in the Valley.
(24:36):
While Google insists it remains a policy, some Google employees
claim it no longer exists, although it's effectively become one
hundred and twenty percent time, meaning that you effectively have
to do it on top of the rest of your work.
In a report by Quarts from a few years ago,
one engineer blamed the death of twenty percent time on
stack ranking, where you fire the bottom percentile of workers
(24:56):
based on their performance every quarter or so. And if
you want to know it, blaming for that idea is
Jack fucking Welch, who I went into detail with about
and just every time I think of Jack Welch, you
need to listen to the Shareholder Supremacy Series. By the way,
it just makes me so angry because you can see
his influence everywhere. It makes me so no, no, anyway,
(25:17):
Google's rock continued in twenty fifteen when they hired former
Morgan Stanley financial executive Ruth parat Is at CFO. Porat's
arrival was celebrated by the markets, which added sixty billion
dollars to Google's market capitalization as the share price went up,
in part because they expected parat to bring Google to
a level of fiscal discipline it sorely lacked, by which
I mean that Google made over seventeen billion dollars a
(25:39):
year in profits, which was not enough for them. And
as The Information reported in twenty twenty one, this involved
killing products that from the outset didn't appear to be
going anywhere. But you know, things take time. Products take time.
Gmail took time. I don't think Gmail made much money
for the first few years they were still working out
how to make money off of it. Sometimes you need
(26:00):
to experiment, and I don't know innovate and man though, man,
they love killing products though Google they claim to invest
in innovation, but they really don't. And their reputation is
so good that there is an entire website called killed
by Google that lists everything they've killed. While some of
these products had a decent run, like Google Domains, which
(26:22):
made it nine whole years, others were terminated in a
matter of months, like game Builder, which was a beginner
friendly tool for building multiplayer three D games that lasted wow,
five whole months before Google got out the bolt Gun.
The reason I bring this up is because it's very
illustrative of Google's biggest threat that they have from antitrust action.
Their cultures moved away from innovating and creating things and
(26:44):
experimenting to make things. And what sucks is they didn't
have to do this. They've all they've been profitable for
what decades now. But I think there's three reasons why
they can't innovate anymore. First of all, employees aren't really
provided the opportunity to work on promising ideas without fearing
that well they'll get fired for not doing their main job. Secondly,
(27:04):
even if they manage to create something new and interesting,
Google has shown a total lack of patience and they
won't let things mature and grow over time, which kind
of echoes a wider financial problem. You see it a
lot in media and indeed podcasts, where podcasts are given
what three months to sing for their supper, and if
they don't survive, they're killed. Same with TV shows. And
(27:25):
guess what, it's something that tracks very precisely with the
management consultants like sund Up A shy coming in. But
the third thing, by the way, is the most obvious,
and that's Google does not need to innovate, or at
least they don't believe they need to. Google makes an
absolute killing from search and advertising, So why would it bother?
Why bother trying to make something interesting or unique, something
(27:46):
that might make oh ugh, disgusting. Only fifty or one
hundred million dollars a year, h your big nasty monopolies
gushing billions of dollars without you doing anything. You just
mess with the customers. Every day more money comes out.
Why would you possibly try and make a new business line?
Speaker 2 (28:02):
Idiot?
Speaker 1 (28:03):
But that's the thing. This is how Google runs. Why
would Google possibly tolerate a product that didn't turn into
a hypergrowth market or look like it might.
Speaker 2 (28:13):
Who cares? Why would you bother?
Speaker 1 (28:15):
Why when there's nobody to compete with? Why would you
give a shit? And that's the thing. We may call
this company Google. We may refer to Google as the
owner of Google Search, the creator of Google Search, the
creator of Gmail. But Google is not Google anymore. Google
the company that was beloved for their search product and
(28:35):
for their email product.
Speaker 2 (28:37):
They're dead.
Speaker 1 (28:39):
The company with such cultural importance that its name is
a fucking verb is dead. Killed by people like Prabagar Ragavan,
Liz Read, and Sandhar Pisshai. What exists today is a
private equity firm with a bunch of flailing business units
bolted onto a monopoly over a search engine and its
associated advertising, run by a former management consultant called Sonda Peshai.
(29:02):
Google's culture is burning in broad daylight its workers. And
I hear from a lot of you, and I love
hearing from you. I will protect your identities. They're furious.
They're furious of what has been done and what is
being done to a company that used to be synonymous
with innovation and experimentation, and this is why I want
to emphasize how dire things are for Google. Keeping the
(29:25):
lights on in Mountain View. It isn't cheap, and I'd
argue that Google is only capable of operating its current
scale because of its bullshit dominance of search and ads.
