
The growing short case on Facebook and Google - oska
https://twitter.com/chamath/status/1281630456807452677
======
bronzeage
The brilliant engineers argument is pretty blind to the way these corporations
might not make the most potential of some people. I know brilliant person
which moved to work for Google because of the pay, and he was spending time
there doing mundane testing. It's pretty known issue that Google easily hires
brilliant people, it becomes so crowded they don't really use their potential.

At least Google is desperately trying to diversify away from ads only.
Facebook doesn't. And Facebook has even bigger problem: their ads are a
distraction, and younger people are getting more and more adapt at
subconsciously ignoring this distraction. I've seen young kids automatically
reaching for the the skip ad button in YouTube. I would argue that in 10 to 20
years, most of humanity will be immune to forced advertisements.

~~~
scarface74
Google has been desperately trying to diversify from advertising for at least
15 years.

~~~
humanlion87
I am really surprised they haven't managed to diversify into one other area
properly. I used to think that with the number of smart people they have, it
was only a matter of time before they had a strong revenue stream from other
than ads. But seems like they are struggling to do that. I guess one issue is
that any new revenue stream looks minuscule when compared to ads revenue and
hence gets killed off before it has the chance to establish and grow.

~~~
scarface74
Let’s compare that to the other big tech companies.

Facebook - yeah it’s just a social media company at its core, but before
mobile really took off, it made money as a platform for games and shortly
after its IPO, everyone thought it was doomed and didn’t get mobile. Between
their strong pivot into mobile ads and their very smart acquisitions. Now FB
has four platforms - FB, Instagram, Messenger, and WhatsApp that all serve
different demographics.

Apple. During the time that Google has existed, Apple has gone from making
most of its money selling computers, to music players and a music store,
phones, and now depending on the quarter, phone sales are less than 50% of
revenue. Heck the watch and AirPods are each considered to be larger
businesses than the iPods were at its peak.

Would Google ever invest in a product that only made up 10% of its revenue?

Amazon: (Disclaimer: I work at Amazon). Went from a retail store selling its
own stuff, to a marketplace, smart speakers, AWS, Amazon Prime Video, and did
a lot of successful acquisitions.

Microsoft - It’s basically removed it’s focus from Windows to Azure, Office in
every imaginable platform, Sql Server even runs on Linux now, and has a
successful gaming division.

~~~
hn_throwaway_99
I don't really see the difference between Facebook and Google. I mean besides
the search engine Google has Android, YouTube, all their ad network stuff
(Doubleclick, AdSense, etc.)

In fact, the only 2 areas I think Google has really underperformed are:

1\. The cloud. I'm a big fan of GCP, and I think in many ways it's easier to
use than AWS, but Google _still_ doesn't understand enterprise support and
what big business customers value. I think a lot of this is just because
Google doesn't have customer support in their DNA, and they had so much custom
tech for so long (most big businesses want to use a relational DB, not
Datastore).

2\. Business applications. I feel like Sheets and Doc should have taken a much
bigger chunk out of MS Office revenue than they have, but again enterprise
support just isn't in their culture and hence G Suite lags.

~~~
scarface74
According to information that came out during the Oracle lawsuit, Android had
only made Google around $22 Billion in profit from inception through 2016
([https://www.reuters.com/article/us-oracle-google-lawsuit-
idU...](https://www.reuters.com/article/us-oracle-google-lawsuit-
idUSKCN0UZ2W9)). Google pays Apple a reported $8 billion a year to be the
default search engine on iOS. Apple makes more on a Google from mobile than
Google makes from Android. In other words, all of the money that Google makes
from Android isn’t enough to pay Apple for it to be the default search engine.

Youtube is still thought you be at best slightly above break even in terms of
profitability.

What happens to the ad network between ad blocking and businesses keep
realizing that you can do better targeting with Facebook?

~~~
hn_throwaway_99
That $22 billion number (which basically sounds like it was just a number made
up from Oracle's lawyers, never confirmed by Google) from the article you
posted is definitely not comparing apples-to-apples.

