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Section 230 in the Supreme Court, Reach and Speech, The First Amendment and U.S. Speech Controls [Ben Thompson, Stratechery]

By William McClain
In Ben Thompson [Stratechery]
February 22, 2023
139 views
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  • Section 230 is going before the Supreme Court: This case will determine whether platforms like YouTube, Instagram, and TikTok are liable for the content that their recommendation algorithms promote.
  • A loss for Google would be an opportunity for Congress to protect essential rights: If Google loses the case, Congressional action around content moderation could focus on protecting links and the infrastructure that enables access to the internet.
  • The top of the stack is about broadcasting: Social media platforms have the right to moderate any content they want, but this should be done with a focus on attracting the broadest customer base.
  • Internet service providers have different obligations: ISPs should provide content neutral access, which is essential for the right to be heard and the right to speak.
  • The crux of the case goes to the second paragraph: Whether platforms are liable for their recommendations is the key question in this case; a win for Gonzalez could mean more “censorship” of posts.
  • The First Amendment and US speech control: Much of the discussion around content moderation forgets that the First Amendment explicitly denies Congress any role in determining what is moderated; Section 230 was essential for the internet in order to protect speech.

Published February 21, 2023
Visit Stratechery to read Ben Thompson’s original post Section 230 in the Supreme Court, Reach and Speech, The First Amendment and U.S. Speech Controls

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How Google Ran Out of Ideas [Cory Doctorow, The Atlantic]

By William McClain
In [The Atlantic]
February 16, 2023
145 views
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  • Microsoft’s Desperate Move – Microsoft has sunk billions into equipping its search engine, Bing, with chatbot technology, ChatGPT, in an attempt to compete with Google Search.
  • Google’s Insecurity – Google has followed suit and is now incorporating chatbots into its products. This is likely due to its history of jumping on trends due to fear of being left behind, as evidenced by its entry into the Chinese market in 2006 and its subsequent attempts to close the social media gap with Facebook.
  • Google’s History – Google’s history has been characterized by follies such as cooperation with the Chinese Communist Party to censor search results, as well as its failed attempt to create a successful social media platform with Google Plus.
  • Google’s Real Business Model – Google’s most successful products are not ones they have created in-house, but rather ones they have acquired. Google’s attempt to integrate chatbots into search is likely an attempt to regain its reputation as an innovator.

Published February 16, 2023
Visit The Atlantic to read Cory Doctorow’s original post How Google Ran Out of Ideas

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The Google CEO Question, Steve Ballmer and Peacetime CEOs, About That Bard Mistake [Ben Thompson, Stratechery]

By Spencer Chen
In Ben Thompson [Stratechery]
February 13, 2023
110 views
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• The Google CEO Question: Sundar Pichai’s tenure has been successful, but investors are questioning if he is the right person to lead the company in the face of a potential existential threat.
• Peacetime CEO/Wartime CEO: Ben Horowitz’s post explains the differences between the two types of CEOs, with the key distinction being that a Wartime CEO is paranoid about losing the advantage.
• Steve Ballmer and Peacetime CEOs: Steve Ballmer’s dismissal of the iPhone is a perfect example of a CEO focused on what he can do with a big advantage, but he should have been more paranoid about the threat of Android.
• About That Bard Mistake: Google’s Bard demonstration had an error, which was directly responsible for Google’s stock price decline. Bing and OpenAI got the answer right, suggesting the large language model was beneficial.

Published February 13, 2023
Visit Stratechery to read Ben Thompson’s original post The Google CEO Question, Steve Ballmer and Peacetime CEOs, About That Bard Mistake

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Google and Microsoft’s Events, Monetizable Panic, Paradigms and Hardware [Ben Thompson, Stratechery]

By Spencer Chen
In Uncategorized
February 9, 2023
139 views
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• Google and Microsoft held back-to-back events to showcase their AI-powered search and map features.
• Google’s event was a mess, while Microsoft’s was well-rehearsed and well-coordinated.
• Microsoft’s event was a response to Google’s search dominance, which has more than 90% market share.
• Microsoft’s blog post from 2010 showed their intent to partner with Facebook to take down Google.
• Microsoft’s Corporate Vice President of Search, Yusuf Mehdi, said that roughly half of all searches don’t deliver the job that people want.
• Microsoft’s new OpenAI-powered chat interface is an attempt to address this issue.
• Google is the default search engine in most browsers and on most phones, making it difficult for Bing to displace it.
• Google has responded to threats before, and the messiness of this week suggests they are ready to do so again.
• Bill Gurley’s article “The Freight Train That Is Android” explains how Android is a “moat” to protect Google’s search engine.
• Microsoft’s approach to Bing is to see it as their Android relative to Google Search’s Windows.
• Chat interfaces are annoying to use, and voice is not always an option.
• Google faces real cost concerns as it incorporates AI into search, and conversation AI is very expensive.