If it's forced to, for example, divest its lucrative advertising business,
which would require them cutting off pretty much the most
profitable business of all time, or sharing data with competitors
which would allow their competitors to compete, or jettisoning its
(29:47):
Android or Chrome businesses, I'm just not sure that Google,
both culturally and financially, is capable of competing. I don't
think they are a competitive business in the way that
most business. Let me give you an example, my PR firm, right,
or any real business. I have competitors. If I'm shit
at my job, if it gets around, if people are
(30:09):
saying I'm shit, if I do a bad job from
tons of people, someone else can be hired in my place.
The same thing happens from many small business owners and
just regular people at jobs. If you're shit at your job,
you get fired, and in turn, you would lose money.
Thus you try and do a good job so that
you're kept at your job or your business keeps getting
money so that the business keeps going. I know this
(30:30):
sounds very obvious, but Google, on the other hand, has
never really had to compete with anybody on quality, not
of search results, not of ad product, nor have they
had to compete with I don't know other advertisers. Searches
are monopoly onto itself. They bullied and used mob like
tactics and just swards of money to get people out,
but on the advertising side, they've never had competition. They
(30:53):
built the marketplace, then they shut the fucking doors behind everyone,
I guess in front of them.
Speaker 2 (30:58):
Eh. Whatever.
Speaker 1 (30:59):
But taking this a step further, I just don't believe
that the company with more than half of its revenue
coming from such an obvious monopoly is built sustainably. And
in fact, I believe that Google search monopoly is used
to bankroll their other oligopolies in other industries like cloud
and mobile and internet browsers. Cloud is profitable, ish took
(31:19):
them a while to get there, and with the mass
buildouts they're doing for Google Gemini, do you really think
it's profitable anymore? Let me put it simply. Google is
not a company built for competition, and I believe it
will collapse if it's ever forced to compete. I don't
think this company is capable of the kind of adaptation
or reinvention it would need. I think it's lost that ability,
(31:42):
and it's lost it through tens of thousands of layoffs
and being run by a guy whose only job is
to make number go up. The vibrancy and culture that
once existed in Google is dead and gone and isn't
coming back. And while Google is significantly more profitable, well,
there's a chance to it ends up shattering and turning
into several different Yahoos. Hey, that reminds me of something
(32:05):
their current search head, Propa gard Ragavan, when they used
to work.
Speaker 2 (32:09):
Was it Yahoo? Is that good? Is Yahoo a good company? Oh? Fuck?
They're owned by a private acuity. Film that's not good.
Speaker 1 (32:19):
Well anyway, In the next episode, I'm going to dive
into the specifics of how Google amassed it's monopoly and
what breaking it up might actually mean for the future
of the company and the Internet at large. I'm very
excited to talk about it because I want to see
these companies burned. I want to see companies that refuse
to compete, that refuse to act on human terms, that
treat their customers like shit, that are run by insanely
(32:41):
rich guys who don't talk to regular people. I want
to see them burn. If you're a big company and
you do a good job, I had no problem with
you none, But if you must exploit to get rich,
fuck you. I'm coming for you every week, every goddamn day.
Thank you, listeners, Thank you for listening to Better Offline.
Speaker 3 (33:09):
The editor and composer of the Better Offline theme song
is Matasowski. You can check out more of his music
and audio projects at Matasowski dot com, M A T
T O S O W s ki dot com. You
can email me at easy at Better offline dot com
or visit Better Offline dot com to find more podcast
links and of course, my newsletter. I also really recommend
(33:31):
you go to chat dot Where's youreed dot at to
visit the discord, and go to our slash.
Speaker 1 (33:35):
Better Offline to check out our reddit. Thank you so
much for listening. Better Offline is a production of cool
Zone Media. For more from cool Zone Media, visit our
website cool Zonemedia dot com or check us out on
the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.
All Zone Media. Hello and welcome to Better Offline and
of course I'm your host, head Zeitron. Before we go
any further, as a reminder, check out the show notes
(00:23):
for links to back up everything I'm saying. I'm not
creative enough to make this stuff up. It's real, I promise. Anyway,
the start of August felt kind of surreal for the
first time since jack GBT launched in November twenty twenty two.
There were signs that the markets were finally starting to
wake up to the bullshit of generative AI and kind
of seeing that it wasn't making anyone money really, you know,
(00:45):
the very obvious thing that some of us have been
saying for quite some time. Anyway, though, it was remarkable,
but not as remarkable as what happened in August fifth,
when a federal judge delivered his ruling in an antitrust
case filed against Google by the US Department of Justice.
In three hundred pages of dense legal text, Judge Amitt
Meta confirmed an excruciating detail that lengthened the breadth of
(01:08):
what all of us Gander's sort of new. The Google
has a monopoly in search and online general text advertising.
