Alphabet Becomes the Most Valuable Public Company in the World
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If Apple starts going faster on AI then I think it will be very interesting between these two companies.
A much more cynical way to look at it is, judging a company based on its aspirations means judging them based on their marketing rather than their products, services, or actions.
Think of how differently Comcast would be perceived if everyone wanted to talk about the company Comcast wishes it was, rather than company that it is. Or any company you don't like for whatever reason.
Sure, but even so (except for the way some people treat Google), we typically call companies that make their money by placing ads in a service or media offering an "X company" where X describes the service or media offering, not "advertising".
From that perspective, Google is an online services company, with AI playing an important role in some of its services.
Calling Google an "AI company" seems like calling Ford in 1962 "a streamlining company" - which is does violence to the concept even if Ford in 1962 maybe some money with streamlined cars.
I've had to un-learn my search query habits from the past. I used to attempt to express queries in ways that I thought would help the search engine (limit it to keywords, suppress keywords that are likely to produce false positives, etc.). Now, it seems better to put in sentence fragments, and the old way of a few specific thought out keywords is actually worse at producing the result I want.
The difference is small to the average HN user (most of us are just as capable of expressing queries both ways, and we'll find what we're looking for) but the latter kind of query is far more accessible to the average person.
eh, either way Google is described it's just trying to be a cute soundbite with next to no information.
You can call them an advertising company, but they create the products that most of their ads are seen in, so really they're an advertising company and a software company. They build the data centers all that software runs on or comes from, so they're also a data center company. And if they're using AI in most of their products these days (no idea), you could fairly add AI company on there too.
So what is the X in "they're an X company"? A better question is why does it matter what the X is? You don't gain any insight by filling it in.
Instead we could go crazy and use like two, even three sentences to describe what a company does, what its incentives are and where its constrained.
What would be your "crazy" characterization of Google?
The business focus matters because the ad market is in trouble, and unless Alphabet has something in the pipeline to replace ads, five to ten years from now the company is going to be where Yahoo is today.
This seems hard to imagine now, but no one expected DEC to fail, or HP to turn into that thing it turned into, or Microsoft to sit on a grenade labelled "Windows", or IBM to drift off to the margins of the web - and so on.
What evidence shows the ad business in trouble? Alphabet recorded revenue and profit in the quarter.
Sure, but for every unexpected floundering there are many more predictions of failure that never occurred. I'm not sure how unexpected failures in general give any insight beyond that they exist.
It doesn't necessarily mean that.
It's more common to associate "X" with their business competency.
If we always insist on X to be only defined by revenue, we then get the following type of soundbites that we pat ourselves on the back for:
- McDonalds is actually a real estate company and not a hamburger company because they make more money from rent than from food
- General Electric is really a bank because GE Capital has higher revenue than GE Aviation or GE Energy
- Harvard University is really a hedge fund and not a school because the endowment income is greater than the tuition paid by students
- Lebron James is actually an advertising spokesperson instead of a basketball player because he gets most of his money from corporate endorsements instead of the NBA player contract. Same thing can be said for NASCAR drivers and Olympic athletes.
Are the twisted examples above really how we categorize companies/celebrities? We don't label NY Times, National Geographic, and NBC/CBS/ABC/Fox as "ad companies". Instead we respectively call them "newspaper", "magazine", and "tv networks". Being a conduit for ads does not define each of them as an ad company.
It's much more reasonable to think of Google Inc as a AI/search/maps/cloud company that happens to get most of their revenue from ads. They are not an "ad company".
We don't compare McDonalds with Donald Trump development properties. We compare McDonalds with Burger King. We also don't compare Google Inc with Omnicom Group; instead we compare Google Search with MS Bing, and Android vs iPhone, and other technologies.
- McDonalds is a real estate company
- General Electric is really a bank
- Harvard University is really a hedge fund
- Lebron James is actually an advertising spokesperson
Are the twisted examples above really how we categorize companies/celebrities?
It makes no sense to categorize McDonalds as a real estate company because its cost structure, hiring policies, marketing efforts, and everything else about the company in no way reflect the components of a traditional marketing company.
If "LeBron James" was a publicly traded company and you categorized him as an advertising spokesperson, would you then take him out of the gym and have him spend 4 years pursing an MBA?
No. Neither would the shareholders. Also, he's a lot more successful than a lot of MBAs. The whole point is that maybe the preconceived notions and categorizations aren't all there is to it.
I find this interesting. Are McDonalds making most of their revenue from real estate rents from their franchisees and/or those involved in their supply chain, or is the bulk of this land outside their hamburger business?
Dollars wise McDonalds does make more in rent than in selling food (by about 2x).
Search, Gmail, Android, Chromebooks, Nexus, Pixel, Youtube, Maps etc. everything is about selling advertisements after scanning user provided data.
The rest are either loss leaders or moats, or ones with unclear monetization scenarios like Fiber. One exception is GCE and GAE, but I don't know how much profit/revenue they're making. I would count Google Apps, but until recently they were scanning even paid Google Apps for Business accounts for ad tracking purposes.
The reason why it's not incorrect to call Google an AI company is that Wall Street thinks they'll be able to shake out ever more cash from their machines in the future because of their position in ML and AI. It's their competitive edge and one that becomes more and more valuable as software continues to eat the world.
https://en.wikipedia.org/wiki/AI_effect#AI_is_whatever_hasn....
it may be the case that 'intelligent' is just a word used to make humans feel special things about mammalian brains, but it's also consistent that we overestimate the difficulty of the abilities that add up to 'intelligent'. It's the difference between moving the goal posts and having our perspective changed so that we realize that the goal is further away than we thought.
To put it another way, if we define a Scotsman as anyone born in Scotland and/or related to someone born in Scotland, we've essentially just defined a Scotsman as every organism ever to be alive on Earth.
I have to imagine when the term first started to be used people imagined an AI as something more human than neural networks. Imagine HAL or any other hollywood perceived robot.
