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The Google Tax (1 Viewer)

Joe Bryant

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Not sure if there's much appetite in the FFA for business discussion talk. But thought I'd try it here.

Seth Godin is a guy I follow closely. He's probably been more influential on me than just about any business writer.

His blog today:

The Google tax

Actually, there are two.

The first is the tax we each pay so that companies can bid against each other to buy traffic from Google. Because their revenue model is (cleverly) built on both direct marketing and an auction, they are able to keep a significant portion of the margin from many industries. They’ve become the internet’s landlord.

The difference between a successful business in New York and an unsuccessful one is just a few percentage points–the successful ones pay 95% of their profit to landlords, while the unsuccessful ones pay 105%.

It doesn’t matter if there are competitors to Google in search: the model of bidding for attention is so economically compelling (because attention is so scarce), that companies are going to be paying ever more to reach people in this way–or allow their competitors to do so.

The second is harder to see: Because Google has made it ever more difficult for sites to be found, previously successful businesses like Groupon, Travelocity and Hipmunk suffer. As a result, new web companies are significantly harder to fund and build. If you’re dependent on being found in a Google search, it’s probably worth rethinking your plan.

The open web (and search… particularly Google) has created huge benefits in access, competitiveness and selection for so many markets. At the same time, there are structural challenges that are making the future less commercially interesting in many ways.

Capitalism is an efficient system for surfacing and addressing the needs of consumers. But once it veers toward control over markets by a single entity, those benefits disappear.

The existence of DuckDuckGo doesn’t significantly change Google’s position as a monopoly able to dictate how most people experience everything on the web.


What do you think?

 
I think there are real antitrust concerns to consider with Amazon, Google and Facebook. 
 

Each has dominated a segment of online communication and ad flow/attention to the point that they really are setting the price for entire markets. 

 
What the heck is Hipmunk?
It's that thing that is living in @gianmarco's backyard.

Lives on acorns and pool water. Sadly, as they lose valuable acorn habitat, they are forced to migrate into the cities looking for food. They then turn into little creatures with beards, and are seen at coffee houses vaping and complaining about our government.

 
I think there are real antitrust concerns to consider with Amazon, Google and Facebook. 
 

Each has dominated a segment of online communication and ad flow/attention to the point that they really are setting the price for entire markets. 
Thanks. It's an interesting situation. 

 
exactly the point
Is it?  Should I have heard of it and I just haven't because they aren't paying Google money to be on the top of the search pile?  Hasn't there always been a cost to getting a new company noticed?  It used to be print advertisement, radio, tv spots.  Just seems like a shift.

 
I think information is becoming a public utility similar to gas, water, electric etc. But it’s nearly entirely privatized at this point. I have no idea how we can regulate it. 
I thought this line was interesting.

As a result, new web companies are significantly harder to fund and build. If you’re dependent on being found in a Google search, it’s probably worth rethinking your plan.

 
I mean...what is Google supposed to do?  This is the model of their company for right now.  It used to be that you HAD to pay google if you wanted to be found in searches.  Now, it is so flooded, that it isn't worth paying for.  It should just work itself out.

 
He lost me when he suggested it's Google's fault Groupon and Travelocity have problems.  I'm not sure what the case would be for Google killing Groupon more than Groupon has impacted Groupon. RE: Travelocity, if you're relying on someone who might turn out to be a competitor for your business to be successful, that's a you problem. Not to mention they're being outperformed by multiple non-Google competitors who operate in the same world they do.

Some of these things can be anticipated, and companies do a poor job of positioning themselves strategically.  Along those same lines, I generally like PINS as a potential investment, but I really don't like the fact that they don't own their own data center(s).  Being an online retailer of any sort and putting yourself in a position to rely on AWS is poor strategic planning. 

 
I mean...what is Google supposed to do?  This is the model of their company for right now.  It used to be that you HAD to pay google if you wanted to be found in searches.  Now, it is so flooded, that it isn't worth paying for.  It should just work itself out.
i don't think that he is saying that google has to do anything different.  This is related to the newer world paradigm where scale and efficiency rule, which are leading to more winner-take-all outcomes resulting in a variety of major economic and social changes.

 
Not sure if there's much appetite in the FFA for business discussion talk. But thought I'd try it here.

Seth Godin is a guy I follow closely. He's probably been more influential on me than just about any business writer.