And that's a specific term of art. For many reasons,
this ruling was a humiliating one for Google, not least
because it showed the sordid, nasty little details of how
it's maintained its market dominance and actively impeded any chance
(01:28):
of fair competition in the search market. Documents obtained through
discovery revealed the incredible amounts of money that Google's been
paying companies. They paid Samsung eight billion dollars over four
years and Apple twenty billion dollars in twenty twenty two
alone to remain the fault search engine on their devices,
as well as Mozilla that makes the Firefox browser. They
pay about half a billion dollars a year. To be clear,
(01:52):
this is one of the grizzlier puts. Mozilla is an
organization I actually admire and they do a lot of
cool stuff technologically, but it also kind of revealed how
dependent they are on Google's money to stay afloat. Anyway,
Judge Meta found that Google had violated the Sherman Act,
a century old Dante trust legislation that, among other things,
led to the breakup of Standard Oil in nineteen ten,
(02:13):
as well as the breakup of AT and T in
nineteen eighty two. This is a significant moment in Silicon
Valley history, and it's an existential threat to Google. While
Google's initial success came thanks to it being actually better
than the alternatives.
Speaker 2 (02:27):
Anyone remember alta Vista? How do this? You see this?
Speaker 1 (02:30):
Google's continued existence is largely thanks to various interconnected monopolies
it's established, creating a choke hold on Well Search and
I'd argue the web at large. Over half of Google's
yearly revenue comes from Google Search, over one hundred and
seventy five billion of the three hundred or so billion
that Google makes every year. And it's hard to imagine
that Google could sustain said revenue or its dominance without
(02:52):
paying billions of dollars to starve the competition, and indeed,
this ruling kind of proves that they can't. As I mentioned,
the Sherman Act is roughly one hundred and thirty years old,
and since its creation, it's unwoven some of the America's
most intractable monopoly players, single handedly ruining the days of
oil company CEOs and rail barons alike. It's robust, powerful,
and it's a really good piece of legislation which in
(03:14):
the decades since its creation, has been augmented with new
laws to cover the blind spots missed by the original authors. Problematically,
the Reagan administration kind of detoothed it by refusing to
actually enforce it. You heard a little of that from
Matt Stoler's interview from last episode. But crucially, the Sherman
Act has teeth. It contains provisions that allow judges to
(03:35):
levy big fines, impose criminal penalties on CEOs or anyone
else involved, and those penalties can be about a decade long.
They can also order companies to perform specific actions like
divesting a business unit to remedy the situation. It's good shit,
and it's exactly what we need. Well, I don't think
that Sundar Pashai is going to prison, which would be very,
(03:55):
very funny, mostly because hardly anyone ever actually gets prosecuted
for violating the shit German Act. I do think this
ruling has the potential to kill Google, at least the
current Google that we see today, this present form of
this company that bankrolls its other entities using a crooked
monopoly over the search market. And in this two part series,
I'm going to take a look at how Google created
(04:16):
its monopoly and how that monopoly allowed it to.
Speaker 2 (04:18):
Become fabulously rich.
Speaker 1 (04:20):
I'll also talk about what might happen next, which for
the most part, will involve a mixture of history, lessons
and a healthy dash of bullshit speculation. Ah, I'm kidding,
it will actually be good, but trust me, even the
best case scenario for Google here is fairly grim. You
may also wonder why I've been going on about monopolies
(04:40):
for weeks, and I really want you to understand. Monopolies
are a big part of why everything feels like it
stopped working. So many problems in the modern tech industry
are a result of a lack of competition, of monopolies
and oligopolies that change the incentive of a company from
selling you a service, you a customer who likes the service,
and for it to extracting as much value from you
(05:02):
as possible because you have nowhere else to go or
leaving is difficult. Competition is deeply important. After all, if
you're not worried about the competition, why would you worry
about your customers leaving? The incentives of the monopolist are
inherently degenerative. Monopolists are not concerned about building better products. No,
they're concerned about squeezing their captive audience as much as possible.
(05:26):
The documents I covered back in April in The Man
Who destroyed Google Search are a great example showing how
Prabagar Ragavan god I love saying his name. The former
head of ads at Google demanded an increase in queries,
meaning more searches rather than better results, as a means
of increasing the amount of time one would spend on Google,
which in turn would allow Google to show you more ads.
(05:47):
However you feel about capitalism, a better economy is one
where actual, real competition between businesses exists, one based on
their ability to meet customers' needs. This stuff feels very obvious,
but it needs repeating. A company that fears the competition
is one that will compete to win a customer's business
and heart. And conversely, a company that has no real
(06:09):
fear of losing customers because they've dominated the market with
say a monopoly, or set up a healthy cartel of friendly,
other bigger quote competitors where newcomers are effectively chased out. Yeah,
they can make their products worse without fear that customers
might do something annoying like choose another option. You see
a lot of it outside of tech two. Ticketmaster and
(06:31):
its associated properties have dominated live events to the point
that they control both on sale tickets and the resale market,
leading to things like their horrifying Platinum Seats deal, where
Ticketmaster reserves tickets so that it can sell them for
a higher price to fans that couldn't buy them the
normal way, which Ticketmaster also runs. And that's why the
Department of Justice is suing them, and they suit them
(06:53):
in May for their monopoly. I wish the executives at
Ticketmaster nothing but the worst. Four companies control eighty percent
of US air travel after decades of acquisitions, allowing them
to effectively charge whatever they want, and because there are
so few of them, they'll pretty much keep their prices
around the same amount. It's a fake competition and a
fake competitive environment, and it's bad for customers and it's disgusting.
