
How Google Could Collapse - CPAhem
https://hackernoon.com/how-google-collapsed-b6ffa82198ee
======
r721
Previous discussion:
[https://news.ycombinator.com/item?id=14221587](https://news.ycombinator.com/item?id=14221587)

Author's comment:
[https://news.ycombinator.com/item?id=14223780](https://news.ycombinator.com/item?id=14223780)

"Honestly I just wrote this for fun to play devil's advocate and see how
convincing an argument I could make. It was intended to be more creative
writing than a serious market prediction. (The title used to be "How Google
Collapsed" \-- Startup Grind changed it and added the subtitle when they
published it on their blog).

I don't think it's likely that Google is going to collapse any time soon. I
just wanted to imagine a world where they had, and try to work backwards from
there with current data.

It's my first article, and I'm only 21 so I definitely got a lot of things
wrong and oversimplified/combined others. But I do have almost 2 years of work
experience in online advertising, so I have /some/ idea of how things work.

I was honestly expecting 12 views and a mean comment about how stupid I was --
I didn't expect the article to pick up traction. The editor in chief of
Startup Grind reached out to me and asked if I would like to have it published
on their blog, and I said sure."

~~~
sjg007
It's a very good analysis. You miss chromebooks and the play store revenues
but those might be dwarfed by ads. the next task is to figure out what's next
which might be glass/AR.

------
papa_bear
This article is placing so much emphasis on voice interfaces as the
replacement for screens, but I can't imagine that happening for more than a
handful of use cases. Maybe I'm an outlier, but I would never use a voice
assistant in public, and you can show a much higher depth of information on a
screen. Screens are going to be around for a long time, with AR headsets being
the logical next step.

Google will have plenty of time to show me ads on screens in the future (if
not directly in search, then via app stores and video ads). And even if their
voice assistant just exists to direct me to their screen presence more, in my
experience, google as a voice assistant has been 10x more reliable than either
Alexa or Siri.

~~~
aninhumer
> would never use a voice assistant in public

I would be _so much_ more willing to use voice control systems if they ditched
the stupid code phrases, and just used a push-to-talk button instead.
Something about saying "Okay Google/Siri/Alexa" creeps me out way more than
just talking to a computer. I already use voice search and say "timer 10
minutes" rather than navigate the awkward clock app, but I'd love to be able
to just squeeze a reliable button on the side of my phone (or even smart
watch) to do that instead of fiddly swiping.

And PTT would also reassure me that the mic isn't listening in when I don't
want it to, and help to minimise latency (which IME is a major impediment to
using voice control) by providing immediate feedback when you're done speaking
instead of having to wait for silence.

~~~
ch0wn
If you have an Android phone with a Bluetooth headset you can do exactly that.
By default you just need to long-press the play button on it. That said, I
personally still very rarely use it that way.

------
hug
I'm tempted to be pithy. I'm tempted to write something like "and that, of
course, is why Microsoft as a company completely folded after the death of the
desktop PC," but it wouldn't really be worth reading. On the other hand who
doesn't like a bit of apophasis, right?

But, you know, maybe they're right. Maybe online advertising is a dying
business, and maybe that's why no one solicits for advertising partnerships at
the bottom of their articles.

Who knows. Maybe their article is, seriously this time, completely correct,
and maybe that flashy graph they've got at the top of the page -- you know,
the one asking about whether or not you search for products on Amazon or
Google -- isn't because no one really feels the need to google for toilet
paper before buying some off whoever is convenient.

You know what will help? Some pullquotes from CEOs saying things like "brand
owners are detemined to take the lead". Of course they are. That's why the
Internet is now devoid of atrocious ads.

Quick. Put some more graphs in, but make sure you don't put the one in that
shows their rising profit margins.

~~~
gaius
_" and that, of course, is why Microsoft as a company completely folded after
the death of the desktop PC,"_

Who thought giants like SGI, DEC, Sun would fall? But they did, and when it
happened it happened quickly. Isn't Google in SGI's old building now?

~~~
izacus
And who thought companies like Apple and Microsoft wouldn't fail?

Doom articles are dime a dozen.