I can guarantee that being in control of the world's dominant mobile OS, and
all the default Google search engine installs, Google Maps installs, etc. that
entails, is worth _much_ more in terms of mobile ad revenue than any directly-
attributed OS revenue.

~~~
scarface74
That number was not made up by Oracle. That came from Google as part of the
discovery process.

Being in control of the major mobile OS when the most affluent customers are
on iOS is a Pyrrhic victory. There is a reason that Google is willing to pay
Apple more than $8 billion dollars when it only has a 13% global marketshare.
Advertisers care much more about reaching people who are willing to pay $650
for a device than people who are paying less than $250.

On top of that Google has a rev share with OEMs for ads.

Google is non existent in China.

------
mindfulplay
This person seems to generate a lot of noise disproportional to his
talent/skills. He has a pinned tweet that is absurdly positioning himself to
the likes of Berkshire Hathaway: sort of a megalomaniac complex. Reading his
Annual Letter (which directly quotes/'competes' with Warren buffett) gives me
a cringe feeling.

He got out of FB claiming the company is shit ( no arguments). But his new
ventures and Twitter commentary is at odds with his position: Social Capital
seems like a farcical take compared with the likes of Gates, Buffett who have
actually proven with their actions not empty egocentric Twitter threads.

Classic VC turned Savior mentality: except underneath it all these people are
regular 'get lucky' hedge fund greedy hacks.

~~~
logicslave
He recently posted a video on youtube where he was pumping Bitcoin. In 2020,
no serious investor thinks bitcoin is going to sky rocket

~~~
thedudeabides5
Well, pretty sure Novagratz is a still a big bull, and he’s more “serious”
than anyone replying to this thread (including me!).

------
dannyw
I don't see much merit in this thesis. Google and Facebook are the gatekeepers
to attention. Taxes, regulation and antitrust action may reduce their gross
margins, but where else is the value going to go?

As TikTok and other companies become more popular, you'll see the US
government more protective of FB and Google. An abusive duopoly with Western
alignment is better than a social media monopoly from China. The continued
rise of TikTok actually simultaneously reduces government's will to act on big
US tech.

Neither FB or Google are in China; so the Chinese government's ability to hurt
those companies are limited.

~~~
appleflaxen
How is that analysis different than myspace 15 years ago (or whenever)?

social media platforms are extremely durable until the next hot new thing
comes along.

There is a new generation you need to engage every ~5 years or so, and they
see facebook as the platform to talk with grandma.

FB made some genius acquisitions with instagram and whatsapp, but eventually
they are going to fail to acquire the challenger, and when that happens the
fall can be swift.

~~~
9nGQluzmnq3M
Google is not a social media platform, and they aren't even trying to be one
anymore now that G+ has been scrapped.

Sure, they could be displaced by a better search engine, but that's a whole
different kettle of fish.

~~~
hn_throwaway_99
> Sure, they could be displaced by a better search engine, but that's a whole
> different kettle of fish.

I don't see how that's remotely possible. The capital costs are just too high.
Currently there is only one other formidable English language search engine
(Bing - all the other search sites like DuckDuckGo use Bing), and it's been a
distant also-ran for over a decade now.

If anyone has _any_ plausible scenario where Google looses their search
supremacy, would love to hear it.

~~~
richk449
It is hard to imagine how google loses raw search superiority, but the more
likely scenario is that they lose their dominance somehow:

(1) social networks provide better basis on which to give answers/results to
users, so FB “replaces” google.

(2) advances in deep learning make googles secret sauce not so critical, and
lots of competitors provide good enough search results (and VC funding makes
the build out of the massive data enters possible (I.e. the u er/Lyft
scenario)

Side question: is google’s dominance really built on search these days? If
they shut down the search engine, would it have a significant effect on their
bottom line?

~~~
hn_throwaway_99
> Side question: is google’s dominance really built on search these days? If
> they shut down the search engine, would it have a significant effect on
> their bottom line?