(07:18):
Now you may think, ah, I got really shitty internet speed,
and whenever I call customer service, they don't seem to
pick up. And that's because most Americans have no real
choice in internet providers thanks to monopolies run by companies
like Comcast, Charter Central, Lincoln, Cox, who can charge what
they want, perform a fairly mediocre standard, and effectively abandoned
less profitable rural areas, discarding some to ultraslow DSL Internet
(07:40):
that many of you probably have not used in decades,
and one of my favorite ones are the real fuck nuts.
The scumbags are at Frontier Frontier Communications, which is partly
owned by a private equity firm called Cerebrous Capital Management,
which owns part of Albertson's, a grocery store that's currently
in the midst of a battle with the FDC over
a larger chain called Kroger's trying to buy them, with
(08:03):
the FTC correctly arguing that it would eliminate competition and
allow one firm to control grocery prices. Hey, that reminds
me of something. You remember when inflation was increasing prices everywhere. Yeah,
if you'd like a journalist who was writing, actually, it's
it's nothing to do with the companies. You're fucking wrong.
You were wrong at the time, and you should not
(08:23):
write anymore. It's disgusting. What actually happened was the increasingly
dwindling amount of competition in many consumer goods companies allowed
them to all raise their prices at once, gouging customers
in a way that should have had someone sent to
jail rather than make nineteen million dollars for CEOs that
were bleeding Americans dry. It's also much much easier for
(08:43):
a tech company to establish a monopoly because they often
do so nestled in their own platforms, making the monopolies
just a little bit harder to pull apart. Without a
three hundred page legal document. One can easily say, if
you own all the grocery stores in an area, that
means you can control the price of groceries. That one's
a bit more obvious, but it's a little harder to
(09:03):
point at the problem with the tech industry because said
monopolies are. They're pretty new and different, yet mostly come
down to owning on some level both the customer and
those selling to the customer. There are no alternatives.
Speaker 2 (09:17):
This is a fairly.
Speaker 1 (09:18):
Basic part of all commerce. One cannot have a lawyer
represent both sides, and one ideally should not have the
same agent represent both the buyer and the seller of
a house, which does happen in some states, which is insane.
And yet it's these conflicts of interest that the tech
industry has made billions of dollars off of and I'd
argue that they can't operate without metas monopoly over the
(09:39):
advertising on both Instagram and Facebook, as well as its
own black box algorithms allow it to make the products
that you use every day so much worse just to
show you more ads, and they can increase advertising prices
whenever they want something they've done multiple times without anybody
really covering it. As a result, Meta is also the
only source of truth for houses successful your advertising is,
(10:01):
to the point that it tricked the entire media industry
into pivoting to video using phony numbers. Hundreds of people
lost their jobs. Nothing happened to Meta. Meta, as with
any digital advertising monopolist, can basically say whatever it wants
to you, inflating stats where they need to as a
means of getting more money out of you, which is
why there is a seven billion dollar class action suit
against the company for literally doing that. How has it
(10:25):
taken this long to do anything? It drives me fucking anyway, again,
it's about incentives. If Meta has no competition, Meta does
not have to act honestly or give detailed metrics about
ad performance, because where else are you gonna go, You're
gonna go to the other advertiser on Facebook. As Matt
Stoler said in the last episode, as Mata isn't really
losing business as their products decay, that seriously suggests they've
(10:47):
got a monopoly over well the advertising on their own products. Now,
I know some of you say I'm too easy on Apple,
but don't worry. I'm writing the ship Apple has, at
least outside of Europe, with the European Commissioners ruled the
company must allow third party app stores the monopoly over
the iOS and associated app stores as well as the
advertising connected to it, meaning that it can set the
(11:09):
prices such as it's seventy thirty revenue split, what can
be installed and house said apps and monetized, which is
again why the Department of Justice has recently sued it
for antitrust violations. There is only one way to buy
apps on your iPhone, and that's why the app store
is so utterly swamped with micro transaction, pumped filth and
random flashlight apps with invasive advertising and spyware and shit,
(11:32):
there's not really quality control.
Speaker 2 (11:34):
And that is.
Speaker 1 (11:35):
Usually, by the way, what their argument is, especially Apple
and I use Apple devices and recording this on an
Apple device. I use an iPhone and a MacBook. But
come the fuck on the whole point of the app Store,
this whole time with Apple holding onto it with their nasty,
gauntleted fists, was that they hold the quality up. But
(11:55):
what you see with the app Store today is a disgrace.
Everything is micro transaction field. And I know the argument is, well,
that's what customers want. Fuck you, it's what you allow.