His blog today:

What do you think?
Its an interesting piece of information that I wasn't completely familiar with, but I think he's confusing the issue somewhat by calling it a "tax."  That term generally refers to payments to a government required by law.  This "Google tax" is just another cost of doing business, like rent.

 
Its an interesting piece of information that I wasn't completely familiar with, but I think he's confusing the issue somewhat by calling it a "tax."  That term generally refers to payments to a government required by law.  This "Google tax" is just another cost of doing business, like rent.
Yes. I think that's what he means when he's using the word "tax". Just another cost of doing business. 

 
Chive has been beefing with Google for a little while now for similar reasons..

I'd link them but they may be too "adult" for hear (girls in bikinis and funny pics).

 
If Google or Amazon is doing something illegal then charge them with a crime, but if they are just benefiting from the power of a network (a business/service is exponentially more valuable as more people use it) then leave them be. No one is forcing people to use Google over Bing, but so far no one has done search better.  Mapquest and Myspace also were in similar positions several years ago and they both got beat by better services. 

 
If Google or Amazon is doing something illegal then charge them with a crime, but if they are just benefiting from the power of a network (a business/service is exponentially more valuable as more people use it) then leave them be. No one is forcing people to use Google over Bing, but so far no one has done search better.  Mapquest and Myspace also were in similar positions several years ago and they both got beat by better services. 
Worse than a crime:  They were caught stealing signs in baseball.

 
If Google or Amazon is doing something illegal then charge them with a crime, but if they are just benefiting from the power of a network (a business/service is exponentially more valuable as more people use it) then leave them be. No one is forcing people to use Google over Bing, but so far no one has done search better.  Mapquest and Myspace also were in similar positions several years ago and they both got beat by better services. 
I don't think the short blog piece suggests Google is doing anything wrong, much less illegal (Amazon isn't mentioned).  I would say the point of the piece is summed up in the last few sentences - that the internet has massively opened access to different markets, creating competition and raising all boats; but at the same time, when one access provider has dominant control over access to the market, those benefits are mitigated.

 
My main job is as an SEO... it's definitely harder than ever to rank, though at least in my business I'm more able to be a little more nimble than large businesses and fit into the cracks as needed. As a business you really need to find a way to be creative, or hire someone who is, because you just can't bull your way to the top anymore. It's tough though, especially on limited budgets.

My biggest concern is with the rise in voice search the "featured snippets" at the top of the search result pages is nothing more than scraper content (copying and re-using content that isn't yours for your own personal benefit) but cuts out the person who actually wrote it. To be fair they include a link so there is a bump for the site for anyone searching on a computer or phone, but answering the question is usually good enough for most people and they never visit, especially with voice searches.

 
Monopolies should be broken up.  There are many of them right now, including Google (Yes, I realize it's part of Alphabet, etc).

 
OK, so you force AMZN to break up.  What's likely to happen?  They're going to spin off AWS. Now they're, what, something like 60% of the size they were.  And there's a new company in the US in the top 20-ish? Market Caps. (which IS nuts to think about).

Great. Now they're smaller.  And two still really large companies. What have you accomplished? Who is benefiting? 

 
I saw something the other day (I don’t remember where) that was a screenshot of a Google search. What was interesting was that the person that posted it put boxes around all of the different advertising areas of the results page. It turns out that a HUGE percentage of the results page are paid results/advertisements. 
 

Google has a fairly minimalist looking site and that look is part of what lead to their success. They not only had a better search algorithm, their competitors all had tons of junk all over their pages and were loaded with pop ups and banner ads. Google was a welcome refuge. But now they’ve expanded their advertising in a way that blends legit and paid results to the point where your view is dominated by paid content. And it’s unclear that their search algorithm is really even the best out there anymore.

 
"Because Google has made it ever more difficult for sites to be found...."

What do you think?
I guess I just disagree with this premise.

Did the yellow pages make it more difficult to find contact information of a business? I mean it was EASIER to find a business that paid for advertising in the yellow pages, but I don't feel the yellow pages made it more difficult to find a business that I was searching for. If someone was looking for a level playing field when looking for a random locksmith.... there wasn't one. If I was looking for "Thrifty Locksmiths" the yellow pages made finding the contact info for that specific business easier even if they weren't paying the yellow pages. How is what Google doing any different than that?