Is that a serious question?

------
vmception
Weak argument as this is America's Saudi Aramco. Wait Saudi Aramco is
America's Saudi Aramco, this analogy has limits.

My point is that digital data is a commodity that has been found and being
excavated at high margins and will be protected by their countries, just
because some other countries are trying to do the same thing.

So while California and the European Union are making it more expensive to do
this, DC and Beijing are only protecting the golden goose.

Legislative changes and protections that raise the cost around monetizing user
data can debilitate them heavily. Just watch for those. But on autopilot these
companies will be fine as they convert quarterly revenue into a big cash
warchest instead of reinvestment fuel.

~~~
adventured
> Weak argument as this is America's Saudi Aramco.

Microsoft (or Apple) is America's Saudi Aramco, if we're speaking of important
& highly profitable corporations.

They're vastly more profitable than Google or Facebook, and far more
sustainable (in terms of market position, regulation, anti-trust, etc). In
fact, Microsoft ($52b) will soon have as much operating income as Google
($35b) and Facebook ($26b) combined, and will soon surpass Apple ($65b; which
has barely grown its operating income in four years and has weak prospects for
income growth).

To make matters worse, Google is stagnating and losing their hold on the ad
market (while being pursued for anti-trust). Google also suddenly lost their
leadership, Larry & Sergey cast Alphabet adrift after creating that mess, said
good luck and adieu (to run & hide from the legal tsunami). Microsoft by
contrast is booming, has a solid regulatory context, and has one of the
world's best CEOs at the helm.

Here is Microsoft's income growth: $22b -> $35b -> $43b -> $52b

If I were a nation, I'd rather own Microsoft than Aramco, much less Google &
Facebook. Easy choice.

Aramco has a collapsed future and they're trapped in low oil price hell
indefinitely. Microsoft is probably going to $75-$80 billion per year in
operating income in five years, on their way to $100 billion this decade. As
far as individual corporate entities goes, nothing like the Microsoft profit
machine has ever existed before (Apple comes the closest, and they're stuck in
a zero growth smartphone market). Apple's cost of revenue is 61.8% of sales;
Microsoft's cost of revenue is 31.7% of sales, their operating income margin
is a wild 37.4% (given their scale it's something beyond extraordinary).

~~~
lioeters
Perhaps the analogy can be drawn that FAA(M)NG are America's new oil industry,
as essential to the national economy and security?

From a quick search, I found the "Forbes Global 2000" list of the most
profitable business sectors (in 2019). From the top, in trillions:

\- Oil and gas - 4.797

\- Technology and communication - 4.726

\- Banking - 4.424

\- Retailing - 3.814

\- Automotive - 2.847

Source: [https://www.nsenergybusiness.com/news/oil-gas-revenue-
forbes...](https://www.nsenergybusiness.com/news/oil-gas-revenue-forbes-2019/)

Seeing how Microsoft accounts for only a portion of the second most profitable
sector, I'd imagine the whole lot of top tech companies in the U.S. would be
considered essential for national interest.

\---

Then I found "The World's 10 Most Profitable Companies" (2019).

\- Saudi Aramco - $110.9 billion

\- Apple - $59.5 billion

\- Industrial & Commercial Bank of China - $45 billion

\- Samsung Electronics - $39.8 billion

\- China Construction Bank - $38.4 billion

\- JPMorgan Chase & Co. - $32.4 billion

\- Alphabet - $30.7 billion

\- Agricultural Bank of China - $30.6 billion

\- Bank of America Corp. - $28.1 billion

\- Bank of China - $27.2 billion

From their summary:

> Saudi Aramco is by far the world's most profitable company.

> Most of the global leaders in profits are based outside the U.S.