Published February 9, 2023
Visit Stratechery to read Ben Thompson’s original post Google and Microsoft’s Events, Monetizable Panic, Paradigms and Hardware

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Google Earnings, YouTube’s Aggregation Bid, YouTube Shorts Monetization [Ben Thompson, Stratechery]

By Spencer Chen
In Ben Thompson [Stratechery]
February 7, 2023
138 views
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• Google reported its first drop in advertising revenue since the beginning of the pandemic, with YouTube’s revenue down 8% year-over-year.
• YouTube is attempting to become an Aggregator of television, with its multiyear agreement to distribute NFL Sunday Ticket and its Primetime Channels launch.
• YouTube is also attempting to monetize its Shorts feature, with a revenue-sharing model similar to Spotify’s.
• Meta is facing pressure from YouTube’s monetization strategy, as it is more difficult to create compelling Reels than Stories.
• Google is more generous with YouTube monetization because it is a smaller part of its business, but other companies have a similarly cavalier approach to profitability.

Published February 7, 2023
Visit Stratechery to read Ben Thompson’s original post Google Earnings, YouTube’s Aggregation Bid, YouTube Shorts Monetization

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An Interview with Eric Seufert About Meta’s Earnings and the Google-DOJ Case [Ben Thompson, Stratechery]

By Spencer Chen
In Ben Thompson [Stratechery]
February 2, 2023
145 views
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• Eric Seufert discussed Meta’s earnings and the Google-DOJ case.
• Meta’s earnings showed a decrease in revenue but a skyrocketing stock price.
• Seufert discussed the importance of increasing impressions and the corresponding decrease in price, as it crowds out competitors and provides more room to grow.
• He also discussed the four ways to increase ad revenue for an ad platform: increasing ad load, increasing reach, increasing the value generated by ads, and increasing time spent on site.
• Facebook has managed to increase engagement and ad load, and has introduced new ad placements to increase the value generated by ads.
• Increased ad load on Reels is justified, as it had no ads before.
• Facebook has created new ad formats, such as click-to-messaging, which have the potential to convert better than other ad formats.
• AI and machine learning are being used to automate the process of managing campaigns, eliminating human error and inefficiency.
• The black box automation suite, Advantage Plus, is used to test different permutations of audiences and creative to find the right mix.
• The application of AI and machine learning is more compelling from the advertising side than the consumer side.
• Generative AI can be used to create assets and interpret what works and what doesn’t.
• The end game is for Facebook to integrate these tools and do it for the advertiser.
• The duopoly of Google and Facebook is over, as brand advertising is moving onto the web from TV in a meaningful way.
Amazon is the one big exception, and ATT has been an accelerant for their ad business.
• Apple and Amazon are capturing direct response budget that has fled from Facebook.
• Facebook is trying to recapture some of those dollars by improving efficiency and engagement, and taking more of the human element away.
• Facebook reintroduced 28-day click attribution reporting, which is modeled, in order to comply with ATT.
• SKAdNetwork 4.0 is more signal, and the biggest platforms will benefit most from it.
• Apple may be shooting themselves in the foot with ATT, as they benefit from in-app purchases.
• ATT has caused a difficult transition for mobile gaming, but Apple may start providing better measurements and signals to help developers.
• Facebook’s earnings results validate the ATT Recession thesis, with revenue down 4% year-over-year.
• Recent decisions in Europe have been problematic for ad targeting, with Meta not allowed to use a contractual basis to get user agreement for ads, WhatsApp not allowed to use first party data for general analytics and security, and Voodoo Games not allowed to use the IDFV.
• The European Union is not likely to allow companies to offer services on terms they don’t want, and this could lead to decreased monetization in Europe.
• Activists and special interests may prevent the right thing from being done, preventing the use of AI technologies.
• The DOJ’s case against Google is that it used its end-to-end ownership of the ad tech stack to suppress competition and prevent other companies from being able to compete.
• The DOJ’s argument is flawed because it portrays supply as chasing demand, when in reality, it is the other way around.
• The DOJ’s chief harm demonstration is that publishers made more money than they should have, which is the only part in the stack where there is arguably lock-in.
• The counterfactual is not that advertisers would have gotten more margin on their ad spend, but that they would have been starved from incremental conversions if Google had not made this available at all.
• The remedy proposed by the DOJ is to split off the exchange and the publisher tool, which highlights the weakness in the case itself because Google Ads are first and foremost for Google Properties.
• Facebook is building up customer engagement to attract advertisers.
• Google divesting Google Ad Manager and AdX could lead to lower prices for publishers and higher prices for advertisers.
• Google is acting as a market maker, pricing long-tail traffic that would otherwise go unsold.
• Google’s data gives them an advantage in pricing, and they may be keeping the third-party ad business alive for the data rather than the revenue.
• Stricter privacy regulations benefit larger companies with more signal.
• Advertisers choose Google because they have no choice, but if Google had been more transparent about their practices, they may not be in as much trouble.