Apple allowed the micro transaction industry to grow on iOS
and in doing so, effectively killed gaming on your phone.
The reason that most games require some kind they're free
(12:18):
to play, but they require some kind of micro transaction
to really use them is because these games are insanely profitable.
They're also deeply evil and exploitative. Yeah, Apple allows them
because Apple makes so much money off of them, thirty
percent of each transaction. If there was a just world here,
if we lived in a just society, if the App
Store was a just society, Apple would have said, no,
(12:39):
this is an evil kind of money making thing. There
is no reason why this should exist. And I know
I sound a bit radical on this, and I'm sure
someone would disagree and say, oh, I like playing Warlords Battlemasters.
I don't care. Those games are evil. There's a reason
why mobile gaming is so thin, and it's because of
(13:00):
companies like Apple, and Matt Stoler said this on the
last episode, and I really like this. When you have
such a strong monopoly, you're effectively a political power, and
things grow within the system, evil things when you use
that monopoly and that power in a way that incentivizes them.
Apple could and should have and the play Store to
an extent. Sure, but Apple really created this market, should
(13:22):
have crushed microtransaction filled free to play games. They should
have rate limited them, I don't know, or they should
have just not allowed them to live. Companies like Ebony,
for example, have got so rich over these games that
require people to put hundreds of dollars to even compete. Hey,
it's another competition thing, all right. I'll stop rating about
this though. We'll get back to the advertising side of
(13:45):
the app store. And Apple, just to be clear, is
the only advertising firm on the app Store, and that
is a big problem. Apple has aggressively moved against tracking
of iOS users, a good thing, by the way, yet
they hold a complete monopoly on any advertisements on the
app Store on their phones and any associated advertisement at
all on the iPhone, and yeah, you just have to
(14:06):
trust them, by the way, on the results there as
that's the only company you can advertise with. There's not
really any other choice.
Speaker 2 (14:13):
Sorry. Also, that's why Apple is also.
Speaker 1 (14:16):
Being sued by the DOJ for alleged German Act violations
over allegations It's control of services like I Message, which
is unavailable on Android, door Windows, and as internal documents show,
is seen as a useful tool for ensuring customer loyalty
has allowed it to restrict competition in the messaging, smartphone
and wearable markets. And what's frustrating here is Apple is
(14:36):
probably not as evil as Google, and I've definitely gone
to back for Apple. But when you really sit and
think about it, does it need to be like this?
Could Apple not open this stuff up? There's not really
a quality control thing. Eddie Q, if you're listening, come
on the show shoot the shit with me, because I'd
like to hear the justification. Steve Jobs was a horrible
(14:58):
man at Deadbeat Dad, real piece of shit, but he
at least realized that there was a level of quality
you had to provide and the app store doesn't have it.
There is an App Store episode coming, By the way,
I'm gonna really take it to task because I think
that Apple's responsibility to society here is yet another thing
they've defaulted on, just like Google's defaulted on search. And
(15:19):
you know, this whole thing is it comes down to restrictions.
And I don't think you should live restrict for lives.
Though restricted lives, I don't know, but if you want
to free yourself and especially the money in your wallet,
you should buy one of the following products.
Speaker 2 (15:34):
Or don't.
Speaker 1 (15:35):
That's what a life unrestricted feels like. But take your
wallets out and maybe start spending on this product that's
coming up that I'm sure you're gonna hear the ad
and you're gonna be like, damn, damn, that's so.
Speaker 2 (15:45):
Good for Ed. Ed probably loves this.
Speaker 1 (15:47):
It's probably hearing this ad and saying, damn, they really
nailed the things that I believe in. So go on,
show them your credit card, wave it in their face
a bit yum young, and we're back. But I want
(16:08):
to make it clear, and I will make it clear.
The competition is good. You want competition. Every one of
these companies has sold you a lie that allowing them
to control the experience makes it better because it'll be
curated by the company that made it. Yet the companies
that make these things a huge constantly laying people off,
though this isn't the case with Apple, and when given
(16:30):
the chance, will take as many liberties as they can
to squeezees many dollars out of every user. And when
they don't have to compete, they get lazy, they get domesticated.