> State-owned Chinese banks are among the profit leaders

..So I guess Saudi Aramco is still America's Saudi Aramco.

~~~
vmception
Check out Saudi Aramco’s gross income, and look at the price they actually
sell oil at.

Its insane what is possible in the commodities market.

And to think there are so many players that aren't publicly traded, and it has
been this way for a century? There are some extremely wealthy people out there
we have no clue about.

------
tzury
If the tweet was: Here is why I _shorted_ Facebook and Google at the amount of
$$$ that was a story worth considering reading.

A series of tweets telling me why _I_ should short... Yeh, right! Calling my
banker on a Sunday.

~~~
shmageggy
Exactly. As if investors hadn't already thought about things like regulation
etc and they aren't already reflected in the market value

------
Ozzie_osman
IC at BigTechCo: "There's another team building the exact same product as my
team. It's frustrating and wasteful."

Director at BigTechCo, when asked why that happens: "That's actually by
design. We want internal competition. We can afford to spend 2 or 3x on
building that product. We can't afford to have a competitor build it better."

~~~
sshumaker
In practice, “internal competition” isn’t competing in the way the free market
does. The most politically connected product tends to win, not the one that
has the best odds of success.

And if you let these all go to market, you risk eroding user trust (think
Google and messaging products). Confusing your users is not a good thing.

~~~
86J8oyZv
Do you mean "most politically connected" or "best marketed at the right time?"
Outside of products being used by state agencies, I don't think political
connections have much bearing...

~~~
Ozzie_osman
I think he means politically connected internally. Ie the VP or Director of
your group convinces the higher-ups that theyve won the internal competition
even if they don't have the better product. This definitely happens.

------
jefftk
I'm not seeing anywhere in the linked thread where they describe why they
don't think these arguments are already priced in? If these companies had no
risks, their stock of course would be much higher.

(Disclosure: I work for Google speaking only for myself)

~~~
marketgod
This is a hit piece against GOOGL to get the price under resistance for
Mondays open. The idea is to try to stop the GOOGL break out this week.

------
paulsutter
A better recent tweet by Chamath[1]:

> BigTech has a huge yearly R&D budget. In fact, with two years’ worth of R&D,
> BigTech could recreate the Apollo program. But they haven’t. Why?
> Incumbency’s biggest drawbacks are lack of creativity, sloth, internecine
> politics and waste.

[1]
[https://twitter.com/chamath/status/1281630459286286336](https://twitter.com/chamath/status/1281630459286286336)

~~~
izacus
Neither did Shell, Apple, Walmart or any of the other of hundreds of ultra-
rich corporations. Which tells more about the Apollo program (and it's rather
rapid cancellation before even finishing all the flights) than about those
corporations.

How can we trust economic judgement from someone who uses a project which was
only approved due to political grandstanding, as an example of successful
corporate direction?

If anything, FB and GOOG will be strengthened by US economic protectionism and
assault on China. They just have to continue navigating the political
mindefield outside the US markets.

~~~
nojito
Apple making the iPhone changed an entire decade.

~~~
adfigninio
I still don't understand why people care so much about the iPhone. It's a bad
computer that fits in your pocket. We've had PDAs for going on thirty years.
Sure, it was a good PDA, but I have no idea how anyone can consider it
revolutionary.

"Consumer" tech hasn't improved at all in my estimation since about 2002. The
hardware has gotten better and the software has gotten more bloated, but a
modern gadget can do roughly zero things that a gadget from 2002 couldn't.

~~~
aglionby
2002 was the year of the Nokia 7650, their first phone with a camera - 0.3MP
which it displayed on its 176x208 screen. It cost €740 in 2020 money (€550
back then).

In 2020 you can buy a second generation iPhone SE for €489, with a 1334x750
screen (at >6x pixel density) and 12MP camera.

These are not roughly equivalent pieces of hardware, and the software they run
differs immensely. MMS is not Instagram.

------
leoh
Google isn't fundamentally in the entertainment business. They are in the
search/ad business, which breaks the fundamental assumption here ("users need
to be entertained or they leave"). Moreover, Facebook has shown an ability to
capture attention, in spite of an incumbent TikTok; their decision to acquire
Instagram when they did was canny and their ability to continue to foster it
was skillful.

