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