My personal bet is on people placing that line squarely on the divide between "Stoic Guru" and "Active Academy" UX models[1]. An AI is probably, to most people, an agent that continues to think and learn when it is not being interacted with—by surfing the internet, maybe—such that it can generate novel outputs, and revise its own previous beliefs, with no user-visible step that would be perceived as "re-training." Something that will come to you with thoughts it has had that you'll find relevant, that were inspired by new data the agent has acquired not derived from your input.
A simple example that people would probably think of as "AI" (and which people wouldn't accept as a UX paradigm unless it was presented to them through an agent-based interface) would be a spam filter like GMail's that learns from the classifications of everyone who uses it, that would go back and reclassify messages that it now had a more refined opinion on. Nobody would want a dumb algorithm to take emails that "were" in their inbox and move them over into their spam folder—that's destructive!—but they'd accept a (virtual) secretary using their judgement to do so. Thus, AI.
[1] https://scifiinterfaces.wordpress.com/category/active-academ...
So if you want to describe Google as a (insert thing here) company, really the thing to insert in the parentheses would be something like "massive computing infrastructure".
And for better or worse, "AI" is still associated in many people's minds with things that the Google search box isn't close to resembling. People expect an AI to hold a conversation, or be able to reach (and explain) novel conclusions, rather than heuristically guess the next word you'll type (given the computing power, not terribly hard given the informational entropy of human languages) or scan a large database quickly to return the result you asked for. People mostly don't see fast brute-force searching of a problem space, for example, as "intelligence", but that's most of the secret sauce behind game-playing "AI".
So? The fact that it is worth a damn at playing go was unexpected to most people afaict. What do you mean "fundamentally novel", are you expecting the field to advance from cars that barely avoid accidents, to Ava in one fell swoop?
Frankly I would prefer that advancement in AI not occur in sudden unexpected bursts of progress, thanks.
Back when neural nets were "fundamentally novel" we didn't have the understanding or computing power to tap their potential. So they "weren't really AI" because they couldn't do much that was interesting.
Now, we have a better understanding of how to use them, and we have enough computing grunt to make them do really interesting things. But they're "not really AI" because they're "not fundamentally novel."
I think the concepts behind this were known 10 years ago - they improved and made it scale/we got the hardware and productized it - but would it really "blow your socks off" ? Hell I'm kind of disappointed at the development speed, I was expecting real personal assistants (not something trivial like Siri) by now.
Nowadays you can search for "young einstein" and get 3 pictures of Yahoo Serious and 10 pictures of Albert Einstein as a young man. It still looks like magic to me even though I know a bit about how it works.
What people want to see is artificial general intelligence, currently that is not possible.
Does running human software on biological hardware make it sentient, or would the same be true on other forms of hardware?
That hardware is just doing what it's been told to.
This concept seems to be a direct abstraction of hindsight bias.
In fact, the concept of hindsight bias feels very much like every aspect of life, also. As soon as you build the next great tower, you opt for a new wave of bigger, more powerful enemies (i.e., you level up), and so the solution for the last wave no longer feels that interesting anymore, and thus seems, perhaps, obvious.
Considering that Amazon could have run a simple account search to determine that I am definitely not interested in seeing ads for a product that I already own, I think that the AI-targeting ad revolution is a while off yet.
That is unrelated to Google, but I haven't seen anything there that would suggest they are running anything smarter.
The deal is those ads show up when the ad space is the cheapest. It's known as remant inventory. So the retargeters can pick it up for very cheap.
The deal is the companies KNOW that some people see ads for things they already bought. But some people are seeing ads for things like only considered, and bombarding them with ads does affect behavior. The question is, is the increase in revenue worth the cost of retargeting.
The answer is very much yes. Even as it annoys people who already bought it, which doesn't even factor since they already made the revenue from your purchase.
A lot of assumptions we make don't hold up when you start gathering real data.
It ain't gonna pass the Turing test anytime soon, and it's not more of an "AI" product any other product with basic algorithmic based matching is.
OP has a point.
Sure. And we didn't use to call them "AI companies".
Though I fail to see any application of machine learning to write home about in their core business -- ads.
Search yes, they do a good job on that.
But given the amount the data they have on us (browsing history, profile, mails in Gmail) has anybody been that impressed with any targeted ad? I've seen targeted ads from "dummy" networks like the Deck that are 1000% times better for my interests.
Sure, that's fine, but since ML is generally considered to fall under the AI umbrella your statement is more precise but not more correct.
> Though I fail to see any application of machine learning to write home about in their core business -- ads.
I know basically nothing about our ads (I work for Alphabet), but I believe there is some kind of ML involved.
I can search the internet way better. Email me what you are looking for and 9 times out of 10 I will send you back something better than what Google will spit out. Furthermore you won't even have to sift through 10 links, or change your search, I will do all this and send you the result back.
What are you even proposing, human search agents? That's absurd.
They do. Most companies which build their primary product on some form of heuristics have "domain experts" who help filter the wheat from the chaff.
Ok, so you agree partially.
Can you do it for me in 100ms or better
Not all searches require an immediate reply, so I'll just focus on those. Looking at the list of the most expensive keywords on Google, it is safe to say the vast majority consist of searches that do not necessitate a decision at the moment of the first try. Think Attorney, Insurance, Travel.
and at no cost?
Yes. It is free, and ad supported.
Really goes to show how much the market works on the 2nd derivative, and how that can result in immensely disproportionate market caps relative to a company's profitability.
If I were Apple I would think about seriously ramping up the stock buyback at this point. If they keep it up long enough they could even take themselves private one day.
People use Google for search, email, maps, etc. And that's what the company was built for. If they had a better way to monetize than ads, they would certainly drop ads.
The way a company makes its money is only weakly correlated to the service it offers to users. Think about it: if McDonalds stopped selling food, it would not have any customers. If Google stopped offering search, it would not have any users.
I don't see the McDonald's reference as the same, drinks are part of their food product. Ads are not a integrated part of search (google did not start out having ads).
If someone asks, which of the 2 answers would be more helpful to them?
But yeah, I agree with you. Businesses are more complex than individual touchpoints.
eg: http://www.businessinsider.com/movie-concessions-drive-amc-e...
Yup don't say "Taylor Swift is in the online concert tickets business", she is in the music business.