With respect to the "Apollo Program" metaphor — Google's X projects and other
projects (like Waymo) are formidable, and may lead to serious breakthroughs
and changes to society. The narrative that FB/Google are inefficient is
questionable and is offered without coherent context; it would be helpful to
compare them, say, to Genentech, Merck, Lockheed Martin and other large
companies with serious R&D budgets, which have survived and are doing okay,
despite not being as nimble as, say, the occasional dark horse like SpaceX
(with respect to Lockheed Martin).

Yes, Google and Facebook may not loom like the giants they were. But there is
a good chance they will continue to thrive. Another example: Microsoft is
doing fine, despite not being the giant it was in the 90s.

------
marketgod
These short sellers are timing this leak because of the break out on GOOGL.
GOOGL is breaking out and it's going toward $1,800. This is where the market
has to stop it, if it can't it's going to pop. TSLA/AMZN/NFLX just broke out
this week and GOOGL is following through. If you are short right now, you are
hurting and need this trade to fail. These sorts of reports always come out
and break outs, even though I don't watch the news frequently, these stories
pop-up across message boards when I get into breakout trades.

Disclaimer: I am in GOOGL 2020-Jul-17 1580 Calls @ 8.20 and it is currently at
$12.00 and I am looking for $1620 targets.

------
quelsolaar
I wouldn’t short Google or Facebook, but out of the big tech companies (FB,
Google, MS, Apple, Amazon, And Netflix) I would bet on the others. The
exception being Netflix, given their very high debt they could get in a
serious squeeze if intrests go up. All other companies are essentially debt
free.

~~~
moksly
I’d never short anything, but I really don’t see the value of google. I used
to love their services, but now the only one I use is maps, and that’s not
because of privacy concerns, it’s because their competition is just better.

I used to have gsuite for my personal e-mail, file/photo and office stuff.
I’ve been using the cheapest office365 business plan for a year and a couple
of months now. Not because I was concerned about privacy, but because google
made it harder for me to use their services as a private consumer on a
business plan. On the flip side of this is my job in the public sector of
Europe, where we’re using more and more cloud solutions, but don’t use google
cloud or gsuite because of their poor business-to-business support and failure
to work with EU legislation.

Privately google search used to be the best in my native language, but these
days I find myself doing !g less and less on DuckDuckGo, again not really
because of privacy concerns but because the whole first page of my google
search results are commercials for places that I’m not going to use. Just try
searching for something baby related on google and see what happens. We have
some very good public health sites with tons of info, run by our government,
first results on DDG but burrowed deep below a heap of advertisements on
google. Professionally we’re moving to the new Edge rather than Chrome because
it’s easier for IT operations and support to control it, even though the
google enterprise tools aren’t bad, they are just not as good.

All of this is completely anecdotal of course, but I’m always worried about
investments into companies that don’t make stuff I’d personally or
professionally want to use. Then again, most of my investments like in green
energy companies, so I’m probably just too conservative for tech investments
and you likely shouldn’t take my advice.

~~~
izacus
Your personal perception of a company's products isn't really correlated in
market stock value of a company. Just because you personally switched products
it doesn't mean that the companies are struggling or having issues - just
think of all the thousands of articles announcing Apples, Microsofts, IBMs or
whoever elses doom because they managed to muck up product strategy for a few
years.

Remember how there was a time where everyone here said that Microsoft's
products are complete trash, Windows 8 is a failure, the company is doomed to
failure and no self-respecting person would ever use their products and would
never invest in it? And the stock kept growing and growing and growing.