~~~
Houshalter
Survivorship bias.

~~~
torstenvl
You seem to have a very flawed concept of what the word "bias" means.

~~~
Houshalter
How? This is straightforward survivorship bias. The first examples of big
companies that come to your head are always going to be ones that were lucky
and survived by pure chance. You are much less likely to remember or hear
about the unlucky ones that aren't around anymore.

~~~
torstenvl
Because the word "bias" pertains to whether a sample is representative or not.
It has to do with probabilities.

GGGP isn't saying that long-term successful outcomes are the probable or most
likely result of being large at one point in history, so your criticism is
inapposite. What he's saying is that, contrary to the OP's seeming position, a
paradigm shift isn't always fatal to established players, i.e., "doom articles
are a dime a dozen."

------
seabird
I hope it collapses fast and hard. Advertising is a nearly worthless vampire
industry that works to suck some of the life out of other useful services. If
Cisco, Qualcomm, or Texas Instruments threw in the towel, their respective
industries would change forever; we would be hearing about it in a matter of
minutes. The same can't be said for any advertising company other than Google,
and that's not because we find Google's advertising particularly endearing. As
time wears on and consumer patience for advertising wears thin, Google will
need a miracle in a market that the world can't live without.

~~~
jordanpg
It has always been something of a mystery to me that billions of dollars of
revenues are somehow extracted from the internet in this form.

My reaction to advertising in all forms is visceral and strong. I don't really
understand it, but I know that I am willing to go to some lengths to avoid it.
Reading HN threads over the years has shown me that I'm not alone.

For this reason, I've come to believe that this era of internet advertising
will be a brief flash in the pan of history. I have no idea what the next step
will be, but it's hard for me to imagine the future internet being one held up
by something that is genuinely despised by so many.

Mass quantities of free, mediocre quality content will give way to something
else in this new equilibrium. But what will pay for all the infrastructure?
All a subject for science fiction writers at the moment.

~~~
kijin
> Mass quantities of free, mediocre quality content will give way to something
> else in this new equilibrium. But what will pay for all the infrastructure?

There are still a lot of people who just rent a (virtual) server, or rent
space on someone else's platform, to post whatever they want. They might have
tens, hundreds, thousands of viewers. They could easily scale to even more
viewers with the help of some off-the-shelf CDN, while keeping the total
expense well within the realm of "hobby spending" for most people in the
developed world.

Producing and distributing content only costs a lot of money if you want to
deliver a lot of content to a lot of people. But I would much prefer a
decentralized network where a lot of people each produce and distribute a
little bit of content. Each of them would only incur a small expense, if and
only if they want to. It will probably cost less than what they're already
paying for advertising anyway.

Even in a world like that, large content producers who actually have a
concrete revenue stream, such as Hollywood studios and a small number of
world-famous and/or publicly funded news outlets, will continue to reach
billions of people at a time. We don't need to worry about BBC as we say
farewell to thousands of content mills who had no reason to exist in the first
place.

------
sametmax
This assume Google can't do anything about it. But it can.

It can deny the use of it's services to people using ad-blockers.

It's possible that we see a migration from youtube. Maybe some people will be
ok with migrating from gmail (probably not the majority though. I did it and
it was HARD). But very few people will stop using the search engine or google
map, because it has absolutely zero decent competitor. I tried them all for
months, fairly. Their are not even on the same planet.

So apart from a few geeks, people will just disable the ad blocking software
if google decide to force their hand.

Besides, wait for the W3C DRM standard + webassembly to be used to hack very
hard to block ads...

~~~
fghtr
> google map, because it has absolutely zero decent competitor.

I am using [https://openstreetmap.org](https://openstreetmap.org) and have no
problems with it.

~~~
sametmax
Open street map don't tell you to go to the left ride of the lane so you can
take a better right turn in 100m in real time, then inform you that you have
to alternatives to your current trip given the current traffic spike if you
wish.

~~~
phicoh
If there is a choice between having to watch annoying ads and not having those
details, then I go for the more basic system that is ad free. (I do use
openstreetmap for 99% for my navigation, mostly because I care about open
navigation systems)

No doubt, real time traffic information can be developed for openstreetmap.
But if and when it happens depends on where others drop the ball.