McDonald's not in the hamburgers-and-cokes business, its in the fast food business.
Just because it's the way they make money it doesn't mean is the most appropriate classification.
Although originally theaters wanted nothing to do with popcorn: http://www.smithsonianmag.com/arts-culture/why-do-we-eat-pop...
I was just referring to the fact that theaters make most of their money from concessions, but you wouldn't then call them a concession company. No one would go to a theater just for the concessions. They would (and do) go just for the movie though.
> "Movie theaters wanted nothing to do with popcorn," Smith says, "because they were trying to duplicate what was done in real theaters. They had beautiful carpets and rugs and didn't want popcorn being ground into it." Movie theaters were trying to appeal to a highbrow clientele, and didn't want to deal with the distracting trash of concessions—or the distracting noise that snacking during a film would create.
> When films added sound in 1927, the movie theater industry opened itself up to a much wider clientele, since literacy was no longer required to attend films (the titles used [in] early silent films restricted their audience). [emphasis added]
Actually, yeah. I worked in cinema (as a projectionist) before getting into tech, and the management definitely saw the food counter as more important than the movies being shown.
The place was run like a fast-food restaurant.
OK, to be fair, search is still very important too (in fact the most important content provider for their ad business). So call them a "search and advertising company".
They use machine learning and are actively researching it, but that's true of a lot of companies. Is IBM an AI company?
That's how they've decided to brand themselves, at least (as of ~four months ago): http://adage.com/article/datadriven-marketing/ibm-replaces-s...
I'm not saying they don't do AI, I'm just saying it's not their unique focus that sets them apart from other companies. Search-and-ads sets them apart.
You could certainly identify very large datacenters, Big Data and now machine learning as tools that Google have pioneered. But they don't have an exclusive lock on those.
(Said the guy whose work is related to Android...)
“Oh, we’re really making an AI.” -Larry Page [0]
[0] http://www.wired.com/2014/10/future-of-artificial-intelligen...
AROUND 2002 I attended a small party for Google—before its IPO, when it only focused on search. I struck up a conversation with Larry Page, Google’s brilliant cofounder, who became the company’s CEO in 2011. “Larry, I still don’t get it. There are so many search companies. Web search, for free? Where does that get you?”… But Page’s reply has always stuck with me: “Oh, we’re really making an AI.”
http://www.wired.com/2014/10/future-of-artificial-intelligen...
No, first you are mistaking a bet on a single company for a bet on an industry. The obvious counterexamples being that there are no shortage of wannabe AI companies valued orders of magnitude lower than Apple, that doesn't mean wall street thinks devices beat ai as an industry gold mine.
Google is valued highly today because they print money today. They print money because of search and advertising. They are really good at this and that's why their market cap exceed's Apple's today.
These prices are not remotely rational. There's no serious investor that thinks Apple is going to shut the lights off inside 7 years which is what the current 'market cap' would tell you.
AAPL's P/E ratio as I write this is 10.26. I would strongly make the argument that Apple is thus NOT priced as a growth company.
In fact the first years of the iPhone corresponded with a precipitous plunge in their PE ratio as their revenues rose rapidly, but their share price was dragged kicking and screaming along behind them.
Apple is a product company that makes iOS+Hardware for profit and also seeks rent to access this platform. Google is synonymous with search/advertising which is fancy word for media. For google that media comes first and platform monopoly comes second. That is why Google continues to offer all its services on iOS despite virtually owning Android.
For every product that Apple builds in future its success will be like a toss of a coin (of course biased). Google succeeds no matter which platform succeeds.
Presumably there's some point of diminishing returns on R&D for one company in the billions of dollars range...
Google has great AI people - arguably more than anywhere else - but the bulk of the company is not based on AI. I'm a former Google employee, and up until a few years ago, most of the company was very skeptical of machine learning. Many people still are. I left because my machine learning project was canceled - a manager had an older solution that didn't use machine learning, and he didn't want his pet project to be replaced (even though it had worse performance and was much harder to use), so we were canceled while about fifty lines of code away from launching. Other parts of the company may be different, but in our product area AI was a minus, not a plus.
Google makes money from that crazy amount of information they have available, albeit we must admit that thus far, they haven't been able to turn a real business from most of it: the real profitable way they use that knowledge is to serve us ads.
I still think the market is making a mistake here, in that the real difference between Google's and Apple's investment projects is not in their nature ("moonshot" vs "mundane") but in their PR. Google just talks more about them.
Given that investors think that Google's stream of cash flows is weighted towards the future and Apple's to the present, though, it makes sense that in the current rate environment valuations are as they are. See also Facebook, Amazon, or Netflix.
No need for grand narratives about the relative merits, product and management philosophies, or management personalities.
That said, I disagree with the market and am betting this is a bubble that will pop soon.
That's an interesting take, because for many years I'm pretty sure the largest portion of their income was from advertising revenue. That makes them an ad firm. Yeah they've diversified, but let's be honest, they're in sales straight up first and foremost.
Probably the most disruptive thing if Apple vanished would actually be every tech company suddenly needing to figure out how to use Windows or desktop Linux.
Additionally, think of all of the Google-backed services out there provided by other companies. How many companies use gmail heavily that would lose all kinds of records?
Normal people would lose their e-mail too, and businessmen would lose a lot of their calendars. The actual solution doesn't matter as much as the data already invested in Google's solutions that would be lost if Google just vanished.
The biggest loss to humanity (in my opinion) would be all the translation data they hold privately. But Google really just people and money. If Google the entity disappeared tomorrow all those people who still know how to do the work will just start working on it elsewhere and catch up quickly.
My bad. I was thinking about what would happen if Google disappeared as in, one day their servers and services just aren't available for whatever reason, rather than a staged transition/fade out.
20 years ago, nobody could have pictured living without AOL, they had search, the directory, email, Aim - and connectivity.
15 years ago, few people could have seen a world without Yahoo.
3 months ago Dorsey said Twitter is an essential part of the internet.
There's arguments for backups, etc but in reality if the common business person working at these companies sits down and none of their Google products work, their day will halt.