Investing based on your personal product usage is about as sensible as using
Las Vegas casinos as a way of increasing your wealth.

~~~
moksly
I’m well aware of this, but I’m not comfortable investing into something I
can’t personally see a reason to buy. I doubt google is going anyways, but I
would never invest with them. This strategy has never failed me, though I
obviously may have missed out on opportunities.

I will note that there is a difference between what everyone says, and what
everyone does. Microsoft may have taken a lot of heat over the years, but it’s
remained one of the best tech partners to non-tech enterprise corporations and
organisations for decades.

------
jliptzin
Even if you agree with him in principal I don’t see how anyone could stomach
shorting a growth stock for 5+ years like he suggests. How much would you lose
just on interest paid to borrow the shares for that long? So maybe he’s
talking about buying puts? Can you buy puts 5 years out? The premium would be
insane. Is there another instrument I’m missing to make this trade?

------
scarface74
I keep seeing the argument is full of talented and “smart people” (tm) as a
competitive advantage. While I don’t doubt that the actual engineers are some
of the smartest people in the world, their leadership and product managers are
so rudderless, it seems like it’s wasted.

Despite years of trying, they are still a one trick pony - advertising - where
90% of their revenue comes from.

~~~
umanwizard
I was at FB for four years. Some of FB’s engineers are incredibly intelligent,
but most are just normal.

~~~
TulliusCicero
Same thing at Google. I think the biggest difference between the
prestigious/high-paying tech companies and programmers at more conventional
companies, is that at the former you find basically no dead weight engineers.
At least, I never saw any at Amazon or Google.

~~~
scarface74
Isn’t a engineer “dead weight” if they work on a project that ends of getting
canned a year later? I would say that any engineer that worked on one of the
many messaging apps that Google has created was dead weight.

~~~
oh_sigh
That's more of a failure of leadership. If the engineers are in the galley
rowing, they can all be great contributors to the forward motion of the boat,
but it may still crash into rocks nonetheless. You can redeploy "deadweight"
engineers who are good engineers but the project fails for
business/political/leadership reasons. You can't redeploy actual deadweight
engineers who don't contribute anything on an individual basis(or rather, you
can, but you wouldn't want to).

~~~
scarface74
You can, but how has that worked out for Google? They have been redeploying
engineers from one failed non ad product to another for over 15 years.

~~~
TulliusCicero
Judging by Google's continued growth, I'd say pretty damn well?

~~~
scarface74
Not as far as diversification it hasn’t.

------
bob1029
I disagree with shorting stock, but I agree with some of the sentiment behind
that choice.

I am not sure the best way to articulate the specific names for these, but I
generally categorize our tech companies into 2 buckets when viewing this
through the lens of an investor:

Bucket A: Facebook, Google, Twitter, Snap, Pinterest, Netflix, et. al.

Bucket B: Microsoft, Amazon, Apple, Intel, AMD, et. al.

Bucket A seems to be the riskiest to me because there are virtually no
barriers to entry on the markets and products these companies target. Sure,
Google & Facebook have some hardware/cloud hosting angles, but the companies
in Bucket B make those revenue streams pale in comparison. E.g. AWS/Azure vs
GCP, Microsoft Surface vs Oculus Rift, Macbook vs Pixelbook, iPhone vs
anything, etc.

Bucket B contains all of the companies that I would feel comfortable buying
and holding long. These companies have a deep pool of products, IP and larger
barriers to entry for their markets. For instance, if someone came along and
made some change to the world where Microsoft no longer makes any money off of
advertising, they would be able to proceed without much difficulty. If someone
chopped Google's ad revenue stream, I think there would be a serious problem
for the company.

------
Lasher
Everything written in this article would have made perfect sense 5 years ago
too, now look at the stock charts over the last 5 years. I don't disagree with
it, possibly even want it to be right, but I sure would have hated to hold a
short on either of those stocks over the last 5 years.

------
mathgenius
If someone really wanted to do this, you would short GOOG or FB and long the
nasdaq (QQQ) by a proportional amount. This position insulates you against the
market bulls, which could go on pumping the market for several more years.
It's a bet that GOOG & FB will underperform the tech sector more widely.

Maintaining a short position also costs money, so this is a further
complication. As a retail investor, I don't know if there are any instruments
for shorting these big tech co's. I'm guessing that you can do it on
interactive brokers (for example) if you post enough margin. DYOR.

~~~
oh_sigh
How would you do it if you were working for Microsoft and weren't legally
allowed to transact with Microsoft stock because of a trading blackout period?

