Google is basically a digital Yellow Pages at this point. Sure they have been producing a lot of high quality research and concepts but so did Xerox PARC.
Much of the profit margin Google makes now is from people clicking on ads that they do not know are ads. A good portion of that is from companies paying for clicks from searches for their own company or product names. Neither of these are really sustainable or models that produce consumer surplus. It's a form of navigational rent seeking.
There are a lot of claims that people only want to use Google and won't stop, yet Google is paying Apple tens of billions of dollars to remain the default search engine on the iPhone. There is a reason why. There is also a massive weakness here because:
#1 Regulators in the US and the EU may break this
#2 The more Google's results are just Yellow Pages, the easier it is for Apple to swap out the results and no one notices.
I've extrapolated on this general argument for the last few years, and this was before LLMs. The decline of Google search quality has been discussed endlessly for years on HN. Now we have search engines which are suddenly a lot more capable than Google for finding answers to more complicated questions (perplexity.io etc.)
We can talk about how Google actually isn't far behind in AI or may actually be ahead. The problem is, besides increased cost of search query, hardware demand for AI/ML training and inference is going to be really tight for a while. TSMC is going to be deciding who ends up with this stuff. A LLM providing answers to complex questions with ads plastered around it and in the answer may not be the highest value thing to do with advanced semiconductor compute, even if Google did want to pay a premium over everyone else.
If you were investing in Google, the problem would be to identify how fast Google's search revenue is going to erode. People still pay for cable TV and watch it. People still use Yahoo as a search engine. You could bet that Google will have an abrupt pivot and suddenly be as well capital managed as Microsoft. They really have a poor track record at this point going back a decade. Apple had that pivot when Steve Jobs returned. I'm not sure Eric Schmidt is a Steve Jobs or that he would be returning if he was.
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Google is basically a digital Yellow Pages at this point. Sure they have been producing a lot of high quality research and concepts but so did Xerox PARC.
Much of the profit margin Google makes now is from people clicking on ads that they do not know are ads. A good portion of that is from companies paying for clicks from searches for their own company or product names. Neither of these are really sustainable or models that produce consumer surplus. It's a form of navigational rent seeking.
There are a lot of claims that people only want to use Google and won't stop, yet Google is paying Apple tens of billions of dollars to remain the default search engine on the iPhone. There is a reason why. There is also a massive weakness here because:
#1 Regulators in the US and the EU may break this #2 The more Google's results are just Yellow Pages, the easier it is for Apple to swap out the results and no one notices.
I've extrapolated on this general argument for the last few years, and this was before LLMs. The decline of Google search quality has been discussed endlessly for years on HN. Now we have search engines which are suddenly a lot more capable than Google for finding answers to more complicated questions (perplexity.io etc.)
We can talk about how Google actually isn't far behind in AI or may actually be ahead. The problem is, besides increased cost of search query, hardware demand for AI/ML training and inference is going to be really tight for a while. TSMC is going to be deciding who ends up with this stuff. A LLM providing answers to complex questions with ads plastered around it and in the answer may not be the highest value thing to do with advanced semiconductor compute, even if Google did want to pay a premium over everyone else.
If you were investing in Google, the problem would be to identify how fast Google's search revenue is going to erode. People still pay for cable TV and watch it. People still use Yahoo as a search engine. You could bet that Google will have an abrupt pivot and suddenly be as well capital managed as Microsoft. They really have a poor track record at this point going back a decade. Apple had that pivot when Steve Jobs returned. I'm not sure Eric Schmidt is a Steve Jobs or that he would be returning if he was.
Perplexity.ai, not .io