Edit: to clarify, my source[1] said 5 million orgs with 50 million individual users. Not counting Gmail obviously
User Interface. Dropbox presented a beautifully clean metaphor for how your files get synced. It doesn't matter if you understand what "the cloud" is. My grandmother understands: "put things in folder, folder available elsewhere".
On the other hand we've got Google Drive. Is GMail using Google drive? Is Google Photos using Google Drive? Why don't folders other people have shared to me not appear in my folder? Why isn't 'Shared with Me' the same as "Mine". Is Google Drive the same thing as Google Docs?
Not to mention - Dropbox really pushed the "Desktop App", while Google Drive pushed the "Web First" approach. Add on referral bonuses, Dropbox had some good solid adoption - well, at least among free users.
I use both extensively - Dropbox Pro for everything personal, and Google Drive for everything at work, and I still get confused about the where I saved/shared files to in Google Drive.
What do you mean?
Drive sync works fine like Dropbox, at least on Windows and Mac.
That source is pretty old and cites an even older source (it looks like it may be from Google I/O 2012). Searching for "Google Apps has 50 million users" actually gives articles from last year saying they have 50 million education users alone, so I'd say the number is a pretty extreme lowshot now.
But more importantly, why would you compare Google Apps and iCloud? The closer thing would be Android backup and iCloud, maybe?
"In fact, DuckDuckGo gets its results from over four hundred sources. These include hundreds of vertical sources delivering niche Instant Answers, DuckDuckBot (our crawler) and crowd-sourced sites (like Wikipedia, stored in our answer indexes). We also of course have more traditional links in the search results, which we primarily source from Yahoo!, and in some regions and scenarios, Yandex and Bing.
On the other hand, there were a few Chinese people there, and most of them seemed to have a non-halted life.
I agree that Google vanishing in an instant would have a more tangible short-term effect than Apple doing the same. But I feel you paint them as (nearly) opposite ends of a spectrum. Google provides many centralized services that people have come to depend on, whereas Apple creates physical products that would continue to function even if the company ceased to be. But Apple provides some similar centralized services and its various stores that sell virtual products (apps, music, video).
Either disappearing would be inconvenient for a lot of people—notably those who use centralized services—but my opinion is that in both cases, people would adapt fairly quickly.
All that said, as someone who doesn't use services or products provided by either of these two companies, my instinct is to agree with you that Google feels like it provides greater net value to society than Apple.
What am I missing? I don't know all the ins and outs of Google.
I don't use any Google services, personally.
https://developers.google.com/apis-explorer/
There's a lot of services that depend on Google and changing all that code overnight is unlikely. Apple doesn't have that kind of 3rd party reach.
Google might (unlikely, but remotely possible) get split up by antitrust action, but it won't disappear through it, the same way AT&T didn't.
Wait, what was your point?
No company is as dominant in any of those areas as Google is in its area, or they probably would be. Water and electricity are often public utilities; while there are big food companies, there's no parallel to Google; there are a number of major oil companies, but no one single dominant one -- but those of the many in the top tier that are publicly traded are valued highly (from tens of billions to hundreds of billions), and several are not public so that no public valuation exists.
If Google were abducted by space aliens I'd immediately start an online ad exchange supported by a ubiquitous cookie. If Apple were likewise abducted I'd fork Android and hire a good industrial designer and try to eat Samsung's lunch before they come to their senses.
Neither company makes anything the average user can't live without, and neither company has a monopoly on stuff that excites nerds like us. Both are very very good at some things, sure, but let's not pretend the world really needs them per se.
Ok, cheap shot, but seriously though, without these companies flagship products the world would be a poorer place. Even their competitors products would be significantly poorer. But it's not so much the present that would suffer from the loss of these companies as it is the future.
a) That growth is outpacing internet traffic growth, and has for many years now. Internet traffic CAGR is 23%[1]
b) The shift from desktop to mobile should have the effect of reducing clicks.
c) Since some of the growth is video, I would expect a decrease in click growth related to this as well. Video adds to bandwidth growth pretty directly. Click growth would be less direct.
Sergey and Larry, at least at one time, might have expressed concern:
"The goals of the advertising business model do not always correspond to providing quality search to users"[2]
[1] http://www.cisco.com/c/en/us/solutions/collateral/service-pr...
Of course, one imagines there are many other explanations for growth, too.
http://infolab.stanford.edu/~backrub/google.html
Scroll down to "Appendix A: Advertising and Mixed Motives"
Can you clarify this statement?
So, absent any other variables...if mobile traffic is growing faster than desktop traffic, year over year, click growth would slow.
* Is mobile growth rate so high that it outstrips the reduced expected CTR for desktop users?
* Is mobile use not displacing desktop use, meaning desktop CTR is not falling as fast as anticipated?
* Is mobile use growing in places where there was previously no desktop use? Those users previously had a functional CTR of 0; onboarding them should increase the total clicks even if it reduces the mean CTR.
> So, absent any other variables...if mobile traffic is growing faster than desktop traffic, year over year, click growth would slow.
Sure, assuming that actual total traffic growth is constant; if desktop to mobile transition accelerates overall traffic growth, the increase in mobile traffic can be enough to even at a lower click/traffic rate increase total clicks.
And in the "free apps with ads" of the mobile store the situation is even worse... they'll often try all possible tricks to force you to click on the ads.
Like higher education, the online ads business seems poised to collapse.
In a lot of verticals without ads you would be concentrating most of the sales in the biggest players as it has become very hard to compete in organic search for anyone else.
Not in a long time; Firefox Mobile with Adblock Plus makes the web far more usable on a phone.
The constraints of a mobile device make adblocking even more critical than on desktop systems. If a browser or mobile environment wanted to differentiate itself, it could pre-install and pre-configure an adblocker.
There might be something to dig into here. I'd like to learn more. Can you expand on your previous point?
I recall that when froogle/google-shopping first launched they were just filling in content from search results because they didn't have very much direct engagement by vendors. maybe that's changed now so the search results were just scaled back because not necessary.