For example, current navigation systems built into cars tend to be completely
out of date and mostly unsupported long before the car itself is end of life.
So this is an area where openstreetmap might take over.

~~~
icebraining
OSM actually had ads way before Google Maps:
[http://wiki.openstreetmap.org/wiki/Mappam](http://wiki.openstreetmap.org/wiki/Mappam)

~~~
rmc
I don't think you can compare the ad tracking that Google does now, and what
the OSM website used to do years ago. That wiki page is almost 10 years old,
with the website mentioned (mappam.com) no longer working.

Though since OSM predates Google Maps, it makes sense that OSM would have
another first :P

------
codingdave
The battle for the future success of Google isn't going to be over
advertising. Google already knows they need to be more diverse than that. And
they already are, even if we look no farther than their cloud platforms.

When the article said that Search is the only product that Google was a winner
on, it seems to have forgotten about gmail. And how a large number of
enterprise customers are moving their internal email to gmail, and thereby
their Office Suite to Docs. If Google fills in the gaps that custom software
development fills in the enterprise (small department level workflow apps,
content management, industry-specific forms, processes, and data flows,
etc)... THAT is what will make a whole new Google over the next 10 years.

~~~
dilemma
Do enterprise customers really move to GSuite? I don't believe so. Startups
may start on it, but I would never put my business on there. You can't even
back up your documents! They only exist as links. And you can't move them.

~~~
theandrewbailey
Wrong. You can backup all your documents in a real format.

[https://takeout.google.com/settings/takeout](https://takeout.google.com/settings/takeout)

------
semperdark
Maybe it's wishful thinking, but I think the value of personal data in
advertising is inflated right now.

P&G spent $7 billion on online ads in 2016, and has been making a lot of noise
about moving away from them. Many of those consumer products can be sold to
almost anyone, and hyper-targeting users by keyword may not help much.

For the sake of the Internet, it'd be stellar if the value of personal data
corrected to a level that stopped the war on user privacy. If it turns out
that the value is propped up by hype/FOMO-driven ad purchases by larger
companies, it could very well happen.

~~~
tonyedgecombe
_P &G spent $7 billion on online ads in 2016_

No, P&G spent $7 billion on ads in 2016.

~~~
semperdark
You're absolutely correct - I'm not sure how I didn't notice that. Thank you
for the clarification.

------
harel
Using voice interfaces (at least in a public setting) is going to end up like
the Segway. Looks kinda cool on the brochure, but feels a bit daft actually
doing it when out and about.

~~~
crispytx
This ^^^. My Dad is always talking into his phone to send text messages. I
really want to tell him, "Dad, you're doing it wrong. Nobody wants to hear you
narrate your text messages."

~~~
falcolas
Aah, but your dad doesn't care. It's just so much easier to use the VR
software than to fiddle with the keyboard, especially as you hand-eye
coordination fades with age. Spend a minute fiddling with a tiny on-screen
keyboard, or a few seconds and a minor social gaffe?

People have been speaking to their phones for decades now; the only difference
is there isn't someone listening directly.

~~~
harel
Most people, I think, don't feel comfortable speaking to their phone when
nobody is at the other side. Even if I, as an observer am not aware of that. I
know I don't feel comfortable. Because I know nobody is there and i'm talking
to a machine. Besides, can you imagine the background noise in the world if
everybody started talking to their machines? Its enough their eyes are stuck
on the screen all the time. If they equated that time to talking - it would
mean constant chatter noise. nobody wants that...

------
scalablenotions
This is fun reading, but it paints a picture of a "Google" much smaller than
the real thing.

~~~
coldtea
Well, the truth is Google is not that bigger than the picture.

Despite Android and Gmail and self-driving cars and this and that, the
overwhelming majority of its revenue is plain ole advertising.

------
jmull
People want stuff for free more than they hate ads... ads aren't going
anywhere.

~~~
adventured
While ads definitely aren't going anywhere, the extreme majority of Google's
$99 billion in sales (last four quarters), is earned directly from search ads,
not from ads having anything to do with free stuff (gmail, youtube etc).

~~~
crispytx
I think he means free search results.