They don't have to innovate or impress you. They just
have to keep you there, and keeping you there can
be as simple as it's really difficult to move, or
where else are you going to go? I keep using
my iPhone because I genuinely like iOS, but I also
(16:53):
know that if I message was an app rather than
a thing only found in Apple products, I'd absolutely consider
using another platform. I'm sure someone's going to message me
about goddamn beeper or something like that. It's not a
good ux. I don't like it, sorry, Casey. Anyway, when
you have a marketplace entirely dominated by one company selling
advertising on services it runs, you really have no idea
(17:15):
what you're buying. And this is when we get back
to Google and specifically their AI powered Performance Max platform,
a four year old black box advertising solution that covers
all of Google's properties, letting you run one campaign across
every Google property. Man, how convenient, right? You just tell
Google what you want, how much you want to spend,
(17:35):
and roughly who you'd like to see it with what
you're advertising a Google will magically tell you at the
end how many people saw your ads and how much
you owe Google for the pleasure. And no, you do
not know where the ads ran, which is a problem
That means that hundreds of large brands find themselves every
year spending money on spammy and scammy websites that likely
never get them any real customers. And as an aside,
(17:56):
by the way I'm hearing tell that there's a big
problem in CPM advertising cost per mile, so impressions where
I don't know the impressions might not be real people,
they might be bots. Oh and you know what, I
have to wonder if the end of this trial doesn't
involve that data being shared with the rest of the
(18:17):
companies in the industry and US finding out it's a
much bigger problem. I have an advertising episode coming up
as well. This, by the way, all of this horrible
monopolistic chicanery. This is what keeps the lights on for
these companies. Google and Meta own both the products and
the advertising services available on those products, and thus set
the terms of every part of the transaction. Because there's
(18:38):
no other way to advertise on Google, Search, Facebook, or Instagram,
there are entities competing for placement, but that competition is
done on the terms and the platforms set by the
platforms themselves, which in turn control how and when the
ads are shown and how much you'll be charged for them. Crucially,
these companies also control all the data involved. They are
(18:58):
both the companies selling you the ad space and the
company auditing said ad space and the business. If you
do not like Google as an advertising vendor on Google,
or Meta as a partner to advertise with on Facebook,
you are shit out of luck, both if you want
to try an alternative and if you need them to
improve the product in question. This is the exact reason
that Google is so nervous about its upcoming antitrust trial
(19:21):
over its accused monopoly over digital advertising, because the government
wants it to divest its ad management divination, which would
in turn create an entirely different marketplace, one where it
actually I don't know had to compete. I also don't
believe that most of these companies can operate without their monopolies.
As I've said before, Facebook and Instagram are increasingly decaying
(19:41):
products that make tens of billions of dollars a year
because there's no competitor that can undercut or compete with
metas advertising dollars, which make up ninety eight percent of
their revenue. Meta made thirteen point four to six billion
dollars in profit last quarter on thirty nine billion dollars
in revenue, which is a direct result of it being
able to manipul the platform to show more advertising and
(20:02):
increase the pricing of the advertising being shown. Metas users
are trapped because Meta owns two of the largest social
networks in the world three if you count Threads, though
it doesn't show adds yet, and Metas advertisers need to
be able to access the swards of people that the
platform has. Everyone loses except for Meta. Of course, Meta
does so very well, but we need to crush their monopoly.
(20:25):
And by the way, all of this goes for Google
two and they made a profit of twenty three point
six two billion dollars last quarter, but on revenues of
eighty four point seventy four billion dollars. Do you really
think that sixty one billion dollars in expenditures or losses
is sustainable in the event that Google no longer owns
a monopoly over its advertising space. All those costs aren't
(20:47):
all associated with Google Search half of their revenue is,
and how much of said revenue is tied in the
vagueness of the metrics it provides to its advertisers. Using
these numbers, we see that Meta had expenditures of twins
tent five point five four billion dollars over the last quarter. Again,
can it sustain this level of spending without a monopoly
on advertising on Facebook and Instagram? I don't think they can.
(21:10):
And sure they could cut back on the tens of
billions of dollars they're putting into reality labs. That might help,
but at some point they're going to run out of
people to sell to and they definitely couldn't survive if
they couldn't rig the dice how they have been. And
while we might like the main revenue driving products and
services from Apple like iPhones and MacBooks and Microsoft Xbox,
(21:30):
Surface Office three sixty five and Windows, it's hard to
say the same of Meta and Google, and I believe
both are very brittle. As a result, a lack of
competition has turned Metascore products into skinner boxes that live
only as a result of a combination of a black
box advertising product where nobody knows what's actually happening, and
a product that billions of people rely on and use
(21:50):
for free, kind of like Google Search and its associated
products like Gmail and Google Docs, which I got to
admit I still really like Gmail and Google are so good.
I have had readers and listeners ask I don't know
when they're going to fuck them up, and I'm scared.
But these companies are not competing so much as they're
holding the digital lives of their customers hostage and using
(22:11):
that as a means to set the terms of how
they're shown advertising that Google both controls the placement and
pricing up. They're not worried about somebody using the other product.
Facebook has really not got any competitors, let's be honest.