I dunno. I'm willing to accept non-nefarious explanations for this. That doesn't mean it isn't on the whole better for google and their paid advertisers. Whether or not that also means its worse for consumers is an open question.
http://googlecommerce.blogspot.com/2012/05/building-better-s...
>We believe that having a commercial relationship with merchants will encourage them to keep their product information fresh and up to date. Higher quality data—whether it’s accurate prices, the latest offers or product availability—should mean better shopping results for users, which in turn should create higher quality traffic for merchants.
That they're getting better at it is why click growth outpaces traffic growth. If they stayed the same at it then click growth would equal traffic growth.
> It seems unlikely it's just targeting, without spilling over into something that's bad for consumers.
It could be one or the other or both. Care to present any evidence or reasoning as to why we should make one conclusion or the other?
They certainly do things today that they did not do 5 years ago. Like specific query results where everything above the fold on desktop is an ad.
I personally do not think that's good for consumers. I suspect, though, that you disagree.
On your other point, they are getting better every year as measured by a YoY comparison...not just plain growth. Double-digit percentage YoY improvement. That's hard to do.
Do you have an non-anecdotal evidence to present? A few advertisement laden queries and a "funny feeling" is rarely a sound investment strategy.
Where GP is wrong is that this is something "they did not do 5 years ago". There were a ton of articles complaining about it in 2008/2009. Unless it is happening on many times more search terms than it was back then, it wouldn't explain the increased click rate at all. The fact that the increase was YoY makes it even more dubious.
YoY click growth percentage has been higher than traffic growth for years and years for Google. I suspect there are a number of reasons for it.
The 100% ads above the fold did get a lot of complaints in 2014, specifically because Google announced it would penalize sites that did that. Quite a few examples of Google doing this were subsequently pointed out, due to the irony.
You are correct in that I don't have an itemized, timestamped list of the things they've done over the years to either push organics down the fold, or expose ads further down the fold.
There are many things they've done that are pretty subtle as well.
- The wikipedia information in the sidebar when you do informational searches used to have links to wikipedia...leading you away from google. They now keep you within Google, and include links to ads: http://i.imgur.com/j3w9LbP.png
- Various widgets push organics down pretty far: http://i.imgur.com/VwYH7mY.png
- There are queries that became 100% above the folds ads within the last 1 or 2 years. Travel is especially aggressive: http://i.imgur.com/89iYCmc.png
- Other widgets that aren't ads per se, but serve to keep you on Google's site as you drill down to pages that will have ads: http://i.imgur.com/v1urMBm.png
> The wikipedia information in the sidebar when you do informational searches used to have links to wikipedia...leading you away from google. They now keep you within Google, and include links to ads http://i.imgur.com/j3w9LbP.png
That still has a link to wikipedia
> Various widgets push organics down pretty far: http://i.imgur.com/VwYH7mY.png
That second box isn't an ad, it's just a called out search result.
> There are queries that became 100% above the folds ads within the last 1 or 2 years. Travel is especially aggressive: http://i.imgur.com/89iYCmc.png
As I said, this has been a thing for more than 5 or 6 years:
http://www.seobook.com/excuse-me-where-did-googles-organic-s... (from 2009)
> Other widgets that aren't ads per se, but serve to keep you on Google's site as you drill down to pages that will have ads: http://i.imgur.com/v1urMBm.png
They aren't ads per se...so would have at most a secondary effect on ad click through rates. It's also hard to argue that this (and the other) examples would be the cause of user harm as you argued above.
> YoY click growth percentage has been higher than traffic growth for years and years for Google.
You're missing my point because that's exactly it. Unless things have changed substantially in the last year, and every year before that, these things wouldn't explain the growth in click rates.
>>That second box isn't an ad, it's just a called out search result.
It also consumes vertical space, pushing the organics down. The relevance is also quite low, being a link to a discontinued product.
>>You're missing my point because that's exactly it.
Not missing your point. I'm not saying the few examples I gave are everything they've done. I think they've been doing things like, for several years, this to sustain the expected growth. Lacking a dividend, the pressure to sustain growth rates is pretty high.
Edit: It's also likely that for other purposes (testing/deployment/whatever), these things (and similar ones I haven't noticed) have dials for where/when/how often they are exposed, either by geography, search terms, demographic, or some other criteria. A bunch of dials would also allow you to smooth growth if you wanted.
You also put "funny feeling" in quotes, as if I'd said that.
In short, the repeated pattern of click growth outpacing traffic growth has me concerned that they are achieving that, in part, with strategies that are bad for the end user. Google says they care about such things. https://www.google.com/about/company/philosophy/
Non-anecdotal evidence is hard to collect, since Google doesn't release statistics like "organic click growth" or "real estate devoted to organic vs ads".
I can certainly post screenshots of queries that are 100% ads above the fold, but lacking the kind of information only Google has, they are, by definition, anecdotal.
We're not shifting from desktop to mobile. Mobile is increasing while desktop stays about the same.
We are shifting from print media, TV, excercise, talking, driving, academic studies and paid labor... To mobile.
Why? The shift from desktop to mobile means people spend more of their time with the opportunity to give clicks.
b) You'd think this. From what I've seen, mobile ads have up to 4x higher CTR with a as much as a 30% lower CVR. This is from multiple high spend accounts I have managed. Fat finger misclicks? Mobile ad "cards" also look almost identical to the organic result cards.
Google used to roll major updates all of the time, now they come within 2 weeks of earnings releases, fairly consistently. Look for them to continue manipulate their black box (quality score) to help inflate CPCs, blend paid ads into organic (a la Baidu), reduce the number of organic results per page, increase the prominence of Shopping campaigns, remove advertiser control (no true exact match, or no exact match at all?) and generally try to squeeze SMBs by reducing organic visibility and subtly suggesting to try AdWords. Google's advertising business is at odds with providing the highest quality search results. They aren't really innovating in search, they're just turning dials to increase their earnings per mille for ads displayed.
* Apple's quarterly revenue: $75.9bil
* Apple's quarterly profit: $18.4bil
* Google's quarterly revenue: $21.3bil
* Google's quarterly profit: $6.8bil
In sheer numbers, Apple's total profit is quite a bit more than Google's so there's that.
