Google has YouTube, Android, gmail, GCP and a bunch of other big businesses.

I have a ton of criticism about Google but they've been able to diversify a lot better than I expected and I totally understand why companies with big cash "hoses" like you describe are making these sort of 'long shot but highly profitable' investments.

All those businesses (except GCP) boils back down to ads. They still manage to diversify better than Facebook, because they diversified where they show ads, but it's still pretty much just ads.

I agree but ultimately those are still advertising :)

They bought YouTube and Android.

My learned experience with mergers/acquisitions is that it is a genuine skill to pull them off correctly.

In YouTube's case it's more likely that they saved it, IIRC the bandwidth bills and legal threats were getting pretty existential around the time of the purchase.

Being able to pull off being the only company to successfully do self-driving is a similarly masterful execution and I'm not sure how long it's going to take for competitors to catch up to them at this point.

>Inheriting those legal problems was a chance they took that could have sunk the entire company in a slightly dumber legal outcome for the status quo of the web, which was still very much in limbo at the time.

Yeah. Smartphones were barely a thing when Google bought YouTube and, more broadly, user-created video wasn't very widespread generally. YouTube's money-losing business, such as it was, mostly consisted of users violating copyright by uploading TV and movie clips.

How is that relevant? They also bought DoubleClick (the online advertising "hose")

They bought DoubleClick with revenues from paid search. (Google's market share was about 50% at the time.) The acquisition certainly helped them establish display marketing, though.

Google bought the seed that became Android. The startup had only been working on the mobile phone OS concept for about a year when Google acquired it in 2005 (originally they'd planned a camera OS). The first public Android phone wasn't released until 2008.

You could reasonably argue that only things Sergey and Larry didn’t buy is whatever they implemented personally.

They bought Maps too.

However, it would be silly to imply that either of those products were nearly as popular and solid/full-featured as they are now, by many magnitudes. Those products today are nothing compared to what they were back then. Even for me, as someone who has been using YouTube since way back then, just randomly seeing screenshots of the old YouTube throws me off and makes me go "is that what it really was back then? it doesn't even look similar at all".

And no, I don't mean it in a bad way. Up until about Honeycomb (3.0) or Ice Cream Sandwich (4.0), Android imo felt more like "minimum viable product that technically has feature parity with Apple and some more, but you have to have some really good justification to willingly pick it for any reason other than the price", and the experience of using it felt entirely subpar. The release of 4.0 (or 3.0, i honestly forgot) was when Android started feeling like an actual solid competitor to Apple for the first time, and not just an obvious "second best option".

Google has a pretty solid acquisition record, and definitely a solid record of investing in the products that do work and really upgrading them. It’s a shame they have cancelled a lot of products, but let’s be honest do they cancel stuff that’s making money or could be making money at scale? Generally not much I think.

Their top 3 revenue sources are ads, ads, and ads. (Respectively ads on their own properties, "Google Network" ads, and YouTube ads.) That's more than 80% of their revenue. GCP is 7.5% of their total revenue. Details here: https://www.oberlo.com/statistics/how-does-google-make-money

One of the interesting questions for me is where the profits come in. Android definitely started as a loss leader so that they didn't get shut out of the mobile advertising market. But I could believe that it's in the black now due to the Apple-like model of charging a slice of everything that goes through the phone. Google Cloud is definitely not profitable yet, but they claim they will get there: https://accelerationeconomy.com/cloud-wars/google-cloud-has-...

Android probably pays for itself right now. But its primary purpose is forcing about 70% of phones sold globally to have Google apps pre-installed. And mobile ads, as you said.

Is that true though? The Chinese market is huge, and even if most phones are running Android, they aren’t including google apps. But if we exclude Chinese android phones, I would guess that Google doesn’t hit that 70% mark.

Virtually all markets outside of the top wealthy western countries are Android dominated.

I’ve lived in UK where iOS is very common but also in Portugal where the average salary is 800 euros and virtually everyone uses android.

Most of the world can’t afford iPhones

That’s true, but China is 1.4 billion people with not much iPhone penetration either (relatively speaking). That’s 17.5% of the world, so getting to 80% with that handicap (google being blocked in china) seems like a huge problem.

It is not such a big problem as you would imagine. The money comes from businesses, not consumers. As far as I know, the US and EU markets have the highest value consumers, so even Google is outside China, it is making a lot money from Chinese advertisers. The biggest problem for Google is competition from other advertising platforms, I don't remember last time I searched for a product on Google to be honest.

I believe the core ad platform for Google is going to be YouTube, it is the only one I am not leaving now.

Google pays Apple $10B a quarter as search revenue sharing. Chrome/Android are good deals on an alternative analysis basis.

YouTube may be a business but, if you take away online advertising there, it wouldn't be a successful one. In fact, one of the first things people bring up when discussing YouTube from that standpoint is how much money it loses. If Google wasn't one of the richest corporations in the world, YouTube would have been killed off a long time ago. I'm frankly not even sure that the advertisements are enough to sustain it even now, would have to check the recent data.

