Dancing in the Dark
People think I’m an ad tech guy. I mean, sure, it makes sense. I think about ads and spent time in tech. Yesterday, the DOJ asked a Federal Court to break up Google. So, let’s talk about that.
LinkedIn featured the DOJ/Google story at the top of their news stack. As usual, they made like Bruce Springsteen and pulled a Courtney Cox of their own on their big stage to opine on the news.
Unlike The Boss, Augustus Christensen isn’t an unknown. LinkedIn has queathed unto him a Top Economics Voice badge. Here are Christensen’s opening bullets on the Google story:
Google controls 90% of searches and 65% of web browsing (80% when considering its Blink engine)
Chrome also fuels Google’s ad empire, tracking your searches, sites you visit, and even 'Incognito mode' activity. That data drives its unmatched ad targeting, leaving competitors in the dust.
Like Courtney, Christensen is dancing in the dark.
Google controls lots of search outside platforms we use a lot. You know who handles the search for you when you’re on Facebook? Facebook. On TikTok? TikTok. Amazon? Go ahead, guess. Yep, Amazon. Do you know how much Google gets to power those searches? Nada. How much data Google gets from a search within Amazon? Nada. How much money Google gets from ads shown on TikTok? Nada.
Ok. Now that his first bunky bullet is debunked, let’s tackle the second point. We are sort of lead to believe that Google only gets data when you use Google on Chrome. So, if I use Firefox made by the not-for-profit Mozilla which has a nifty privacy manifesto, Google won’t get my data. That’s why I use Firefox. So Google’s ad empire of evil won’t get data about me. Nope. To sort of quote Gary Cole as Lumbergh in Office Space, “Ooh. Yeah. Um, I’m going to have to go ahead and tell Google your IP address.”
To determine location, Firefox may use your operating system's geolocation features, Wi-Fi networks, cell phone towers, or IP address, and may send this data to Google's geolocation service, which has its own privacy policy.
Let’s ignore why people think the baseless things they do. Let’s also ignore why they say share wrongisms. Let’s also also ignore why people in positions to choose content to feature choose to feature fallacious content. That’s for another time. A time when we come back to talk about what’s going on in “news.” News – he says facetiously. Today is about Google.
There’s a good-sized group with an outsized voice that hates the business of Google.
People like, Nate Hake. I get why a travel blogger like Nate would like the DOJ to take Google down a notch or two. No. Better. I wrote about it. Six months ago. When Google diverted traffic from the travel bloggers and wiped out the travel blogosphere.
Upon hearing the news about Google, Nate took to X. His oversized post made three points. One, “Google has destroyed news and publishers.” Two, “Google has also extracted INCREDIBLE rents — in the form of ever increasing ad costs — from businesses of all sizes.” And, Three, “Google sucks now!”
Here, Nate hits .333. Good enough to get to Cooperstown, but still not a passing grade.
One, news was in decline long before Google started to put ads on sites. News and publishers relied on the intersectionality of advertisers wanting their beholden audiences. Now, audiences have more choices and advertisers can reach them elsewhere. So, no. Google didn’t destroy news or publishers. Media did. We like media more than we like news.
Two, for what it’s worth, I think Google has been a boon to publishers. Yeah. You heard me. Go back to a time before Google. You know what a publisher would need to monetize their content? An ad sales team. You know what today’s smaller publishers don’t have (or have to pay for) these days? An ad sales team. That’s gotta be worth something. To try to find out how much it’s worth, I did some googling.
According to Apple, app developers generated $1.1T from apps in the App Store in 2022. Data from Digital Information World says two-thirds of app revenue comes from ads. So, that’s about $700B in ad revenue. Sure, there are some big players in the App Store that generate big dollars and have their own sales team. But, an awful lot of news sites, publishers, and apps don’t have a sales team. And, they get ad money. This week, an app my friend is building made four bucks in ad revenue and he didn’t lift a finger to sell one. You know what he texted me? “Thanks, Google.”
But the boon doesn’t end there. Google makes the ads they sell for publishers more valuable. Yeah. You heard me. Because, on top of sales, Google brings data to the party. They know I went here and here and here before I landed on your site. Advertisers love that data and pay a premium for ads that have it. The vast majority of smaller news and publishers don’t have that data. They’d be hardpressed to get it. If they did, they wouldn’t have the wherewithal to optimize ad pricing with it. Because – again – they don’t have an ad sales team. Google has created an ecosystem of content creators who can focus on creating content.
You know what Google gets for this? A vig. As in vigorish. In betting parlance, juice. Assuming two ad prices for a square of ad real estate are mostly equal, Google chooses their ads over other people’s ads they put on a publisher’s site. Those bastards — he says facetiously. To me, a little vig seems like an absurdly small price to pay for – a sales team, the data, price maximization, and infrastructure that handles all the Ts and Cs.
Three, Nate is right. Google does suck now. And here is the ironic part.
Yes, Google does suck now. Because Google has lost their intersectionality with audiences. Just like news and publishers. As people move to gated keepers (Meta, TikTok, Amazon, etc., And, hell, Uber and InstaCart), those platforms have their own search and ad systems and they don’t need Google or Google's schlocky ads.
So, Google, like the publishers before them, is flailing. Which is we see crappier search results. We see Reddit as a proxy for expertise. We see snippets that intercept traffic. We see AI inserting itself into results with warnings like, “This may be wrong.”
As people don’t realize Google is actually starting to circle the drain, Let’s circle back to the big news. The DOJ has asked the judge to force Google to sell… wait for it… Chrome. And the anti-Googlers cheer.
The market for browsers is mature. So mature that standalone browsers don’t make money. Mozilla made $593M in revenue last year. Of that, $510M came from payments from… wait for it… Google.
What happens when you toss Chrome in with the also-rans? Edge and Apple will divvy up Chrome’s market share and Chrome will fight for scraps. Most news sites and publishers will still be too small to sell their own ads. They’ll rely on Google or a couple of other Google-like competitors to shunt ads their way. That is, until we all just go to Facebook and TikTok or Amazon.
Chipping Chrome off Google’s block isn’t a competitive fix. No.
Forcing Google to spin-off an unclear-how-it-will-ever-profit browser into a mature market is the height of pointless vendetta for the too many people who have Google derangement syndrome (GDS).
Yeah, I think about ads and spent time in tech. I’m not an ad tech guy. Writing this ought to jerk me right out of the circle.
