
Google's $19B Black Box Is Worrying Investors - rbanffy
https://www.bloomberg.com/news/articles/2017-10-09/google-s-19-billion-black-box-is-worrying-investors
======
havetocharge
Given Google's stock price floating close to all time high, this worrying
might be a pretty narrowly impacting activity.

------
EGreg
Perhaps if the box had been blue or green, it would not have been as worrying.
A black box conjures up images of darkness etc.

But probably when this was brought up during the project at Google it was
dismissed as "bikeshedding". Or in this case, perhaps, "boxshedding".

~~~
JumpCrisscross
> _if the box had been blue or green, it would not have been as worrying_

Did you read the article? The “black box” isn’t a physical object. It’s
figurative [1].

[1]
[https://en.m.wikipedia.org/wiki/Black_box_(disambiguation)](https://en.m.wikipedia.org/wiki/Black_box_\(disambiguation\))

------
josefresco
Why is it a "black box"? Is it because Google doesn't break down the number or
elaborate on the details of each contract?

Also, an increase in share price (Yandex) doesn't necessarily correlate to a
change in actual usage.

~~~
gumby
It's material enough on earnings to need reporting but the precise numbers are
of competitive value.

Probably if more than 2/3 of it were paid to one company the CFO might
consider _that_ material and then we'd learn.

------
leggomylibro
Everyone is paying more to acquire users these days. I haven't read the book
that coins them as 'attention merchants,' but it seems like an accurate
description, and their product is getting to be scarce and expensive.

I've got things to do, and when I waste time I'd like it to be wasted in a way
that relaxes or recharges me or the people I care about.

Not that there isn't such a thing as good advertising, but the trick seems to
be targeting. If you can't target people who actually want what you're
offering to them, it's a waste of everyone's time and people will start tuning
you out. Worse, you really have to hit them _when_ they want what you're
selling.

Like, when I go to Digikey and see an ad for some company's 48V/166F
supercapacitor bank, or a new line of 16-bit ADC chips? Yeah, that sort of
thing is a reasonable bet. When I go to a news story and see an ad for a VR
headset? Not...quite.

~~~
Terr_
A big problem is that once being a bulk attention merchant isn't appealing,
they'll double-down on finding ways to creepily invade your privacy, profile
you, and resell that profile to companies you'd rather _didn 't_ have your
information.

~~~
visarga
We need a browser that is more private than what we have today. Something to
hide the IP and separate online identities on various sites, and monitor the
data being sent out not to contain your personal information, even if it was
sent by your own mistake (like, referencing your secret reddit account on your
public name email).

Privacy has similarities to hygiene. We have learned, through a lot of
suffering, the importance of hygiene in daily life, we need to learn a new
kind of hygiene now, but people can't do that unaided.

~~~
dredmorbius
I'd go a step further and state unequivocably that privacy _is_ hygiene.

Hygiene is about _preserving the health of a system_ , and violating
principles of privacy _endanger the health of social intercourse_.

This is part of a large set of dynamics associated with technology in that
there are systemic side-effects of any number of technologies which affect
_overall systemic health_. The emergence of and/or management of these is
itself a major mode of technological mechanisms.

[http://www.etymonline.com/word/hygiene](http://www.etymonline.com/word/hygiene)

------
Animats
$19bn. We all knew about Google paying Apple to stay on the iPhone. That's
$3bn.[1] There's the old deal with Mozilla to be the default search engine in
Firefox, but that's over. But there must be a lot of other deals to add up to
$19 billion.

That Google has to pay to be on the front of Android handsets is surprising.
Isn't that enforced by the bundling agreement Google requires to use the
Google-proprietary parts of Android? That's how Microsoft forces their stuff
onto PCs; they don't pay PC vendors.

The non-Google Android phone business is pretty dead outside China.

[1] [https://www.cnbc.com/2017/08/14/google-paying-
apple-3-billio...](https://www.cnbc.com/2017/08/14/google-paying-
apple-3-billion-to-remain-default-search--bernstein.html)

~~~
carrier_lost
I wonder how much Google pays PC manufacturers to have Chrome as the default
browser. A few years ago I purchased a Lenovo laptop that had Chrome pre-
installed as the default. The desktop shortcut label was simply "Internet
Browser".

~~~
cududa
Back in 2012 when they were still pushing chrome market share it was $.50-$5
depending on product and manufacturer

------
sunstone
Google may have expected the Android ecosystem to resemble the DOS/Windows
ecosystem of the past ie many diverse companies competing for market share.

It hasn't turned out that way. A few major players have come to dominate the
cell phone market and the also rans have mostly exited the market.

The major's market share now gives them the clout to demand higher fees from
Google. And all of this has led Google to now compete seriously with it's
Pixel line of phones against Samsung and Apple. Now the big boys will battle
it out.

~~~
ariwilson
This is not true at all. A huge number of OEMs have come out of China and (to
a much lesser extent) the US over the last few years and taken substantial
market share. Huawei, Xiaomi, etc.

~~~
cududa
Less than ten percent market share - whoopee, who cares?

~~~
morsch
Xiaomi sold half as many smartphones in 2Q17 as Apple. Huawei sold about as
much as Apple. Apart from Samsung, the Android brands that are well known in
western markets -- HTC, Motorola. Google, LG, Sony -- aren't relevant
globally.

[https://www.idc.com/getdoc.jsp?containerId=prUS42935817](https://www.idc.com/getdoc.jsp?containerId=prUS42935817)

------
shubhamjain
I wonder how worse it'll play out if Google pulled the plug and stopped paying
these fees. These companies would be left with nothing but inferior
alternatives (Bing, Yahoo, maybe DDG?). Mozilla tried this by cutting out
Google for its default search engine and I don't think it made any meaningful
difference.

