[6gvONxR4sf7o]

My point is that he’s calling certain costs fixed that I would call marginal. For COGS or data centers you have to choose something to amortize over. For a traditional good, it’s the lifecycle of the physical product. For a data center, you could amortize it relative to its capacity, maybe? Or cost per ad dollar sold, rather than per query? It really depends on the question you’re asking, as fixed or marginal is really fixed or marginal with respect to some factor. It’s unclear what the correct way to do it is, but it’s clear to me that calling it fixed is wrong, relative to the specific points he’s making.

I’d look at how AWS looks at its data center costs and apply that model. Google Search may not be renting infra to searchers, but that’s not the important distinction.