I'm always a little confused by this claim. Focusing on revenue-generating products and not the user products they use to sell them: Google Search was their first success, then AdSense (third-party display ads), then YouTube. The latter two each make almost $30B/yr (run rate). Ignoring ads, Google Cloud makes >$20B/yr, as do Google hardware sales, with an additional $30B/yr from "non-advertising Other".
I don't really understand how one supports this claim without using decidedly non-standard definitions and grouping of revenue. If you insist on lumping together separate, wildly-successful revenue-generating products into overbroad groups by the manner in which the revenue is collected, and ignore a couple of objectively enormous revenue streams: Do you similarly feel that Apple "hasn't found a second gold vein" beyond "hardware sales"?
I would say it's the people visiting google that's the gold vein - advertising is the pick-axe. You don't make money with ads if no one visits. So in a sense making more and more products and reasons to visit is the gold vein.
Otherwise just saying advertising is a gold vein would mean people that put up a blank page with a single ad on it and no reason to visit would definitely not be a gold vein. So as others mentioned, its the Youtube and Gmails level products.
Google doesn't release net income numbers by business unit but in 2021 revenue for search was around $148B and Youtube revenue was around $29B. Given that youtube revenue dollars are probably much more expensive than search revenue dollars I'd say that ratio will skew toward more of the profit being in the search category than the you tube category, not less. It does seem on balance to be a relatively small part of their business dollars-wise, although I'd make the case that the cultural relevancy that youtube gives google has a non-zero value.
They don't break out the profitability of some subunits, but according to the WSJ it was "breakeven"[1] in 2014 with $4B in revenue.
I still don't see where the GP comment's confidence that it's not meaningfully profitable comes from. It doesn't seem like an uncontroversial assumption that costs have more than septupled in the last five years in the way that revenue has.
The numbers are trending in the right direction. From 2021Q1 to 2022Q1, revenue grew 43% (vs 34% at AWS and 46% at Azure), loss went down by 4%, and the loss to revenue ratio went from 24% to 16%.
IIRC the rumor leak around that was more nuanced: the leaks reported someone allegedly saying that market economics may not ultimately be able to support more than 2 leaders, because the economics will make #1 and #2 able to profit at prices that numbers 3+ can't compete with due to lack of scale. So the statement was that GCP has keep up or its ability to profit will be at risk, not that they'd shut down just because their slice of the pie isn't big enough if they end up as #3.
I don't believe it was clear who said this, how confident it was that someone said this, and whether it was an off-the-cuff comment in support of a push for more growth or an actual deep assessment of the economics of the space.
If advertisers felt motivated enough, circumventing PiHole would be trivial. Since all they do is block DNS requests based on a blacklist, an ad company just needs to serve their content from a trusted domain. Google owns plenty of domains which few PiHole users are likely to tolerate being blacklisted. They already do this with ads on YouTube.
Youtube ads are not a problem because of uBlock Origin / Newpipe etc... I have not seen an ad in Youtube in more than a decade.
But you are right. This could motivate them to move to a single domain for all Google content. But this is just another escalation in the adblock arms range. uBlock-style blockers would proliferate.
This is basically what youtube is doing. PiHole does not work on Youtube, but uBlock origin does (so does NewPipe, FreeTube and a bunch of software).
This would solve Google's immediate problem, but it's such a huge escalation that I expect lots of unintended effects not to Google's benefit. There is a reason they haven't done this, despite widespread adblocking use.
Yeah, the industry is definitely moving to that. Admiral, probably the most known ad-blocker-blocker already successfully circumvents PiHole and other DNS blocking by being served by the same domain.
I also expect Google to double down on Chrome Manifest v3 limitations if ad-blocking keeps getting more popular. Or even using DNS-over-HTTPS as a default on Chrome if ISP blocking ever becomes a thing.
The reason why Google (and other advertisers) do not do this is actually not because of the ad blocker arms race. On-domain ads are difficult to block, as can be seen by Facebook. But it also has huge trust problems, as can be seen by... Facebook.
Right now, with normal web advertising, the publisher (person with a website who wants to sell ads) tells your browser to go get an ad from the advertiser (the person paying for the ads), and that means that the advertiser gets a web request every time their ad is sold. This means that they can implement their own analytics and do not have to trust the publisher's, because the publisher merely kicks off the ad delivery process.
However, this requires separate domains or IP addresses, which can be blocked even at the network level[0] with a Pi-Hole. The alternative would be to serve ads straight off the publisher's site, which is how most social networks do it. Except... now you've just cut off every advertiser's data spigot[1]. If you do that, web advertising stops working - not because it's harder to target users, but because it's impossible to verify that you are paying for legitimate traffic to your website.
This is not a hypothetical. Social media companies already implement publisher delivery, and there have been multiple times in which they[2] themselves have admitted that their analytics and attribution were just plain wrong. That meant that advertisers were paying for traffic they never actually got. Publishers have an inherent incentive to inflate their traffic; the ad networks call this "click fraud" and it's when you run a bunch of bots to click on ads so you make more money[3].
The end of separate-domain advertising takes us right back to the days of television, where advertisers were buying specific time slots ("inventory") from specific publishers they trusted. The way that said inventory was priced was through random sampling of television watchers; but that relied on asking people to accurately record their TV watching habits. Good luck doing that when ads are served on a request-by-request basis.
Yes, you could randomly sample web users by having them install an extension that scans all their traffic and generates an equivalent log, but that almost certainly violates every extension repository's rules. Remember how Facebook was caught using their In-House signing cert to ship an iPhone VPN that did just that? That's the sort of sketchy shit we're talking about here. And any rules for detecting and reporting which ads were viewed could also be extracted and used to generate a tool for blocking said ads, which would be counter-productive.
So, basically, the reason why we don't just have publishers delivering ads is because it shuts out smaller publishers from selling them and puts advertisers solely at the mercy of Google and Facebook to verify that they actually got what they paid for. It would be a monopolistic power play few would tolerate.
[0] DoH and encrypted SNI complicates things, since it was also intended to be censorship-resistant - and we're trying to censor advertisements. However, you cannot encrypt IP addresses without taking on all of the inefficiencies of Tor onion routing. And you can also configure your web browser to just use the Pi-Hole's DNS instead of a public DoH server.
[1] Yes, there is an argument that telling the user's browser to make a request to another server is not "sending data"; this argument is stupid.
[2] Minimally, Facebook and Twitter; though other socials probably have the same problem.
[3] This is also why Google's antispam teams are secret police
Of course they’re not. It just might get more complicated for users but it’d be super easy for them to set up cloaking. uBlock could deal with that, ISP won’t.
Either way that will never happen obviously; Why would an ISP “block ads”? They’re literally hosting Google hardware (specifically YouTube’s cache)
In France, Free (one of the major telcos) has done exactly that. They block ads from the router that they give to their subscribers.
I guess they may be doing that to save bandwidth... They also have a tendency to offer features that few of their subscribers use, or even know about (some of their routers come with built-in VPN servers and torrent seedboxes).
I can see ad-blocking as a feature an ISP can try to sell. Imagine an ISP-level PiHole. (I can see this selling easily given how many family and friends asked me to install PiHole for them.
I don't really understand how one supports this claim without using decidedly non-standard definitions and grouping of revenue. If you insist on lumping together separate, wildly-successful revenue-generating products into overbroad groups by the manner in which the revenue is collected, and ignore a couple of objectively enormous revenue streams: Do you similarly feel that Apple "hasn't found a second gold vein" beyond "hardware sales"?