I think, in a certain sense, Google is a risk-averse company. It simply won't
gamble with its user base, no matter how high the costs are. Considering the
cash arsenal the company has, I don't think it's a bad use of capital for
Google.

~~~
bitmapbrother
>Mozilla tried this by cutting out Google for its default search engine

Did Mozilla really cut out Google or did Google not want to renew the deal
after it expired?

~~~
kibwen
Word on the street is that Meyer was desperate enough for market share that
they actually outbid Google for the Firefox deal. I think Mozilla is supposed
to publicly release financial data every three years, and the last time was
2014, so we might know for certain soon.

------
tyingq
I can't help but have a bit of schadenfreude here. Part of what happened was
that Google used to send a fair amount of organic traffic to smaller sites.
And many of those smaller sites had Adsense ads.

Google's changes in search shifted much of the traffic that went to smaller
sites to larger, more established sites. Ones where the cost per
impression/click are higher for Google.

So, part of it is self inflicted. They did, of course, get benefits out of
that in the form of less low quality sites in their ad inventory. But some
babies went out with that bathwater.

~~~
gumby
> Google's changes in search shifted much of the traffic that went to smaller
> sites to larger, more established sites. Ones where the cost per
> impression/click are higher for Google.

Do you have a reference that Google detuned their search for profit purposes?
I'm happy to believe that Google did do evil, but I would like some evidence.
This kind of change sounds short sighted.

~~~
tyingq
>Do you have a reference that Google detuned their search for profit purposes?

That's not what I said at all...I was saying their costs were higher as a
result. They detuned it to reduce the number of low quality sites appearing in
Google search results. I am speculating on one particular side effect that
had. I have no proof, because only Google would have the data needed to prove
that.

~~~
dom0
> They detuned it to reduce the number of low quality sites appearing in
> Google search results.

Interestingly Google Search results have degraded heavily over the years, and
for many topics almost entirely consist of bullshit SEO sites and arbitrary-
keyword-generation sites ([http://foo-shit.com/freude-des-
schadens](http://foo-shit.com/freude-des-schadens) = automatically generated
page about "freude-des-schadens").

~~~
scholia
Agreed. My anecdotal experience is that the number of low quality sites has
increased dramatically.

I put this down partly to the "freshness" algorithm. You get shown the most
appalling crap on the grounds that it appeared within the past few hours.

If you're a share cropper in the news blogosphere, it's stupid to spend an
hour checking facts or making phone calls because then you'll be 50th to post.
Post any old crap and you reap the financial rewards of "freshness".

I exaggerate only slightly....

------
mankash666
It's rather sad that Google needs to pay Android makers a fee for installing
it's apps, given how Google gives away source code that makes Android exist in
the first place.

On the contrary, Apple's ecosystem is completely closed, app cut fairly high
and non-negotiable at 30% and app store rejections arbitrary at best and
blatantly anti competitive at worst. In the name of user centricity, their
platform places arbitrary restrictions on code execution and access.

Who'd you think the EU would investigate for monopolistic practices?

~~~
gumby
> On the contrary, Apple's ecosystem is completely closed

Their App Store is a monopoly, but I have friends who use iPhones and use
Google's Inbox, Google's search app, Chrome browser, Google Maps and Waze etc
and don't use the built-in defaults. I guess they like the hardware. So maybe
I'm not interpreting "completely closed" correctly.

> ... In the name of user centricity, their platform places arbitrary
> restrictions on code execution and access.

As a software but non-iOS developer I _like_ these restrictions. Yes they can
be annoying (you can't use your iPhone as certain kinds of portable network
scanner because they restrict access to the MAC) but they also stop shitty and
malign developers from screwing me in certain ways (jerks were using the MAC
as an illicit user tracking device).

I see it like various sorts of regulation: everyone us better off if the paint
factory can't simply dump its waste into the river, even the paint company.

~~~
neonhomer
I'm one of those people who gladly use an iPhone with mostly Google apps
(namely Chrome, Gmail and Maps). My little experience with Android has always
been negative.

The only real annoyance with iOS is you can't set Chrome nor Maps as default
applications.

~~~
AceJohnny2
I'm in the same boat. My dream device would be iPhone HW with Android
software. I like Android's flexibility, the replaceable home screen instead of
the list of apps, the Intents system that lets you replace an app handler with
another (Chrome & Maps for example), the much better notification system...

I have an iPhone now (because work), and it took a few months to stop
grumbling, but I definitely appreciated the overall better hardware compared
to my friend's Android phones, most significantly the excellent (and
immediately available!) camera.

~~~
nvarsj
Samsung hardware has blown Apple out of the water for the last 3-4 years. I
want Samsung screens and form factors with iOS. iOS is what makes iPhones
great!

Android is a giant tracking/ad/malware machine. It’s far too permissive to
applications you install on it. My most recent negative experience were pop up
ads that the Peel Remote started showing on my home screen. Peel remote is one
of the force installed applications that Samsung’s touchwiz installs. It’s
like Windows 95 with OEM bloatware, but worse.

~~~
giobox
> Samsung hardware has blown Apple out of the water for the last 3-4 years

No one familiar with the impressive lead in mobile CPU design Apple has carved
the past few years would ever make this claim. It's far more than just iOS
making Apple's iOS devices great today.

You're wish for a better display is definitely valid though, and arguably gets
granted at the end of this month.