 
I use to love using Google as a search engine.  You could find anything with the proper word combination.  Today you get filtered results which adding additional key words does nothing to the supplied results.  Complete garbage to what it use to be.  DuckDuckGo is only marginally better and produces most of the same results as google.  You get results that others paid for you to see.  It is like watching TV and only getting advertisements.  

 
 It is like watching TV and only getting advertisements.  
Actually it's not, though.

Right now people pay for TV and watch some commercials despite the fact they are PAYING to watch them. Just like the newspaper/magazine model. Or the My Fantasy League model. I find this more troubling.

Or people watch TV for free that is supported by commercials on over the air networks. Also the over the air radio model. And the podcast model(in most cases anyway).

To me the Google experience is like the latter. You use their search engine for free in exchange for seeing advertisements. I much prefer that to the model where you pay to be subjected to advertisements.

It's like the author of this article woke up one day and said, "OMG all these companies that are spending money on marketing and advertising..... they are baking those costs.... INTO.... THEIR.... PRODUCT... COST!?". In five years or so when he realizes those companies spending a bazillion dollars on Super Bowl commercials are actually passing those costs onto their customers. Boy, that will be a sad day in Mudville for Seth Godin.

 
Actually it's not, though.

Right now people pay for TV and watch some commercials despite the fact they are PAYING to watch them. Just like the newspaper/magazine model. Or the My Fantasy League model. I find this more troubling.

Or people watch TV for free that is supported by commercials on over the air networks. Also the over the air radio model. And the podcast model(in most cases anyway).

To me the Google experience is like the latter. You use their search engine for free in exchange for seeing advertisements. I much prefer that to the model where you pay to be subjected to advertisements.

It's like the author of this article woke up one day and said, "OMG all these companies that are spending money on marketing and advertising..... they are baking those costs.... INTO.... THEIR.... PRODUCT... COST!?". In five years or so when he realizes those companies spending a bazillion dollars on Super Bowl commercials are actually passing those costs onto their customers. Boy, that will be a sad day in Mudville for Seth Godin.
But the results you get are ALL advertisements.  That is the problem.  I would not mind if they just had a few advertisements which are labeled.  That is all fine.  The problem is Google no longer gives you real completr search results.  You can't find obscure stuff like you used to be able to.  It is unusable unless you are happy with the filtered results.  I am not.  

 
Actually it's not, though.

Right now people pay for TV and watch some commercials despite the fact they are PAYING to watch them. Just like the newspaper/magazine model. Or the My Fantasy League model. I find this more troubling.

Or people watch TV for free that is supported by commercials on over the air networks. Also the over the air radio model. And the podcast model(in most cases anyway).

To me the Google experience is like the latter. You use their search engine for free in exchange for seeing advertisements. I much prefer that to the model where you pay to be subjected to advertisements.

It's like the author of this article woke up one day and said, "OMG all these companies that are spending money on marketing and advertising..... they are baking those costs.... INTO.... THEIR.... PRODUCT... COST!?". In five years or so when he realizes those companies spending a bazillion dollars on Super Bowl commercials are actually passing those costs onto their customers. Boy, that will be a sad day in Mudville for Seth Godin.
I don't think an analogy to television advertising works here. The point is not that Google shows ads, but that Google alters internet search results in favor of its customers.  It would be more like watching the Superbowl and thinking there are only two beers available in the market, Bud and Miller, because those are the only two advertisers you can see.  We know that's not true, because of other advertising outlets (like the internet).  But if you're doing an internet search, you will only find the tailors who pay Google for search hits, because Google is so dominant that almost no one uses any other search engine.  Many don't realize this. Most of us think a search for a product will hit anyone who has a webpage with the right tags, but that's not the case.

 
But the results you get are ALL advertisements.  That is the problem.  I would not mind if they just had a few advertisements which are labeled.  That is all fine.  The problem is Google no longer gives you real completr search results.  You can't find obscure stuff like you used to be able to.  It is unusable unless you are happy with the filtered results.  I am not.  
Do you still use Google? This isn't a "gotcha", I'm just honestly curious.

 
Do you still use Google? This isn't a "gotcha", I'm just honestly curious.
I use DuckDuckGo.  Google is fine if you are looking for stuff from their prescribed retailers or their select media sources.  I do use Google maps.  But I usually avoid their search engine.

 

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