Android and GCP both hemorrhage money

Android does not. That changed a while ago too.

GCP loses money.

This is like people saying all Apple does is sell iPhones.

AirPods would be a fortune 50 business by themselves...

The difference is that Apple’s delineated businesses are extremely profitable. Google not so much aside from ads.

YouTube is thought to only break even as far as profits.

Android makes very little money in the grand scheme of things. It came out during the Oracle trial that Android only had made $17 billion between 2011-2017. On the other hand, they pay Apple $18B+ to be the default search engine on iOS devices. Apple makes far more from Google paying them in mobile than Google makes from Android.

GCP is still losing money.

Google has no successful profitable business besides advertising and has the focus of a crack addles flea.

If Waymo works this will all sound like gibberish in 5 years. They will have successfully revolutionised the entire world’s transportation, or started the revolution.

We also forget DeepMind which is run as an independent company but I believe is Google owned.

Right, like all of Google’s other profitable businesses not related to search over the past two decades.

But I’m sure they will get right this time.

Did I mention Google Fiber? They literally abandoned cities and left streets in ruins.

https://arstechnica.com/information-technology/2019/02/googl...

Or if the shareholders had any say in it, they could pay a dividend and let the market decide.

> I would love to see Waymo become another hose.

Waymo is just another way to add more water to the hose.

More leisure time not focusing on the road = more eyeballs.

What percent of our lives do we spend driving?[0]

"Our best guess? Six percent of our waking hours are spent in a car, en route. There are 4.12 million miles of road in the United States, and that’s a lot of ground for the 222 million drivers in this country to cover."

[0] - https://short-facts.com/how-many-hours-does-the-average-amer...

It's both.

Moving people and things (Waymo Via[1] is their autonomous trucking and delivery subdivision) via roadways is worth (in revenue) hundreds of billions of dollars in the U.S. alone. Even capturing a fraction of that market, and carving out profit (by displacing expensive, accident-prone and sleep-needing humans), is a money hose on its own.

[1] https://waymo.com/waymo-via/

I disagree. There’s a ton of profit margin on the table selling driverless rideshares and licensing the tech to other automakers. While Google will be able to serve a few ads during the ride, that will amount to a few cents of ad revenue vs. several dollars of transportation services. Tesla is already setting a price for full self driving that does not even work or exist at 15k, so the actual retail price could easily be tens of thousands, absolutely dwarfing the 5 year ad revenue per user, let alone the incremental increase from a few extra hours of screen time a week.

I'm not an expert but I doubt there's really a ton of profit in rides. Uber, Lyft, even taxi companies are barely profitable after many years. With the amount of money and time spent on making self driving work I'm not sure they'll ever make their money back.

You realize like 60% of the Uber / lyft fee goes to the driver? Now imagine there is no driver… the math sure changes

I'm begging you to read up on the actual experiences of drivers for Lyft & Uber - there are dedicated subreddits.

Lyft and Uber are not leaving 60% of the money on the table to the drivers.

https://www.reddit.com/r/lyftdrivers/ https://www.reddit.com/r/uberdrivers/

Are you including tips and recruitment fee and driver bonuses?

Absolutely. No competent accounting would exclude those.

Nobody is saying it’s a livable wage for a human. In many competitive markets drivers spend more time driving around looking for a ride than making money. But it’s still a huge cost to Uber/Lyft to pay people even if they’re paying a pittance.

Neither me nor the person I was responding to mentioned the words "liveable wage".

Want to respond to the 60% figure?

Yes, 60% of the money including tip (which is a cost that gets passed onto the consumer and therefore reduces ridership) seems more or less correct to me. A forum where people to go to complain about Uber/Lyft doesn’t seem like a representative enough sample to refute that.

The current Google is not good at inventing world changing tech.

The rational thing would be to keep doing what they're best at.

But somehow that's not how things work.

I believe that the current ad revenue model is facing a challenge due to the shift from a search-based approach to a dialogue-based one. People are more likely to use a local model to filter the web and communicate in a Q&A format. This means that fewer ads will be visible, making it more difficult for businesses to generate revenue in this new paradigm. Why search when you can ask directly for the answer?

BTW, local models underperform GPT-3 but they can still perform decently (eg. FLAN T5, GPT Neo)

And you think AI models could not provide answers appropriately biased towards an advertiser? Organic ad content is the future.

No kind of ads will work if your LM is skipping them. I am thinking along the lines of having an OS-LM or a browser-LM, should be a standard component.

You mean the same google that owns DeepMind, one the premiere AI companies on the planet?

OK, that's actually something real impressive they've done!

Didn't think of it. It's not much of a business though. At least not yet.

I suspect that when it becomes a business we might not know about it for a while. Why show your cards if you don’t have to? Their medical research alone seems very promising. Obviously OpenAI has been doing incredible things, but I suspect DeepMind is doing really cool stuff in the background too.