------
ndh2
This graph paints a different picture, though:
[https://www.statista.com/statistics/234529/comparison-of-
app...](https://www.statista.com/statistics/234529/comparison-of-apple-and-
google-revenues/)

~~~
nabla9
revenues are not profits.

Alphabet profits have increased but profit margins are down.

Amazon revenue is rocketing in the expense of not making profits.

~~~
adventured
Alphabet's margins in fact are not down in any meaningful sense. They're
basically unchanged for years.

2016 net income margin: 21.5%

2015 net income margin: 21.7%

2014 net income margin: 21.3%

2013 net income margin: 20.4%

2012 net income margin: 21.6%

~~~
nabla9
Alphabets profit margin dropping is recent phenomenon. 2017q2 profit margin is
just 13.55%. Advertisers paid 23% less per click.

------
mark_l_watson
Clever article, blending history and future conjecture. Sure, Google has
potential long term problems with its ad revenue stream but the have
sufficient cash reserves to succeed in different lines of business. And they
probably will. I use fastmail and mostly duck duck go, so in a sense Google
doesn't make money from me in the traditional advertising sense, but I like
GCP, pay for YouTube red and music, and buy movies and tv shows on Play TV.

~~~
dalbasal
In practice, Google have very few different revenue streams. They do a lot of
different things, but advertising makes up the biggest portion of revenue and
search market share is what locks up that market.

------
joneholland
Two of the largest customers of adwords are Expedia and Priceline. Why?

Because almost every travel customer starts by typing their destination into
google, and whoever has the top ad gets the booking.

It's a fierce bidding war on keywords, and the only winner is Google.

This article grossly understates the number of companies and industries that
begrudgingly play this game to acquire expensive traffic with hopes that it
converts to cheap organic repeat traffic in the future.

Google is doing fine.

~~~
scandox
> This article grossly understates the number of companies and industries that
> begrudgingly play this game to acquire expensive traffic with hopes that it
> converts to cheap organic repeat traffic in the future.

Exactly right. Seen it over and over again.

------
keyle
So, talking about ads... Yes my adblocker on the web is pretty nice... But I'm
still getting bombarded by ads on Youtube and Twitch.

That's the difference, if you own the platform / app, you get 100% ad views.

By putting more DRM on the web and 'sneaking' ads on the web, they will
prevail.

~~~
jvzr
I wonder what AdBlocker you are using. I use both of these platforms daily,
and see absolutely no ad. Apart from product placements directly in the video
by the content creator, but not as banners/pre-rolls or any other form.

~~~
keyle
YouTube and twitch apps on iOS. No ad blocking that I know of. Sorry I wasn't
clear.

~~~
jvzr
Oh, yes I understand. Totally with you. And proxy adblockers are not really
user-friendly yet, so as long as advertisers go native they still have a rosy
future indeed.

------
scandox
My feeling is that the thing that would really rock Google to its core would
be a major scandal about ad spend.

Like one where they were unambiguously exposed - say - channelling all the
good leads to people at the start of campaigns and then once the spend was
established starting to feed them the shit leads, until they convinced them to
spend more money. In short like a Casino that would let people win to give
them a taste and then reef them.

But of course that's purely speculative and probably that type of thing
couldn't be unambiguously proved even if it were true - which it isn't.

------
bsenftner
Google needs to fix the issue with search optimization gaming. Searching for
products on Google is useless! The SEO manipulation puts marketing heaving
companies first, while companies with product focus rather than marketing
focus loose out. This creates a world of empty products with the majority of
the product's investment going towards the advertising of the empty thing.

------
leoharsha2
If I had to pick a point of fragility for Google it is that the founders have
set up the company such that they exercise dictatorial control. This can be
good, but it's a question mark what will happen once that control is passed to
other hands. Further, Google makes most of its money from advertising and it's
search engine. They're one competitor away from being in serious trouble. So
far Google has beaten them all off but there are a lot of very smart people
out there who want to cut into that very profitable business. In the plus
column for longevity is a very large cash hoard. However, history proves that
companies can vaporise their cash overnight in ill-advised acquisitions.

------
code4tee
It is true that, for all the cool stuff Google does, it is still fundamentally
an advertising company where the future in those revenue streams looks bleak.