Alphabet is only just now entering its Apple-like growth phase, however. It would seem that it could only go up, whereas at some point, Apple will saturate the market and have to start going down. Seem, mind you. This has nothing to do with reality, only with investor psychology.
* Google's quarterly profit margin: 31.9%
all "other bets" are actually losing money, per their data.
And yet the percentage of people who watch the Super Bowl explicitly to see the ads is a non-trivial percentage of the viewing population (obviously anecdata, but I know many people who throw super bowl parties for groups who have no interest in the football, and just want to have a party while watching the moderately amusing, big-budget ads with breaks for football in between).
Except of course, the people actually paying for ads don't hate them... otherwise they wouldn't be paying for them.
https://abc.xyz/investor/news/earnings/2015/Q4_google_earnin...
OP was pointing out investor's criticism of Apple as a one-trick pony due to iPhone - I am pointing out that outside of ads, nothing generates any significant profit at Google either, even more so actually.
but whatever, HN really is the wrong forum for certain topics.
And we only know that the "other bets" (non-Google Alphabet operations) are losing money in aggregate, not that all of them are losing money individually.
(Disclaimer: I work for Google, on open-source software that doesn't have anything to do with ads.)
Does Apple do research in biotech (Alphabet's Calico)? Are they developing drones delivering wireless internet to the world (Google's Skybender)? Do they have an investment arm (Google Ventures)? Did they start an ISP (Google Fiber)?
People see Alphabet's increasing outreach that almost seems ludicrous. Then they compare this with Apple who seems to have been doing iPhones and iPads for 6-10 years, and doesn't seem to be interested in anything else (though this is slowly changing with Apple apparently getting into home automation and self-driving vehicles). It doesn't matter if it is true or not. This is what people perceive. This is what makes them value Google more than Apple. For all we know smartphones and tablets could be disrupted by another technology (the same way PCs were disrupted by phones and tablets) and Apple may not be ready for this next tech disruption, while Google is placing bets in many other markets.
Maybe the only way around that is taking a page out of Alphabet's playbook and making a parent company with "riskier" subsidiaries with their own non-Apple brand?
I don't fully agree with this. Did you have the first version of the iPhone? No copy and paste? WTF.
Antenna signal dropping because "you're holding it wrong!"? WTF.
The only thing you can hold to the apple brand without any criticism is the industrial design of the packaging and look of their products has been consistent and un-matched.
There are plenty of UX issues that have arisen that take away from the polished experience.
Sure I like their products, but im not deluded to think that they are beyond reproach.
How many people do you really think tested the copy and paste functionality on the original iPhone before making their purchasing decision?
I think almost no one.
The way I remember it: the product was still overwhelmingly better than everything else. Missing copy&paste was an "oh well" compared to owning an iPhone in 2007.
If you (correctly) disagree with this assessment, there may be money to be made here. If you agree with it, well, I understand why Apple wouldn't look very appealing.
Meanwhile, since Google was founded, Apple went from the Mac company to the iPod company to the iPhone company. Apple has a proven ability to reinvent itself, with more agility and success than Google or really any other tech company. But this has never been reflected in the market. The perception you mention is based on who the companies are, not what they do.
Apple could announce all of those products tomorrow, and the needle wouldn't move. Apple is doomed because Apple, and Google is the market's darling because Google.
I don't think it's proven that Apple can reinvent itself from within. Which is not to say that they'll never have another hit product.
Apple does, or Steve Jobs did? I don't think Cook is anywhere near Jobs. Meanwhile, Larry Page is not only still alive, but is positioning his company so that he still has creative power and final say.
As much as I love Apple, I'm not as optimistic of their future without Jobs.
Just looking at the "Apple vs. Alphabet Market Capitalization Over Time" chart, this story appears to be as much about Apple falling as it is about Alphabet rising. And in that case I see what Apple is selling today.
iPods are obviously on the way out. iPads have been losing to cheaper tablets for a while now. Macs have been neglected to the point you can't even get one with a Skylake CPU. And now, the last week's news that iPhone sales are in decline. It seems Apple's fall is all about what they are (not) selling today.
* Apple's quarterly revenue: $75.9b * Apple's quarterly profit: $18.4b * Apple's market cap: $538.7b * Apple's P/E ratio: 10.24
* Google's quarterly revenue: $21.3b * Google's quarterly profit: $6.8b * Google's market cap: 517.6b (pre-earnings) * Google's P/E ratio: 35.37 (pre-earnings)
* Facebook's quarterly revenue: $5.84b * Facebook's quarterly profit: $2.56b * Facebook's market cap: $319b * Facebook's P/E ratio: 89.22
Do investors really think Facebook can grow at the pace a 89.22 P/E ratio suggests? They're quickly reaching the point where everyone in the world who can get a Facebook account already has one. They're pushing hard to spread to poorer areas by offering Internet access, but how much marginal revenue/profit can a poor rural farmer add? If Facebook somehow magically increased their numbers tenfold at the same growth rate, which would make their numbers roughly match Apple's, the current P/E ratio would make them a 3.19 trillion dollar company.
People knock Apple for relying too heavily on iPhone revenue, but Google gets a pass because their even more unbalance reliance on search has a "bigger moat"? Their core product, ads, is something most people despise and put up with, not something they seek out. Let's hope that some of their moonshots actually pan out.
Facebook's financials are ~1/3 Google's and so is its P/E. It's a much younger company and seems possible that's it's revenue and profit could approach Google's.
I don't see anything unbelievable or even particularly unusual.
Let's go back in time to a point when Apple's #'s roughly matched Googles.
https://www.apple.com/pr/library/2011/10/18Apple-Reports-Fou...
$28.27b revenue, $6.62 profit.
In 2011, Apple's P/E ratio hovered around 14, with a stock price that fluctuated around $46-$56 throughout the year:
http://financials.morningstar.com/valuation/price-ratio.html... http://www.nasdaq.com/symbol/aapl/historical
A P/E ratio of 14, and the company basically tripled their numbers in ~4 years. Does Google's P/E of 35.7 suggests we can look forward to a rough 10x increase in Google's numbers over the next 4 years?