~~~
mathgenius
Yikes.. If buying QQQ is counted as "transacting with microsoft stock" then
you could try finding a basket that didnt have microsoft. I'm not an expert in
this stuff, but for example the Russell 2000 fits. It would be better if it
was a tech/internet related basket.

EDIT: here's a better idea. Just buy apple and/or half a dozen other big tech
stocks that you like!

~~~
esrauch
Generally the "quiet period" while employed at big tech cos doesn't include
index/mutual funds even though they technically include the company.

------
rmrfstar
Here's a reasonable, though unsystematic take on what happens to monopoly
shares after a break up [1].

A systematic analysis would probably get published in a prestige finance
journal, whatever it concluded.

[1] [https://mattstoller.substack.com/p/break-ups-and-stock-
price...](https://mattstoller.substack.com/p/break-ups-and-stock-prices)

------
nojito
Google is headed for choppy waters starting in 2021, however shorting now
would be a terrible idea.

They still have some growth left as they optimize their workforce for WFH and
cut costs elsewhere. Worst case they can still push their ad delivery in more
“annoying” ways, but that’s more of a break glass in case of emergency
situation.

It’s also unclear how damaging their antitrust result will be.

------
roenxi
Say, from India's perspective it is possible that they will be at war with the
United States at some point in the next 50 years. If that happens then the US
will have a detailed social graph of the country through Facebook and who-
knows-what information about their manufacturing, commercial and geospatial
situation through Google.

Geopolitically, there is an argument there for, say, Europe or Asian countries
to ban Google/Facebook/whatever and choke off the revenue leaving their
country. That is a pretty decent short-term nationalist argue to try and avoid
large amounts of money leaving the country for foreign climes. The Chinese
wall-off-the-internet strategy hasn't obviously failed them, and it gave them
a bunch of serious technology contenders.

It isn't a problem for this week, but that perspective raises longer-term
questions about what the risks are to Google's and Facebook's business models
of government intervention.

~~~
oblio
It makes no sense for India to be at war with the US, I'd say. Not that these
things are always logical.

From a strategic point of view, India should be allied with the US as India is
quite naturally at odds with China.

~~~
balladeer
I am sure OP meant it hypothetically.

Besides geopolitics might shift quite fast. If, and that's a gigantic if,
China lets go of is habit of looking at a map and declaring "yeah, that region
is ours!", or Pakistan gets rid of its shadow deep state (that'd be ISI +
military) India could have way better cooperation with them than it had ever
had with USA, or will ever have. This again, obviously, is hypothetical.

~~~
perl4ever
Historically, wasn't there a period where the US was considerably more
friendly with Pakistan than India? I think it was when India was more Soviet-
sympathizing.

I remember reading about an incident when the US sold a lot of fighter jets to
Pakistan, and decided after collecting payment not to deliver. Probably that
was about when the relationship went sour?

------
ramoz
That's an optimistic short. Especially for companies like Google who are prime
to take over the internet of corporate function.

Imagine how those premises apply in covid-remote-enterprise world and any
existing major player built on the foundations of on-prem corporate function
and real estate ... especially the inner-city & inner-building support
businesses (food/beverage, commute, telecom, hotel).

Im more inclined to think large tech companies are prone to further growth
here.

------
aaron695
Can someone explain how you would actually do this?

Assume their thesis is true. How would you short it? What's some real figures
and returns if true.

I'm not sure I even understand the bet/prediction.

Is the bet it will drop in the next 5 years and drop lower than now and then
stay lower until the 5 year mark, then we profit? How much do we profit to
investment?