That said, Microsoft didn't die off in the "post PC" era even after
spectacular failures in things like trying to make inroads in mobile phones.
So with Google yes there are dark clouds on the horizon, but they could pull
off a change in revenue streams and still do quite well.

The clock is ticking though... they're spending tons on these other pet
projects that have yet to pay off so the pressure is really on to prove that
they can actually create a viable business with revenue outside advertising.

~~~
seabird
The zinger with the "post PC era" bullshit was that it was a ridiculous
marketing/buzz campaign that attempted to completely eschew the reality that
most people _need_ something more than a compact touch screen device to
effectively complete their work. You cannot genuinely ask an electrical
engineer, Excel jockey, photographer, or any other professional or power user
to use something other than a laptop or desktop to make their living.

I think you can can see the difference between Microsoft's model (which never
did go out of style and won't any time soon) and Google's model (which was
doomed from the start).

~~~
slededit
It's still a net reduction in the size of the market. Early 2000s your office
had a PC and you had one at home. The office computer may remain but the home
one is gone for the vast majority of people.

~~~
seabird
There's a net reduction, but that loss in the market didn't translate directly
into tablet/mobile usage. Anecdotally, I would say that the home PC isn't
gone, just less focused on entertainment. I've noticed a significant shift
towards occasionally used laptops that are used for work and study while
mobile devices make up for the entertainment/simple browsing/bullshitting that
would have been done on a desktop ten years ago.

Regardless, the relevance to my point is still there; PCs are a product that
will have worthwhile demand for the foreseeable future while internet
advertising could disappear with little fanfare. That isn't a good fit for
Google.

------
occultist_throw
You want evil? I can give you evil.

ASM.js or similar like Webassembly. Use it, create a polymorphic VM in the
browser that forces a user to compute the ads in order to get content.

Now, trap the content in each VM (and no, not as a downloaded plaintext). This
will be an encoded bytestream, that the easiest way to decode will be through
the browser VM, and displaying ads along the way.

That's evil, and I would highly assume it works.

------
matt4077
This reminds me of all those articles saying Facebook would die because people
were moving to mobile and "there are no ads in the Facebook app".

~~~
crispytx
I still don't think facebook is safe long term. I've been on facebook off and
on for 12 years, and honestly is was only really cool back in college. I
suppose there is some value in the whole 'real identity' thing. But the
problem I see with facebook is the whole 'friending' thing. Do you really want
to have to maintain digital relationships with everyone you've ever known? A
digital phone book would be so much nicer. Want to reach out to an old friend
from college you haven't seen in years? Look them up in the digital phone
book. Wouldn't that be nice? But with how facebook works now, you have to stay
'friends' with everyone you've ever known (because its awkward deleting and
then re-friending people). But then you ended up with this news feed full of a
bunch of crap from everyone you've ever known. It's just not good. People
aren't going to want to keep using facebook for 20+ years. After 12 years I'm
burned out as hell on facebook and only have like 7 friends. And I have a
feeling, other people are going to get burned out at the 12 year mark as well.

Anyway... I think facebook is still the most vulnerable of all the big tech
companies. And I think Mark Zuckerberg feels the same way deep down inside.
Why else did he pay $1,000,000,000 for Instagram? And feels he has to copy
SnapChat? Because he's scared his empire is going to be the next MySpace. And
you know what, it probably will go the way of MySpace eventually.

~~~
nicoburns
Facebook has a bunch of tools to restrict both what you see of other people in
your newsfeed (unfollow), and what they see of you (restricted list).

------
dgudkov
The Google's business is not search, but answering questions. Web search is
just one way to ask (and answer) a question.

------
yuhong
Personally I think the problem is the ad bubble in general not just Google.

------
jeanloolz
I'm not too sure about the conclusion of the article. While it's true that ad
blockers have been adopted by users, advertising revenue from Google is about
to get a 15% growth this year compared to last year.

Regarding Cloud computing, although I have no numbers to back this up, I'm
pretty sure Google Cloud will also grow nicely in the next decade.

From an AI perspective, they're clearly leading that field over amazon,
without a doubt.