Gmail kind of does, but does it. It's just it's
a big mess. But you know, if you're looking for
(22:32):
an alternative product to something you already own, well, there's
a great place to go to and it's whatever the
next thing you hear is. And I'm sure they're very
trustworthy and they would never ever embarrass me. And you
should take your wallet and just fastball it at them
so hard you require Tommy John's surgery. Please buy the
thing or dimond, I don't know. I can't make you,
(23:07):
and we're back. As I was saying, Google doesn't have
to worry about losing you to another search engine, nor
does it worry about you leaving Gmail or Google Docs
or any of its other products, because leaving is hard
and advertisers simply do not have another choice. Google has
such a large market share of so many markets and
just one easy ad platform to use them, ah, I
(23:27):
would be painful. And also where else do you find
this many customers? It doesn't even have to as Microsoft, Amazon,
and Apple have had to diversify its business or add
other revenue streams besides the big two of search and
online advertising. Yes they make money on cloud, yes, yes, yes,
but that's not going to replace the search revenue. Don't
(23:47):
take the piss. I'd even go as far as to
say that Google can't diversify, at least culturally speaking. When
it was a young company, Google had a policy where
engineers could spend at least twenty percent of their time
on projects that in rested them. This in turn led
to the creation of beloved things like Google News, which
was a passion project of Krishna Barat, and Gmail from
Paul Boushett. And what's crazy about this is Google has
(24:13):
kind of moved away from this model. I'll get to
it in a second. It's extremely blood boiling in the
twenty tens. As Google entered this adolescence, it began to
resemble sadly the kind of stodgy corporate behemoths it once
for cutting perks and ending permissive workplace practices, and one,
it seems, was this twenty percent time. Whether twenty percent
time still exists is genuinely a hot debate in the Valley.
(24:36):
While Google insists it remains a policy, some Google employees
claim it no longer exists, although it's effectively become one
hundred and twenty percent time, meaning that you effectively have
to do it on top of the rest of your work.
In a report by Quarts from a few years ago,
one engineer blamed the death of twenty percent time on
stack ranking, where you fire the bottom percentile of workers
(24:56):
based on their performance every quarter or so. And if
you want to know it, blaming for that idea is
Jack fucking Welch, who I went into detail with about
and just every time I think of Jack Welch, you
need to listen to the Shareholder Supremacy Series. By the way,
it just makes me so angry because you can see
his influence everywhere. It makes me so no, no, anyway,
(25:17):
Google's rock continued in twenty fifteen when they hired former
Morgan Stanley financial executive Ruth parat Is at CFO. Porat's
arrival was celebrated by the markets, which added sixty billion
dollars to Google's market capitalization as the share price went up,
in part because they expected parat to bring Google to
a level of fiscal discipline it sorely lacked, by which
I mean that Google made over seventeen billion dollars a
(25:39):
year in profits, which was not enough for them. And
as The Information reported in twenty twenty one, this involved
killing products that from the outset didn't appear to be
going anywhere. But you know, things take time. Products take time.
Gmail took time. I don't think Gmail made much money
for the first few years they were still working out
how to make money off of it. Sometimes you need
(26:00):
to experiment, and I don't know innovate and man though, man,
they love killing products though Google they claim to invest
in innovation, but they really don't. And their reputation is
so good that there is an entire website called killed
by Google that lists everything they've killed. While some of
these products had a decent run, like Google Domains, which
(26:22):
made it nine whole years, others were terminated in a
matter of months, like game Builder, which was a beginner
friendly tool for building multiplayer three D games that lasted wow,
five whole months before Google got out the bolt Gun.
The reason I bring this up is because it's very
illustrative of Google's biggest threat that they have from antitrust action.
Their cultures moved away from innovating and creating things and
(26:44):
experimenting to make things. And what sucks is they didn't
have to do this. They've all they've been profitable for
what decades now. But I think there's three reasons why
they can't innovate anymore. First of all, employees aren't really
provided the opportunity to work on promising ideas without fearing
that well they'll get fired for not doing their main job. Secondly,
(27:04):
even if they manage to create something new and interesting,
Google has shown a total lack of patience and they
won't let things mature and grow over time, which kind
of echoes a wider financial problem. You see it a
lot in media and indeed podcasts, where podcasts are given
what three months to sing for their supper, and if
they don't survive, they're killed. Same with TV shows. And
(27:25):
guess what, it's something that tracks very precisely with the
management consultants like sund Up A shy coming in. But
the third thing, by the way, is the most obvious,
and that's Google does not need to innovate, or at
least they don't believe they need to. Google makes an
absolute killing from search and advertising, So why would it bother?
Why bother trying to make something interesting or unique, something
(27:46):
that might make oh ugh, disgusting. Only fifty or one
hundred million dollars a year, h your big nasty monopolies
gushing billions of dollars without you doing anything. You just
mess with the customers. Every day more money comes out.
Why would you possibly try and make a new business line?
Speaker 2 (28:02):
Idiot?
Speaker 1 (28:03):
But that's the thing. This is how Google runs. Why
would Google possibly tolerate a product that didn't turn into
a hypergrowth market or look like it might.
Speaker 2 (28:13):
Who cares? Why would you bother?
Speaker 1 (28:15):
Why when there's nobody to compete with? Why would you
give a shit? And that's the thing. We may call
this company Google. We may refer to Google as the
owner of Google Search, the creator of Google Search, the
creator of Gmail. But Google is not Google anymore. Google
the company that was beloved for their search product and
(28:35):
for their email product.
