Thursday December 10, 2020 |Big tech trends

The unbundling of Google search

Google is in the midst of being broken up. It's happening outside the framework of government regulation, and instead in the world of tech innovation. Google has grown at a rate unlike anything beforehand, in terms of market share, influence, and everyday usage by both individuals and businesses. Other big tech companies have grown in parallel, seemingly separating themselves from the rest of the market.

There was a time when Google openly professed to 'do no evil.' The company grew because it had a verifiably great product. The internet was relatively closed in terms of what was easily accessible. Yahoo, Lycos, and other competitors served a relatively limited number of results. The results were both curated and biased towards those that drove revenue. The opportunity for Google was clear: provide a free search engine with better results.

Search results on Google are no longer unbiased, and the first page is primarily ads or those from a relatively short list 3rd party domains. As most users rarely go beyond the first page, it naturally leads to most results being up for auction. The auction system has been hugely beneficial to Google in making advertisers compete against other advertisers, virtually guaranteeing a gradual increase over time as advertisers increased bits to reach the top spots.

At one time, Google ads could be run in a way that lead to a short-term profit, i.e. given a 100 clicks, there'd be 25 buyers, allowing the advertiser to turn a profit. That's given way to the idea that businesses should optimize for customer lifetime value (CLTV) which leads to negative short terms profits, with a 'strategy' of turning a profit later on. This model works for some businesses, but it's a much more difficult path.

Meanwhile, the search experience has gotten worse for users. Nobody wants to be barraged with ads, regardless of whether text or visual. It seems unlikely a social platform could serve the same ratio of ads to real content without user attrition. Mobile makes it easier to go directly to segmented categories of search, i.e. Yelp for restaurants, App store for games, imdb for movies, etc. Those all deliver better results for the users that care about the specifics because the product is tailored for that audience, and they aren't merely trying to insert themselves between unpaid results and the best results.

Google is a free product in one sense. However Google's profits are another's costs and the company now extracts money from a system it built under the ethos of organizing the world's information while doing no evil. The experience is worse and the unbundling is underway.

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