No, it means that investors didn't believe there was much room for further growth at Apple[1]. They were clearly wrong! (Note that if you think that they are still wrong then there is a good opportunity to make money here!)
(Also, P/E is often related to margin as well as growth potential. Google's better profit margin is a factor here).
[1] http://www.asymco.com/2011/03/24/analysts-apples-growth-next... - the quote here is "The P/E ratio has remained at despondent levels for over two years.... The logical explanation is that pricing reflects a consensus that growth will fall off a cliff... Growth may slow to 18 percent the following year."
I don't think the market is efficient, it has a lot to do with perception. Amazon, for instance, is constantly doing press releases for products, even products that have no future (this is a deliberate strategy near as I can tell from my time when I worked at Amazon)... while Apple does 3 or 4 product introductions a year, and doesn't do a lot of PR stuff (Though Tim Cook is getting interviewed a lot more than Steve Jobs did.)
No idea what the rest of the company is like, but internally, Lab126 employees treat it as a stepping stone until their resume or skillset becomes good enough for Apple, Google, etc.
You've got remember the billions of rural poor will probably be less poor in a decade or two.
iPhone shipments didn't decline, iPhone shipment growth declined.
[0]https://abc.xyz/investor/news/earnings/2015/Q4_google_earnin...
I'm fond of how Google's voting structure is designed to prevent common stockholders from changing the direction of the company (for the same reason Elon Musk won't take SpaceX public until there are ongoing flights to Mars): investors are too concerned with short-term enrichment.
If all of your ventures are making money hand over fist, you're not trying anything hard.
[1] http://www.streetinsider.com/dividend_history.php?q=AAPL
[2] http://www.streetinsider.com/dividend_history.php?q=GOOG
[3] http://www.streetinsider.com/dividend_history.php?q=MSFT
It will be very interesting to see where Alphabet/Google go in the next 10 years.
(Not that the largest 4 companies are tech companies, so that explains part of it...)
[1] http://www.dogsofthedow.com/largest-companies-by-market-cap....
[1] https://www.google.com/finance?ei=BzuxVqG2ItO5euz2pMAO#stock...
Oh my, isn't that damning with faint praise? It's an indictment against Apple: Ping was so bad no one missed it.
>>>On the other hand, that product stance helps [Apple] avoid Google Reader-type situations.
and GP replied:
>>Right, it gets them into more iTunes Ping situations.
followed by:
>But nobody was sad when it got killed, you know? Nobody misses iTunes Ping or iAds or MobileMe
Which is damning Apple with faint praise.
>It would be mighty disingenuous to somehow suggest that level of failure is a statement of the possibility of future success for them considering how big their hits are
That's a non-sequitur. No where in my comment did I extrapolate or attept to divine Apple's future failure/success.
Second, I understand that part of the reason Apple executes well is because it minimizes distractions. But I believe a well-executing company like Apple should be able to take on more projects effectively.
For me, RSS is the way informational web should work.
I mean, Alphabet has military robots.
Companies A and B both want to raise $10B to fund a new investment opportunity. A decides to issue corporate bonds, because it doesn't want to dilute its shareholders. B decides to issue new equity instead, because they feel that their company stock is actually overvalued at the moment. Net result: A's market cap remains the same. B's market cap increased by $10B. No difference in future projected earnings/revenue between the 2 of them, but B now leads A in market cap.
Another scenario: Companies A and B both made $20B in profits over the past year. Company A decides to keep $5B in the bank, and returns the remaining $15B to their shareholders. Company B hoards all $20B, and doesn't do anything with it besides letting it sit in the bank. Company A's market cap drops by $15B because of their decision to issue dividends, and company B's market cap now leads A, just because they decided to sit on their pile of money.
If you want to judge how powerful a company is, look at its revenue, profits or total assets. If you want to judge how successful a company is, look at its investor returns. Market cap isn't really all that meaningful a metric to judge a company by.
In number two they have more control because if an opportunity comes up that costs say 10 billion, Company B can act on that and Company A cannot.
You missed the example completely. Both companies raised $10B, either through debt or equity, and both of them spent/invested the money immediately. Net result: both of them have equal amounts of cash in the bank. But one of them has a market cap $10B higher than the other. Simply because of a tactical choice they made in financing.
There are minor advantages/disadvantages involved in debt vs equity financing. However, these differences are all 2nd order effects. At a macro level, they have remarkably similar financial outcomes. Read up on Modigliani-Miller Theorem if you don't get this concept.
The company with the higher market cap is the one that raised $10bn using equity and not debt. You could say that the company with more equity has more control of their destiny as it has less debt (equity is owned by the company shareholders, debt is owned by third parties), but this is not what you wrote.
Er, there is a difference: A added a bunch of future debt-service expense that B didn't; presumably the expansion that each A & B funded has future expected revenue, but A's future expenses cut into that, while B, with equity financing, didn't add expenses. So, B's actual value should be greater than A's, which the market cap in your scenario reflects.
There are good criticism of market cap as value, but yours isn't one of them.
This is factually false. Ask anyone with a background in finance and they will tell you so.
Scenario 2: A's share price now has a dividend stream implying future returns, which will increase the future value of the shares.
If companies A and B start off with the exact same market cap, and generate the exact same profits every year, and A keeps paying off the profits in the form of dividends, and B refuses to do so and hoards the profits in its bank account, B's market cap will keep rising further and further ahead of A's market cap. Again, this is a basic financial fact, and anyone with a background in finance will tell you so.
Incidentally this is why when you hear anyone quoting the Dow you can tell immediately that they are either clueless or an innumerate moron.
Anybody with any sort of financial literacy uses the S&P 500 as the proxy for the U.S. stock market. Even that has its problems, but it's a lot closer to meaningful than the Dow is.
Apple Marketcap: $539B
Google Marketcap: $537B
Microsoft Marketcap: $435B
Facebook Marketcap: $320B
Total of these big 4: $1.8 Trillion
Who said the bubble is going to burst this year?
Am I missing something? Based on the current market cap numbers on Google Finance, Apple is still higher than Alphabet.
http://www.usatoday.com/story/tech/news/2016/02/01/alphabet-...