Speaker 2 (28:37):
They're dead.
Speaker 1 (28:39):
The company with such cultural importance that its name is
a fucking verb is dead. Killed by people like Prabagar Ragavan,
Liz Read, and Sandhar Pisshai. What exists today is a
private equity firm with a bunch of flailing business units
bolted onto a monopoly over a search engine and its
associated advertising, run by a former management consultant called Sonda Peshai.
(29:02):
Google's culture is burning in broad daylight its workers. And
I hear from a lot of you, and I love
hearing from you. I will protect your identities. They're furious.
They're furious of what has been done and what is
being done to a company that used to be synonymous
with innovation and experimentation, and this is why I want
to emphasize how dire things are for Google. Keeping the
(29:25):
lights on in Mountain View. It isn't cheap, and I'd
argue that Google is only capable of operating its current
scale because of its bullshit dominance of search and ads.
If it's forced to, for example, divest its lucrative advertising business,
which would require them cutting off pretty much the most
profitable business of all time, or sharing data with competitors
which would allow their competitors to compete, or jettisoning its
(29:47):
Android or Chrome businesses, I'm just not sure that Google,
both culturally and financially, is capable of competing. I don't
think they are a competitive business in the way that
most business. Let me give you an example, my PR firm, right,
or any real business. I have competitors. If I'm shit
at my job, if it gets around, if people are
(30:09):
saying I'm shit, if I do a bad job from
tons of people, someone else can be hired in my place.
The same thing happens from many small business owners and
just regular people at jobs. If you're shit at your job,
you get fired, and in turn, you would lose money.
Thus you try and do a good job so that
you're kept at your job or your business keeps getting
money so that the business keeps going. I know this
(30:30):
sounds very obvious, but Google, on the other hand, has
never really had to compete with anybody on quality, not
of search results, not of ad product, nor have they
had to compete with I don't know other advertisers. Searches
are monopoly onto itself. They bullied and used mob like
tactics and just swards of money to get people out,
but on the advertising side, they've never had competition. They
(30:53):
built the marketplace, then they shut the fucking doors behind everyone,
I guess in front of them.
Speaker 2 (30:58):
Eh. Whatever.
Speaker 1 (30:59):
But taking this a step further, I just don't believe
that the company with more than half of its revenue
coming from such an obvious monopoly is built sustainably. And
in fact, I believe that Google search monopoly is used
to bankroll their other oligopolies in other industries like cloud
and mobile and internet browsers. Cloud is profitable, ish took
(31:19):
them a while to get there, and with the mass
buildouts they're doing for Google Gemini, do you really think
it's profitable anymore? Let me put it simply. Google is
not a company built for competition, and I believe it
will collapse if it's ever forced to compete. I don't
think this company is capable of the kind of adaptation
or reinvention it would need. I think it's lost that ability,
(31:42):
and it's lost it through tens of thousands of layoffs
and being run by a guy whose only job is
to make number go up. The vibrancy and culture that
once existed in Google is dead and gone and isn't
coming back. And while Google is significantly more profitable, well,
there's a chance to it ends up shattering and turning
into several different Yahoos. Hey, that reminds me of something
(32:05):
their current search head, Propa gard Ragavan, when they used
to work.
Speaker 2 (32:09):
Was it Yahoo? Is that good? Is Yahoo a good company? Oh? Fuck?
They're owned by a private acuity. Film that's not good.
Speaker 1 (32:19):
Well anyway, In the next episode, I'm going to dive
into the specifics of how Google amassed it's monopoly and
what breaking it up might actually mean for the future
of the company and the Internet at large. I'm very
excited to talk about it because I want to see
these companies burned. I want to see companies that refuse
to compete, that refuse to act on human terms, that
treat their customers like shit, that are run by insanely
(32:41):
rich guys who don't talk to regular people. I want
to see them burn. If you're a big company and
you do a good job, I had no problem with
you none, But if you must exploit to get rich,
fuck you. I'm coming for you every week, every goddamn day.
Thank you, listeners, Thank you for listening to Better Offline.
Speaker 3 (33:09):
The editor and composer of the Better Offline theme song
is Matasowski. You can check out more of his music
and audio projects at Matasowski dot com, M A T
T O S O W s ki dot com. You
can email me at easy at Better offline dot com
or visit Better Offline dot com to find more podcast
links and of course, my newsletter. I also really recommend
(33:31):
you go to chat dot Where's youreed dot at to
visit the discord, and go to our slash.
Speaker 1 (33:35):
Better Offline to check out our reddit. Thank you so
much for listening. Better Offline is a production of cool
Zone Media. For more from cool Zone Media, visit our
website cool Zonemedia dot com or check us out on
the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.
Popular Podcasts
1. Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
2. Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations.
3. Crime Junkie
If you can never get enough true crime... Congratulations, you’ve found your people.