Saying there will be a substantial fall sometime in the next 5 years seems to
me still hard to profit from, but I don't know the numbers.

~~~
chillacy
Hmm, I assumed the author implied literally short selling the underlying stock
but I think that's a bad idea: potentially unlimited losses. The author may
even be correct but the market can be particularly irrational around growth
stocks...

Another method might be to sell calls or call spreads, date it out a few years
and hope the underlying doesn't rise too much.

------
onetimemanytime
I thought Google was a good short in 2010 as they filled the page up with ads.
But look what happened to the stock price since then.

The "Market Can Remain Irrational Longer Than You Can Remain Solvent" comes to
mind, no doubt one day they'll crash but until then...

~~~
drunkpotato
That was my immediate first thought. Sure, they'll crash some day, and who
knows how many ups and downs there will be before then? Trying to time the
market to take advantage of that is not going to be easy.

------
dreamcompiler
Offtopic: Why is TikTok growing faster than IG or Youtube? What features make
it more compelling for users? I don't use TikTok and don't plan to, but I'm
curious about the TikTok phenomenon.

~~~
Miner49er
It's more memetic than either of those, by design. You can easily incorporate
other videos, sounds, and ideas (memes) into your own videos.

The videos are also very short compared to YouTube and to have a new video
play is as simple as a swipe down.

I don't have much experience with Instagram, but Instagram doesn't seem to
have the memetic component. It's more just traditional social media. Users
don't really build off of other users content as much.

------
soared
You can’t possibly evaluate stock prices by blatantly ignoring every single
financial metric, knowing nothing about the product, and posting your analysis
on Twitter.

------
artsyca
\-- Incumbency’s biggest drawbacks are lack of creativity, sloth, internecine
politics and waste.

And an utter disregard for traditional business mores

------
setzeus
The fundamentals in the thesis/tweet thread mainly (sorta) hold up.

Fighting the fed in this environment though? Not a chance.

------
knorker
I wish people would stop using twitter for article/blog sized content.

Maybe I'm holding it wrong, but I find retweets of threads extremely an
extremely unreliable way to find my way back to the actual thread.

This particular link works, but it's still very a very annoying form to read
it.

That said: Shorting these companies, that OP admits have huge R&D budgets, is
a bet that they _won 't_ invent something new. Or that they _will_ be taken
over by something that does.

With a 10 digit R&D budget you can afford to be second mover.

In the last 20 years, has GOOG invented? Wow, yes. Question is do you think
the past 2 years (or whatever) is a better predictor of next 5 years than the
last 20 years was?

I dunno. And saying you do (especially when shorting) is saying you know
better than the market, which is not always wrong, but it does have some
arrogance in it.

~~~
gavribirnbaum
I think the major question is not whether they will invent something else.
they are reliant on Ads and will remain so as far as I can tell.

the real question is: is the ad model overvalued?

I think so for the following reasons: ad blockers, users getting desensitized
to ads, diminishing returns of the amount of data one needs on a user to sell.

I think OP has the right conclusion but the wrong reasons.

what do you think?

~~~
knorker
I think the ads market risk is offset by the market potential of self-driving,
cloud, AI (deepmind), and maybe other things, long term.

Shorting GOOG is betting not only that ads will decrease long term, but also
that the other fields _won 't_ increase.

Yes, I realize even cloud has a long way to go, revenue wise, compared to ads.
But on the other hands ads has a long way to fall. And public cloud (including
Google's cloud) is still growing exponentially.

In other words: I have no reason to think I know better than the invisible
hand of the market.

That's GOOG. FB I've not looked into as much.

~~~
perl4ever
>I have no reason to think I know better than the invisible hand of the
market.

I don't understand how anyone can talk any more about the market having
mystical powers after what we've seen in the past few months.

If the market was priced correctly in late February, and now that it's
regained almost all it lost, how could it be priced correctly in late March at
1/3 lower? And if you swallow that, how is it that it went lower in a
basically linear fashion over a month rather than instantly as whatever
information was absorbed got out?

This really is bugging me as an "emperor's new clothes" situation, you can
argue any which way on _which_ is the right price, but how can you believe for
an instant that they are _all_ correct, reflecting all available information
at all times?