Published February 2, 2023
Visit Stratechery to read Ben Thompson’s original post An Interview with Eric Seufert About Meta’s Earnings and the Google-DOJ Case

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DOJ Sues Google, Google’s Advertising Aggregation, No Duty to Deal [Ben Thompson, Stratechery]

By Spencer Chen
In Ben Thompson [Stratechery]
January 25, 2023
146 views
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• The DOJ has filed a lawsuit against Google, alleging that the company has abused its role as one of the largest brokers, suppliers, and online auctioneers of ads placed on websites and mobile applications.
• The lawsuit seeks to unwind Google’s “anticompetitive acquisitions” and calls for the divestiture of its ad exchange.
• Google has used its market power to force more publishers and advertisers to use its products while disrupting their ability to use competing products effectively.
• Google’s power in digital advertising stems from a series of acquisitions, beginning with the company’s $3.1 billion purchase of DoubleClick in 2008.
• Google has capitalized on its well-known search engine to start a profitable search advertising business, Google Ads (formerly AdWords).
• Google Ads’ unique and sizeable advertiser demand is what makes Google’s ad exchange unavoidable for most website publishers.
• A 2014 Google experiment found that more than half of the impressions that publishers offered on its ad exchange would go unsold without the critical Google Ads’ demand.
• Google has effectively locked out meaningful competition in the digital advertising industry by leveraging its control of the “operating system” of advertising.
• Google has Aggregated the long tail of advertisers, and that long tail is so large that no publisher can do without them.
• Google has then levered access to those advertisers into control of the “operating system” of advertising, and with that control systemically favored itself.
• Google shifted money from advertisers to publishers by submitting two bids for ad slots from Google Ads, which systematically increased the winning price for an ad.
• Google’s defense is the “no duty to deal” argument, which is based on the Supreme Court case Verizon v. Trinko.
• The most likely outcome is that this case highlights exactly where current law is deficient in limiting big tech companies.

Published January 25, 2023
Visit Stratechery to read Ben Thompson’s original post DOJ Sues Google, Google’s Advertising Aggregation, No Duty to Deal

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Google’s most serious antitrust challenge to date [Casey Newton, Platformer]

By Spencer Chen
In [Platformer]
January 25, 2023
103 views
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• The US Justice Department and 8 states have filed a major antitrust case against Google, accusing the company of maintaining an illegal monopoly over the online ad business.
• The lawsuit calls for Google to divest its Google Ad Manager suite, including both its publisher ad server and ad exchange.
• Google has faced a steady drumbeat of regulators accusing it of antitrust violations since 2017, when the European Commission fined the company a then-record $2.73 billion.
• Google’s estimated 26.5 percent share of the US digital ad market is down more than 10 percent from its peak in 2015, due to the growth of Meta and Amazon.
• The lawsuit claims that Google’s fees on its ad exchanges allow it to keep 30 cents out of every dollar spent on them, resulting in overcharges of $100 million for federal agencies.
• The case is rooted in real harms and is in line with traditional thinking about the point of antitrust law, which is to protect consumers.

Published January 25, 2023
Visit Platformer to read Casey Newton’s original post Google’s most serious antitrust challenge to date

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More on Google and AI; OpenAI, Integration, and Microsoft [Ben Thompson, Stratechery]

By Spencer Chen
In Ben Thompson [Stratechery]
January 10, 2023
114 views
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• Google is the default in every browser and on every phone, and people have over two decades of habits of using Google for everything, making it difficult for competitors to gain traction.
• Google’s acquisition record is strong, and the company is well-placed to benefit from AI, with YouTube, Android, GCP, and DeepMind all being major assets.
• Microsoft is in talks to invest $10 billion into OpenAI, valuing the firm at $29 billion, and giving Microsoft a 49% stake.
• Microsoft’s investment is likely driven by its ability to offer attractive rates and monetize the output of OpenAI’s products, as well as its deep pockets and patience.

Published January 10, 2023. Visit Stratechery to read Ben Thompson’s original post.

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AI and the Big Five [Ben Thompson, Stratechery]

By Spencer Chen
In Ben Thompson [Stratechery]
January 9, 2023
170 views
A

• AI has emerged as a major technology in 2022, with image generation models such as DALL-E, MidJourney, and Stable Diffusion, and text-generation model ChatGPT leading the way.
• Clayton Christensen’s The Innovator’s Dilemma explains the different kinds of innovations, and how incumbents have fared in previous tech epochs.
• Apple has taken advantage of the open source Stable Diffusion model, optimizing it for its own chips and operating systems, and potentially building it into its OS.
• Amazon is leveraging its cloud services to provide GPUs for training and inference, but must gauge demand for these services.
• Marginal costs of AI generation may make it challenging to achieve product-market fit, and costs should come down over time as models become more efficient and cloud services gain returns to scale.
• AI is a massive opportunity for Meta, Google, and Microsoft, and all three companies are investing heavily in the technology.
• Meta is investing in AI to power its services, better target ads, and recommend content from across its network.
• Google has a go-to-market gap and a business-model problem when it comes to AI, but its technology is still the best on the market.
• Microsoft is investing in the infrastructure of the AI epoch, and is well-placed to benefit from the disruption of AI.
• OpenAI may become the platform on which all other AI companies are built, and Nvidia and TSMC may be the biggest winners.

Published January 9, 2023. Visit Stratechery to read Ben Thompson’s original post.

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