[matthewdgreen]

But let’s ask a different question: aside from re-allocating the economy’s marketing and advertising budget into Google (from, presumably, local newspapers and TV before Google existed) how much of that revenue comes from actual tangible new wealth creation?

To put some context on this, 78% of Google’s revenue is advertising. Overall US ad spending has been increasing at about 1.6% per year since 2001, with no obvious indication of an acceleration (beyond some bumps around 2007/8.) So is there actually a success story beyond market capture here? And if all we’re doing is concentrating existing business into new channels, is this something we should be excited about?

[econ]

You simply pay more for a product to find you. The more overpriced ones find you first. Googles business model is to make it as hard as possible for products to find you while simultaneously pretending to be the go-to place for precisely the opposite. A truly magical accomplishment.

Wealth creation?

[pzo]

Google created android - the most popular OS. Sure maybe samsung or nokia would be used instead but definitely the helped expend ad business with android. Same like Meta/ByteDance expanded Ad business with Intagram/Tiktok. Even if ad spending grew 1.6% per year it's not sure if it grew as much if android didn't exist. Also need to take into account probably reduced cost of advertising - this product just got cheaper. That the ad market grew 50% in 25 years doesn't mean we have only 50% ads served same like 50% grow (in $) in smartphone market doesn't have to mean you have only 50% more smartphones if they got cheaper.

[piva00]

Technically, Andy Rubin and Chris White weren't at Google when creating Android. In usual big tech fashion, Google did a good acquisition but didn't actually "create" Android, they bought it.

[hluska]

This is an interesting topic and I’m not sure it has an answer. In 1995 advertising was really spray and pray. Testing ads was a really difficult proposition so we saw things like bearer coupons (mention this ad or bring in this coupon for 20% off!). The dominant advice out of radio was to play an ad constantly. That advice worked well for traditional media but not so well for advertisers. That model worked so well for advertisers that thirty years later, people around my age in my city can all sing the same five advertising jingles.

Google provided a toolkit to test ads and figure out which are most effective. Now the other side of that argument is that in industry, a massive of percentage of qualified people still spray and pray. The advertising industry as a whole is far from data driven.

At one point, there was an argument this was good for the planet. My newspapers are much thinner than they were 30 years ago when I could collect a metre of newsprint a month if I subscribed to the Globe and Mail plus a local. But I don’t think anyone can claim now that data centres are environmental miracles. This has also decimated local journalism to such a point that people are less aware of environmental catastrophes in their own relative backyards.

It’s possible the net effect was positive and advertising is more efficient. It’s more accurate to say advertisers have a toolkit to analyze effectiveness but many don’t or aren’t capable.

Edit - I’m going to give a very specific example of a radio jingle. If anyone is around forty or older and from a major city in Saskatchewan, they will be able to finish this.

“I said no no no no don’t pay anymore, no GST and no money down.”

[matthewdgreen]

Maybe another way to say this is: do targeted ads materially advance society? Is there an argument that better ad-targeting has increased GDP, or improved overall economic growth in some other way? Would a less-efficient online advertising system produce dramatically worse outcomes? And did we get more or less back from the older system (TV+local journalism) than we get from Google?

[jayd16]

Online commerce is a huge innovation and Google is part of that.

[matthewdgreen]

But is a Google with 78% market share actually important to this? Could we have a network of companies doing this job, perhaps less efficiently, and the world would be just about as decent?

[nottorp]

The antitrust people in various governments should definitely get excited about it :) And they apparently are indeed.