Please note:https://www.google.com/finance?q=NASDAQ%3AGOOGL and https://www.google.com/finance?q=NASDAQ%3AGOOG
My first reaction was that the problem was one or the other share class being excluded, and then I checked exactly the sources you cite and checked the numbers and realized that couldn't be the problem if.you used Google Finance reported market caps, because they don't report it that way.
then what? what next?
Google is trading for close to 30 times earnings with this latest quarter.
Google's valuation is obviously sustainable, Microsoft's was not at that time.
What's next? Google is likely to become even more valuable as they have a lot of growth left and investors clearly like to give them a nice multiple.
More details on how Google manipulated search rankings manually to make more money:
From http://www.wsj.com/articles/how-google-skewed-search-results...
>A previously undisclosed report by staffers at the Federal Trade Commission reveals new details about how Google Inc. manipulated search results to favor its own services over rivals’, even when they weren’t most relevant for users.
>In a lengthy investigation, staffers in the FTC’s bureau of competition found evidence that Google boosted its own services for shopping, travel and local businesses by altering its ranking criteria and “scraping” content from other sites. It also deliberately demoted rivals.
>For example, the FTC staff noted that Google presented results from its flight-search tool ahead of other travel sites, even though Google offered fewer flight options. Google’s shopping results were ranked above rival comparison-shopping engines, even though users didn’t click on them at the same rate, the staff found. Many of the ways Google boosted its own results have not been previously disclosed.
>One way Google favored its own results was to change its ranking criteria. Google typically ranks sites based on measures like the number of links that point to a site, or how often users click on the site in search results.
>But Marissa Mayer, who was then a Google vice president, said Google didn’t use click-through rates to determine the ranking for its own specialized-search sites, because they would rank too low, according to the staff report
>Instead, Google would “automatically boost” its own sites for certain specialized searches that otherwise would favor rivals, the FTC found. If a comparison-shopping site was supposed to rank highly, Google Product Search was placed above it. When Yelp was deemed relevant to a user’s search query, Google Local would pop up on top of the results page, the staff wrote.
>Other regulators have found similar practices. European antitrust authorities in 2013 said Google had a different, “specialized” search algorithm for ranking its own content.
>To bolster its own listings, Google sometimes copied, or “scraped,” information from rival sites. According to the FTC report, Google copied Amazon’s rankings of how well products were selling, then used that information to rank its results for product searches. Amazon declined to comment.
>While Google promoted its own results, it sometimes demoted rivals, the FTC staff found. For example, Google compiled a list of comparison-shopping sites and “demoted them from the top 10 web results,” staff wrote. According to the report, Google users in tests didn’t like the changes; only after Google tweaked its search algorithm at least four times, and changed the ranking criteria, did the new results get “slightly positive” feedback, the staff said.
>Google’s efforts paid off, the FTC found. It said Google’s maneuvers reduced Web traffic to rivals, and increased traffic to Google sites.
Within that report, they show how Google was able to tweak the questions until end users stopped liking something they did like with the previous set of questions.
The questions being tweaked were specifically about a type of site that competed with Froogle/Google Shopping that Google wanted demoted.
No. Google's purpose is to extract as much money as possible from advertisers. In other words, they find the most stupid and desperate scum willing to pay the most per whatever (i.e. "10x growth hackers"), then separate them from their wallets.
Some of the companies purchased by "Google" became subsidiaries of Alphabet as well.
There is no such thing as complete AI. AI means a piece of software that does whatever you tell it to do, acting like a human. Simply
Artificial = Human made Intelligence = Brain power or thinking power.
That distinction means less and less as time goes on, anyway.
After learning from a billion human lifetimes, and being coded by 100,000 humans' combined efforts, would it be such a surprise that something greater eventually emerges?
But it can figure out by itself how to do it.
That statement is more-or-less the reality of every google-dependent business in the world at this point - Google is getting better and better at charging advertisers for their product - everybody is going to wind up paying the Google tax and this Quarter's results are evidence that GOOG is moving in the "right" direction to that end.
(1) http://www.seobook.com/virtual-real-estate-virtually-disappe...
China is highly leveraged and their stock market was crashing. Their very high spending is often accepted because of their continuing growth which people have been assuming was a lie for the past 7(?) years. They always say it's 7% growth. With a stock market crash people think that maybe people are waking up that the growth isn't there and China won't be able to sustain much longer. Thats not good for apparently many far reaching reasons.
Oil is crashing for many reasons which you could speculate about but not know for sure. The reality for the US markets is that many smaller oil companies are highly leveraged because oil was so expensive and they were funded with the idea it'd stay above something like $50/barrel. Their methods are more expensive than say Saudi Arabia's methods which allow them to sell much cheaper (although they need revenue which they're offsetting by selling bonds). Here is where I'm lost a bit, but somehow this is tied to the banks again who might be in trouble if they all start failing.
Not to mention people have been calling a correction for almost a year now based on debt levels, global banking issues, global economic issues, high P/E ratios, etc. to happen sometime around now till next year.
The stock market fear indicators on money.cnn.com[0] were at extreme levels for several days in Jan. Plenty of issues with fear and emotions in the markets right now. Some of which are well placed fears.
Apple was going down a lot during those periods of fear well before their earning call which is what has been sealing the deal. I think during that major sell off people thought it was the "top" and were getting out.
"To many that equates to revenue generated, to others profitability"
He happened to add that he would read the article which is why I am guessing as of when I viewed the comment it was heavily downvoted.
The heavy handed downvoting is what I don't like about HN so quick to jump and assume there is no value in the comment. There was. Although I know the definition for sure there are "many" people who would read "most valuable" and not know the true definition. [1]
[1] My point being there is value in the observation of people who aren't clued in to that fact.
Really just share price x shares outstanding - by one valuation method, share price in theory is driven by expected present value of future dividend stream, but even this is also very different from what you said (company's actual cash flow)
EDIT: Italicized additions. Thanks for the feedback.
This is not true. Stock price is marginal price of a share -- the point at which all sellers are askin more than all buyers are accepting, not the price that every share would sell for.